Last weekend, while Gaza was once again being blasted into the Stone Age, Beirut hosted the Union of Arab Banks' annual conference. Held under the theme "Economic Stability at a Time of Uncertainty", the gathering ended with calls for regional governments to engage in more interstate cooperation; a more economically robust middle class and improved legislation to spur both investment and overall business activity. The usual balloon juice in other words.
An indication of just how dysfunctional the region has become, even in the wake of the supposedly game-changing Arab Spring, could be inferred from the preamble to the conference on the UAB's website, which pointed out that "the success of macroeconomic policies in general, and fiscal, monetary and investment policies in particular, requires a favourable environment characterised by political stability, security and social welfare". Hold the front page.
It was fitting in that case that Beirut was the venue. It is a city licking its wounds after the bling, brashness and confidence of recent years has evaporated, while the performance of the country's banking sector this year can be described at best as flat.
It only has itself to blame. For nearly two decades, it has been practising what a financier friend calls "lazy banking", a period in which the sector took remittances and bought government bonds, eschewing any urge to embrace corporate lending or project financing. The upshot is that today it does little more than basic retail banking and government lending.
But to be fair, the UAB nailed it even if it did point out the obvious, and, at the risk of being labelled a bad Arab, when I look at the images of the attack on Gaza my frustration and anger is not solely directed at the Israelis. For how can we honestly talk about job creation and a national economic master plans when the region's governments are chronically unable to act in the best interests of their people?
Take Gaza's banking sector, which has to contend with Hamas - a democratically elected group to be sure, but a party that seems to lack any skill to draft a road map for prosperity for its 1.7 million inhabitants.
Stagnation or Revival? Palestinian Economic Prospects, a report undertaken by the World Bank last March makes pitiful reading. The report's authors reasonably conclude that economic growth can come only from "a combination of sustained private sector growth and continued internal reforms".
They correctly point out that this cannot happen as long as Israeli restrictions are in place. But, and here's the rub, the report also says that, despite this undoubtedly suffocating situation, there "remains much to be done … to create an enabling business environment that attracts needed investment". I for one don't think that Hamas has the tools in its kitbag to deliver this.
It is unlikely to set about reforming its archaic business laws to attract foreign direct investment and it is unlikely to send a positive signal to the investment community that fair competition is alive and well by taking steps to regulate its telecoms industry (itself an important sector in driving an emerging economy).
The Hamas leadership would argue that this is a mite tricky when it is being targeted for liquidation from air, land and sea, but this only bears out the point that there exists today a vicious circle that does not help ordinary Gazans get on with his life.
But old habits die hard. At the end of last year, it fined the Bank of Palestine US$113 million (Dh415m) and the Palestine Islamic Bank an undisclosed amount for following the Palestinian Authority, as opposed to Hamas, tax laws. At the time, a spokesman for Hamas was quoted by the West Bank newspaper Al-Ayyam as saying that the banks had "to choose between Palestinian and American legitimacy".
For now, the region's bankers can meet all they want. Nothing will change.
Michael Karam is associate editor-in-chief of Executive
