The Arabpreneurs

Last week, I wrote about innovative ideas for addressing poverty and the class divide in America.

This week I will solve the Middle East crisis.

OK, maybe I’m over-promising.

But on stage in a large ballroom at the Beverly Hilton Hotel earlier this month, two Israelis, a Jordanian and an Egyptian sat together and discussed investment strategies with an investor from Dubai and a Palestinian moderator.

This took place at the Milken Institute Global Conference in front of an audience of some 300 people at a breakout session titled “The Changing Face of the Middle East.”

It should have been called “How to Change the Face of the Middle East.”

The fact is, the Arab Spring that destroyed the stagnant and oppressive status quo unleashed many forces, both positive and negative.  We are well aware of the negative: the rise of Islamic parties in Algeria, Egypt and elsewhere; the chaos and anarchy unleashed when dictators fall; the anti-Israel rhetoric, sown by decades of propaganda, flowering in uncensored media.  Being Jews, that’s what we focus on.

What we neglect are the positive forces: the voices of democracy and women’s rights. The unleashing of creativity and the drive for free enterprise.

It’s that last one that the men and women in the room at the Hilton believe will make all the difference.

“Many of you have heard of the book called ‘Start-Up Nation,’ ” said Chemi Peres, managing general partner and co-founder of Pitango Venture Capital, Israel’s leading venture capital firm. “But,” he added, “there is a more important book to be written, which is ‘Start-Up Region.’  I think we are on the verge of a very important era. The Middle East is the last region in the world that has not experienced dramatic growth. Those who will not participate in the game will be left behind.”

Yes, Peres is the son of Shimon Peres, the eternally optimistic Israeli president who, 20 years ago, was talking about high-speed trains from Beirut to Beersheba.  But while the father dreamt, the son invested.

Recently, Pitango started a $50 million fund to invest in the Israeli Arab sector, whose GDP has grown by 7 percent through the recession.   He said that’s just a small example of what opportunities await investors in the region as a whole.

The numbers are mind-boggling. There are 400 million people in the Middle East. Arabic is the fastest-growing language on the Internet. Some 65 percent of the world’s Arab population is under 30 years old, and they want work and opportunities.

“The Arab Spring is two springs,” Peres said. “There’s the political one, which I’m not so positive about in the short term, but very positive about in the long term. There is more power shifting toward the people. The second Arab Spring is what the young generation is doing.”

The Internet has enabled Arab youth to go from being job seekers to become job creators, said Abdul Malek Al Jaber, the Palestinian entrepreneur who founded and is chairman of MENA Apps.  In Jordan, his company invested $100,000 in an e-commerce site that is now worth $30 million.

Al Jaber’s company has created office spaces in cafes across the region, where entrepreneurs can develop their ideas for free.

“We call them Arabpreneurs,” the Palestinian said. “We want to re-create the high-tech ecosystem of Israel.”

In Egypt, Mohamed Seif-Elnasr, chief investment officer and managing partner of Safanad SA, said, the tech sector is up 18 percent during a time of great turmoil.

That turmoil is the “froth at the top,” Seif-Elnasr said. “Don’t look at the country,” he said, “look at youth.”

Abdulla Mohammed Al Awar, the CEO of the Dubai International Financial Centre Authority, said that in his country oil now accounts for only 2 percent of the GDP. They are making massive investments in high-tech. Focusing only on the turmoil misses the big picture.

“Look at young people,” Al Awar said.  “Look at entrepreneurial spirit. Invest in innovation.”

An hour into this panel, I realized no one had mentioned “peace process” or “settlements” or any of the other sinkholes of Middle East hope. Yet the subtext seemed clear: Rising wealth and opportunity will increase regional cooperation and decrease conflict. The Internet, Al Jaber said, is a land of no passports and no borders.

And even where those exist, investment and innovation can triumph.

Zika Abzuk, senior manager of Cisco in Israel, told of sponsoring a Palestinian-Israeli tech conference with 40 entrepreneurs.  The Palestinians were stopped at a border crossing, so everyone met in a Bedouin tent in a no-man’s land pointed out by a helpful Israel Defense Forces soldier.

“Both Israel and Palestine have educated people as their only resource,” Abzuk said.

These panelists certainly didn’t sound like wild-eyed optimists. They weren’t just describing digital opportunity in a flat world, they were placing multimillion-dollar bets on it. 

Crazy? Peres pointed out that if you had invested in China in 1989, during the Tiananmen Square crackdown, your friends would have thought you were nuts, but you would have made 25 times your investment by now. If you had invested in Turkey when Prime Minister Recep Tayyip Erdogan took power in 2003, your friends would have warned you that the man is a radical who declared, “The mosques are our barracks.” But by now you would have quintupled your money.

And if you had invested in Israel during the crippling turmoil of the First Intifada, in 1987, now, three wars and another Intifada later, you’d be — well, you’d be rich enough to follow this panel’s advice.