This week, the Carleton University Student Council may unfortunately involve itself in the Carleton University pension plans by voting to demand that the pension fund divest investments in certain corporations that do business in Israel.
The plans are administered by an independent body of Carleton faculty and support staff under the Pension Benefits Act of Ontario. Canada is a world leader in banking, pensions and pension law. As in other advanced countries, Ontario's pension regulator, the Financial Services Commission of Ontario, is clear about the obligations of pension directors to protect the financial future of employees by maximizing investment returns.
The activists' proposal is not just wrong, it is self-defeating. Already in shortfall, these pensions would need still higher tuition fees to make up for shortfalls if investment decisions were politicized.
More unfortunately, it appears that some student councillors have been seduced by naive activists (from the falsely titled "Students Against Israel Apartheid") who do not understand the Middle East. These student activists are on the wrong side of history by supporting the corrupt autocrats of the Arab world, who lead closed societies and closed economies, where all freedoms are suppressed.
Let's talk honestly about these closed societies. The GDP of all 22 Arab countries with 335 million people and the world's greatest supply of oil approximates the GDP of one country, Canada, with 34 million, one-10th of their population.
The first United Nations Arab Development Report in 2002, written by Arab experts living in the Middle East, summarized the problems: "high illiteracy rates, the deterioration of education, the slowdown of scientific research and technological development, poor production bases and competitive capacity, rampant poverty and mounting unemployment rates."
The most recent 2009 United Nations Arab Human Development Report found that not much had changed. It found that "the rule of law indicator rates the Arab region as the second worst in the world." Thus, "human security in Arab countries is often imperilled by the State itself."
This is bad enough, for these destructive social policies suppress the creativity and imagination of the human spirit. But sadly it is much worse, for most countries in the Middle East have adopted comprehensive policies of economic protectionism which radically restrict foreign capital, foreign firms and foreign goods.
To take the example of Egypt, on the Heritage Economic Freedom Index, Egypt ranked 96 of 179 countries, while the World Bank Ease of Doing Business Index ranked it 94 of 183. These restrictions produce an Egyptian GDP of $2,450 U.S. per person versus $45,000 per person in Canada.
The outcome is utterly predictable in every country in the world that discriminates against its citizens and adopts restrictive protectionist policies. The politically connected prosper at the great expense of the vast majority of the people.
Economic growth and business investment are reduced because all activities are tightly controlled, with the consequence that unemployment is very high -- from 20 per cent to 40 per cent in these countries.
And the burden in every country falls disproportionately on the young, and more so on women and minorities.
But it does not end there. As protectionist policies create very limited opportunities for jobs or permits to start businesses, they produce an environment that encourages corruption, as individuals in desperation pay to avoid the repressive policies of protectionism and discrimination.
This is confirmed by the UN-financed Transparency International which in 2010 ranked Egypt 98 of 178 countries from least corrupt to most corrupt (Canada is one of the least corrupt at No. 6).
Thus, a perfect storm is created with limited opportunities, very high chronic unemployment, no political outlets to express frustrations and a pervasive sense of unfairness and injustice driven by the clear and present corruption. The outcome is predictable for conditions become intolerable, resulting in mass protests -- as we witnessed in Iran, Egypt, Tunisia and elsewhere.
However, there is an alternative model that provides a path to the future. Rather than use Canada or other western countries from very different regions, there is a country in the Middle East that is democratic and encourages trade and investment -- Israel.
As a consequence, Israeli GDP per person of $27,000 U.S. is around 10 times greater, with substantial economic growth, job creation, capital investment and vastly lower unemployment. For example, between 1986 and 2000, while the 22 Arab countries with their 335 million people registered 367 patents -- representing R&D and future business investment -- Israel with a population of less than 3 per cent of Middle East registered 21 times the number of patents (7,652).
Thus we urge students to divest their support for corrupt Middle Eastern despots and support the transformation of these failed states to more socially just, democratic, prosperous communities that liberate and respect the individual and human rights of Arab citizens including women and minorities, while encouraging trade and investment, so that finally a decent standard of living can be achieved for the region's long suffering citizens.
Ian Lee is a professor in the Sprott School of Business at Carleton University and Conrad Winn is a professor of political science at Carleton. Lee has lectured in developing countries around the world including Iran while Winn has carried out extensive research on Muslim attitudes through COMPAS Research.
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