Economic failure and poverty nurture extremism in the Middle East, according to a new study by a leading US think tank.

"Lack of economic prospects and poverty in the everyday life of people in the Mena (Middle East and North Africa) region contributes to extremism, and perhaps even to terrorism," said the New York-based Council on Foreign Relations.

The Council report, 'Harnessing trade for development and growth in the Middle East', argues that economic and trade liberalisation offer the best hope of improved livelihoods and that countries in the region therefore should follow prescriptions handed down by multilateral institutions including the World Bank and World Trade Organisation (WTO).

The report urges Middle East countries to open up to international trade, reduce the role of the state in their economies, and cut bureaucracy and corruption if they want to maintain steady economic growth.

Economists Bernard Hoekman of the World Bank and Patrick Messerlin of the Paris-based Institut d'Etudes Politiques wrote the report. Peter Sutherland, former WTO head, wrote the introduction.

"Greater openness to trade and domestic economic reforms can reinforce each other to generate faster growth, lower unemployment, and high standards of living," Sutherland wrote.

"The fundamental problems of these economies [are] essentially domestic and related to the need for new policies to govern the internal economy," added the chairperson of Goldman Sachs International.

Reform required

Thirty to 40 years ago, a number of Mena nations were on an economic par with Asian countries. According to the Council's report, in the 1950s per capita income in Egypt was similar to that in South Korea, whereas Egypt's per capita income today is less than 20 percent South Korea's.

Saudi Arabia had a higher gross domestic product than Taiwan in the 1950s; today it is about 50 percent of Taiwan's.

The report also contains a business survey of the region. This reaffirms long-held suspicions that corrupt practices and other economic inefficiencies and bottlenecks undermine prospects for outside investment and economic growth.

"Remarkably, 20 percent of the respondents said corruption payments averaged between two percent and nine percent of the value of traded goods," said the report.

According to the report, Mena economies also "must move quickly to reform their service sectors", such as banking, "if they are to generate outside investment."

The report emphasises the need for "a regulatory agenda that encourages genuine economic competition."

The report is among countless attempts to explain last September's terrorist attacks in the United States. It is among a minority of US analyses, however, to explore what UN Secretary-General Kofi Annan has termed the ''root causes'' of terrorism.

Nevertheless, because it echoes some of the arguments and prescriptions of the World Bank and other international institutions viewed as part of the corporate-led globalisation orthodoxy, at least one anti-poverty activist spurned the document.

Lazy analysis

"To say poverty is behind terrorism is lazy analysis to me," said Njoki Njoroge Njehu, director of the Washington-based 50 Years Is Enough Network. "If you look at Osama bin Laden and those who hijacked the planes (on Sept 11), you'll see they are not poor. Saudi Arabia is not poor. That logic doesn't work for me."

Njehu, who is from Kenya, said that if poverty was the main reason behind violence, Sub-Saharan countries and Latin American poor countries would be at the forefront of terrorism networks, which is evidently not the case.

And while the report provides numerous recommendations, its analysis stops short of getting at the causes of poverty in the first place.

"The World Bank is in this never-ending mission to give itself a reason for life," said Njehu. "Now they say by fighting poverty you are fighting terrorism."

"This is about people feeling disrespected and feeling disempowered," she said, adding that Western countries continued to support "despotic" regimes in the area and to promote economic reforms that take control out of the hands of the people.

Her organisation has rejected the "poverty as breeding-ground for terrorism" argument, she said, because ''this is to say that poor people are a threat to us." (IPS)