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• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00096R000700840001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: January 12, 2017
• Document Release Date: June 8, 2011
• Sequence Number: 1
• Publication Date: August 1, 1987
• Content Type: REPORT

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Directorate of Secret
Intelligence
Bleak Future for
Technological Development
Middle East and North Africa:
Secret
NESA 87-10039
August 1987
Copy
421
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Directorate of
Intelligence
Bleak Future for
Technological Development
Middle East and North Africa:
Division, NES&
This paper was prepared byl Office
of Near Eastern and South Asian Analysis. It was
coordinated with the Directorate of Operations.
Comments and queries are welcome and may be
directed to the Chief, Issues and Applications
Secret
NESA 87-10039
August 1987
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Key Judgments
Information available
as of I July 1987
was used in this report.
Bleak Future for
Technological Development
Middle East and North Africa:
reliable and less advanced than most Western goods and services.
The countries of the Middle East and North Africa will continue to rely
heavily on trade, financial assistance, and trained personnel from the
United States and other industrialized nations to modernize their econo-
mies and to make greater use of technology. Area leaders almost certainly
will ask the United States to disseminate more technological knowledge
and to relax restrictions on patent agreements. As a result of its active mar-
keting campaigns, Japan will be a particularly stiff competitor of the
United States as a supplier of technology to the region. The Middle
Eastern and North African countries probably will depend less on Soviet
and East European equipment and assistance, which is cheaper but less
Most states in the region have little chance of entering the ranks of the
newly industrialized countries during this century because of limited
natural resources, fundamentally flawed educational systems, and deficien-
cies in their labor forces. The Middle Eastern and North African countries
lag the West and many developing countries in Asia and Latin America in
expenditures for research and development and the number of scientists
and engineers as a proportion of the population:
? The poorest countries-Lebanon, Mauritania, North Yemen, South
Yemen, and Sudan-have the worst prospects for technological
development.
? Saudi Arabia and Kuwait are in the best position to achieve technical ad-
vances because of their financial and hydrocarbon resources. These
states, however, will have difficulty reversing their dependence on
expatriate labor while pursuing technological development goals. Devel-
opment in the Gulf probably will continue to depend heavily upon foreign
workers. Iran and Iraq also will have moderate chances to industrialize
when the war ends because of their large labor forces and substantial
resource bases.
? Egypt and Jordan have moderate chances for technical successes in
selected areas because of their relatively strong educational systems.
Countries in the region have had varying degrees of success in economic
modernization. For example:
? All governments have developed or imported technology to upgrade
health care and other public services.
Secret
NESA 87-10039
August 1987
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? Scientists in Egypt and Jordan have improved agricultural production
and irrigation techniques.
? Some industries have acquired computers, machine tools, and other
modern equipment to streamline production processes.
? Petroleum engineers in Saudi Arabia and some of the smaller Gulf states
have improved oil extraction methods and refining techniques.
For the most part, however, the Middle Eastern and North African
countries have had difficulty assimilating relatively sophisticated equip-
ment and new technologies:
? The conflict between modernization and traditional values will continue
to be an impediment in several states. Government leaders face resistance
to policies that emphasize technical education and, in some cases,
confront widely held cultural values that encourage disdain for manual
labor. Fundamentalist groups opposed to the spread of Western culture
also impede technological development.
? Illiteracy is widespread, school curriculums are outdated, and teaching
staffs are weak. Governments will seek to strengthen their technical
training programs, but significant shortages of indigenous manpower in
technical fields probably will persist at least through the end of the
century. The region's rapid population growth probably will impede
government attempts to train workers adequately, further slowing mod-
ernization and making the region more susceptible to political instability.
? Despite the shortage of skilled manpower, wage scales do not adequately
reward technicians.
? Many students, scientists, and engineers contribute to a brain drain by
studying and by seeking fortunes outside the region-particularly in the
United States and Western Europe. The small pool of local talent is
further depleted by the area's military services.
Given the prospects for modest economic growth over the next two years,
most governments in the region probably will proceed gradually with their
modernization policies. They will restart some development programs that
had been postponed to curb budget deficits unless there is a prolonged
recession.
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Scope Note For the purposes of this paper, technological development represents
attempts to modernize or enter a new phase of industrialization. In North
Africa and the Middle East, such technological development largely refers
to what would be regarded as low technology in most of the industrialized
West.' Examples of types of low technology include:
? Turnkey plants ranging from electricity generators to automated steel
mills.
? Machine tools such as drill presses and metalworking lathes.
? Computer systems that keep track of government finances or foreign
workers and visitors.
? New methods to exploit mineral wealth.
? Equipment to update the fishing industry.
? Irrigation and other methods to improve agricultural production.
? Water mapping techniques.
This paper explores why the civilian sectors of countries in the Middle East
and North Africa-excluding Israel-are having trouble absorbing and
mastering technology and assesses the region's potential for overcoming
obstacles to modernization. It also examines the impact of slow technologi-
cal development on the region's economic and political stability and its
relations with the United States. The paper does not attempt to thoroughly
discuss industrialization in the region.
Reporting on the assimilation of technology in the Middle East and North
Africa is infrequent and limited in scope. It focuses primarily on specific
technology transfers rather than the economic and political obstacles to-
and potential for-technological development.
' Countries covered in this paper include Algeria, Bahrain, Egypt, Iran, Iraq, Jordan,
Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria,
Tunisia, United Arab Emirates, North Yemen, and South Yemen.
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Secret
Key Judgments
A Few Bright Spots
Modernization and Indigenization
Selected Technology Interests and Acquisitions in the Middle East and
North Africa 21
Vii Secret
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The Long Road to Self-Sufficiency in Military
Technology
The majority of countries in the Middle East and
North Africa have relied in varying degrees on foreign
military technical personnel. Host governments have
accepted foreign military technicians as a necessary
short-term inconvenience on the road to military
independence. Influenced by nationalism, a desire for
independence in national security matters, or the fear
of covert intelligence collection, nearly all now are
seeking to reduce the size and scope of foreign
military contingents within their borders. For many
countries in the region, however, the prospects for
achieving this goal are poor:
? Since the end of the 1982 war in Lebanon, all
branches of the Syrian military have depended
heavily on foreign military personnel particularly
Soviet and East European advisers and techni-
cians-for assistance in operating and maintaining
their advanced Soviet weapon systems.
? Both North Yemen and South Yemen rely heavily
on the services of Soviet military advisers for
maintenance and operational support. More than
two-thirds of Sanaa's military equipment is from
the USSR. Its efforts to obtain arms and advisers
from Western and Arab sources have been frustrat-
ed by the lack of cash.
? Jordan has made great strides in maintaining its
modern weapons, but it still depends on foreign
technical advisers to help operate highly complex
components. Because US arms will remain in the
inventory for years, US technical assistance in the
upkeep of such weapons as the I-HAWK missile
will play a vital role in maintaining Jordan's
military effectiveness. The United States also pro-
vides technical training for hundreds of Jordanian
soldiers and airmen annually.
? The Arab Gulf states are heavily dependent on
expatriate personnel to keep sophisticated weapon-
ry functioning. Although Saudi Arabia and Oman
have embarked on campaigns to reduce the number
of foreign military personnel, we believe these
efforts will meet with only limited success because
local forces lack the technical skills and often the
motivation to perform functions done by expatri-
ates. Reliance on expatriates probably will increase
over the next few years as additional sophisticated
weapons are delivered.
The Middle Eastern and North African states have
far to go before they are self-sufficient in arms
production. Only a few countries in the region-most
notably Egypt and Jordan-manufacture small
arms, ryes, ammunition, or artillery shells. Egypt
has gone beyond such activities to refurbishing aging
Soviet equipment in its arsenal and manufacturing
missiles and antiaircraft guns. To contribute to re-
gional security and stability, the Arab League estab-
lished the Arab Industrial Organization (AIO) in
1980 to boost the region's arms industries, to increase
military trade between Egypt and other countries in
the region, and to contribute to regional security and
stability. The AIO, however, has done little to foster
greater military cooperation among Arab League
members or to increase arms production by any of
them, especially since Saudi Arabia blocked its con-
tributions to the AIO after Egypt signed the Camp
David accords.
Arab countries depend almost exclusively on foreign
assistance to produce sophisticated military equip-
ment and parts. Saudi Arabia, Egypt, and Morocco
participate in offset or coproduction agreements with
the United States and West European countries. Such
arrangements allow developing countries to import
military equipment as well as the technology and
training needed to manufacture selected components
of this equipment locally. Saudi Arabia's "Project
Peace Shield, "for example, entails offsets from US
contractors of at least $1.2 billion. Some of the funds
will go toward military applications, such as estab-
lishing a center to maintain and repair aircraft and
projects to make electrical and telecommunications
equipment.
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Figure 2
OECD' Machineryb Exports
0 Italy
. West Germany ? Japan
UK Other OECDs
France
a Except Iceland, New Zealand, Portugal, and Turkey.
b We have used the category machinery to cover the region's imports
of low-technology goods. The category includes all types of
engines, farm equipment, heavy industrial machinery, business
machines and computers, electrical equipment, forklifts, pumps,
scientific instruments, and spare parts for machinery.
? Local manpower has been trained to operate and
maintain most civilian aircraft and to manage the
air traffic control systems used by local airlines, five
of which consistently rank, according to World Air
Transport Statistics, among the world's top 50
airlines in terms of passengers carried, freight tons
carried, and distances flown.
? Saudi Arabia and Kuwait operate complex petro-
chemical projects that contribute significantly to-
government revenues.
? Egypt, whose efforts in research and development
are the strongest in the Arab world, has several
relatively good laboratories devoted to medical and
agricultural research-which the government has
proclaimed "Centers of Excellence." Egypt's depen-
dence on the Nile has also spawned some of the
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Most leaders in the region have tried to win public
support for technological development. In practice,
however, they generally have failed to reach their
modernization goals. The following examples illus-
trate how government officials in the Middle East
and North Africa have tried to set the stage for
technological development:
? Egypt's President Mubarak believes that society's
attitude toward scientific research needs to be
changed and has linked economic growth to keeping
up with technological advances, according to press
reports. During a meeting with several hundred
scientists and engineers in 1987, Mubarak urged
them to continue their efforts to improve the living
standards of Egyptians, according to the US Em-
bassy in Cairo. He stated that he intends to remove
obstacles to scientific research in Egypt and to draw
up a new plan for technological development. M. F.
Abd al-Hady, president of Egypt's Academy for
Scientific Research and Technology, believes that
the new plan will stress the need for closer ties
between Egypt's research and development commu-
nity and industry as well as the need to find new
funding sources for research and development-
such as government agencies and private-sector
companies that derive practical benefits from scien-
tific developments, according to the US Embassy in
Cairo.
"Weakening the universities' scientific dimension is
a mistake ... Our society has not yet paid attention
to science from the viewpoint of Islam ... We
should serve in this arena for the sake of the
revolution and of Islam, for the propagation of
science ... and for the salvation of young people
who have come to learn. " We believe that Hashemi-
Rctfsanjani continues to want to bolster scientific
and technical education to support Iran's economic
and political goals.
? Jordan's Crown Prince Hassan believes that Jordan
must create additional employment opportunities
through developing technology manufacturing-
such as computer software-and regional service
industries. Instead of investing large sums in addi-
tional infrastructure and industrial projects to in-
crease productivity, Hassan prefers to concentrate
on education and training and attracting foreign
investment in technical fields. According to the US
Embassy in Amman, the Crown Prince says that
Jordan looks to Singapore as a model for its
economic development. Jordan also has been influ-
enced in its development effort by British prece-
dents, creating its own Royal Scientific Society.
The Society, however, conducts little scientific re-
search. It focuses mainly on economic and social
issues facing Jordan, consulting with government
ministries and private agencies on planning issues,
and undertaking feasibility studies on development
? According to press reporting, Hashemi-Rafsanjani,
speaker of Iran's parliament, addressed educators
in 1983 on the subject of science and technology:
best water technicians in the world, according to
US Government officials.
? Jordan has introduced computers and data process-
ing tools to its educational system.
projects.
Shortcomings and Failures
Most countries in the region have been unable to
fulfill their technological development goals. They are
in the early stages of industrial development and have
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Figure 5
Middle East and North Africa: Improvements in
Life Expectancy, 1970 and 1986
Algeria 1970a
1986a
Bahrain
Egypt
Iran
I ray
Kuwait
Libya
Oman
Qatar
Saudi Arabia
Tunisia
Israel: The Exception to the Rule
In contrast with other countries in the Middle East
and North Africa, Israel has been successful in
building a technological and industrial base. High-
technology industry makes an important contribution
to Israel's economy, even though many of the coun-
try's high-technology industries are caught in a reces-
sion because of declining exports, scarce domestic
investment funds, and the government's austerity
program.
Israel has long touted the development of a high-
technology industrial base as the long-run panacea
for its foreign payments deficits and stagnant eco-
nomic growth. It has sought to educate a scientifical-
ly and technically skilled workforce to give it the
comparative advantage needed to compete in special-
ized high-technology overseas markets. Israel has
eight academic centers that churn out a steady
stream of graduates to fill scientific and technical
vacancies. Emphasizing the important role the profes-
sional work force plays in high-technology develop-
ment, nine of every 1,000 workers employed in manu-
facturing are engineers or scientists, according to the
Israeli press. Among the industrialized countries,
only Japan exceeds this ratio.
0.5 percent in Latin America, 1.2 percent in Asia, 2.5
percent in the United States and Japan, and 3 percent
in Israel.
done little to stimulate innovation or invention. De-
spite government declarations encouraging the indige-
nous development of technology, most governments
have failed to provide sufficient financing-the most
critical measure of potential technological develop-
ment-especially during periods of shrinking re-
sources. According to UNESCO statistics, Arab
states spend only an average of about 0.3 percent of
GNP on research and development as compared to an
average of 0.4 percent in non-Arab African countries,
Another measure of potential technological develop-
ment is the proportion of scientists and engineers in
the population. According to UNESCO statistics and
our own estimates, Arab countries have about 250
scientists and engineers per million people, compared
to about 100 per million in non-Arab African states,
300 per million in Latin America, about 350 per
million in Asia, almost 3,000 per million in the United
States, and over 5,000 per million in the Soviet Union.
Arab researchers are concentrated in the agricultural
and biological sciences.
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Industry provides almost no support for research and
development in most countries in the Middle East and
North Africa-a contrast to the pattern in most
industrialized nations with free market economies. In
Arab countries, universities dominate research and
development. Egypt's universities, for example, spon-
sor between 70 and 90 percent of Egypt's research
and development, according to US Embassy officials
in Cairo. This leads to an emphasis on esoteric
research and gives short shrift to practical applica-
tions of technology. According to US Embassy offi-
cials, when area governments have become involved in
research, they have spent resources predominantly on
low-grade, trial-and-error types of technical experi-
ments that produce marginal economic and scientific
results. Very little applied research is performed.
Technologically advanced "white elephants" are com-
mon throughout the area. They result from poor
planning and a failure to adapt technology to local
conditions. According to US Embassy officials, na-
tional pride gets in the way of eliminating wasteful
projects. Examples include:
? A chemical fertilizer plant in Egypt that is so
inefficient that it would cost less to shut the plant
down and continue paying employees' salaries than
to keep the plant operating.
? A phosphoric acid plant in Morocco that produces
far below capacity and does not have enough quali-
fied foremen and middle-level managers.
? A multimillion-dollar subway system that Egypt is
building in downtown Cairo to alleviate traffic
problems, but which probably will deposit thousands
more people into an already congested urban center.
? Jordan and Saudi Arabia use advanced agricultural
techniques to produce food crops but at the cost of
gross economic inefficiencies. For example, Jordan
has used hydroponic technology to grow $40 water-
melons, according to a contractor study.
Governments in the region frequently import technol-
ogy from the West without transferring or developing
the know-how to re-create the technologies them-
selves. Several countries in the region have established
turnkey plants, in which construction typically is
guided by a foreign company and few local people are
trained to run the plant once it is completed. Exam-
ples of such turnkey projects include:
? The Shubra electricity plant in Egypt.
? Some oil refineries and petrochemical plants in
Saudi Arabia and the smaller Gulf states.
? Water desalination plants throughout the region.
We believe that turnkey plants often represent hollow
advances because they bypass key intermediate tech-
nical stages and do not alleviate surplus labor prob-
lems. According to some development planners, the
construction of turnkey industrial plants is more akin
to conspicuous consumption than to investment in
productive capacity.
The Middle Eastern and North African states have
become dependent on industrialized nations to provide
spare parts-for instance, printed circuit boards, di-
odes, and resistors-for their technologies. Some
countries, such as Iran, Iraq, and Syria, are having
problems acquiring spare parts for their newly ac-
quired technologies because of reduced revenues and
trade restrictions.
even if firms acquire all the spare parts they
need, it is difficult for some technologies-such as
telecommunications equipment-to be utilized suc-
cessfully because of the harsh climate, with the
prolonged exposure of equipment to dust, sand, and
heat.
Agricultural development has not progressed as rapid-
ly in the Middle East and North Africa as it has in
other parts of the less developed world. Despite the
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An examination of the Egyptian textile industry
provides examples of the range of industrial develop-
ment in the Middle East and North Africa. Most
firms are technologically underdeveloped, have poor
managers, and lose money year after year. A few are
well run and are equipped with the most modern
equipment available.
A typical textile firm in Egypt has poor working
conditions, according to the US Embassy in Cairo.
Spinning and weaving equipment is outmoded, the
floors are coated with thread and pieces offabric, and
the walls are covered with dirt. Children, some of
them apparently under the legal working age of 12,
gather pieces of fabric from the floor. Management
complains about the low productivity of textile work-
ers. Most workers moonlight at several other jobs in
order to supplement their incomes. One manager has
advertised for textile engineers for weeks at a time
without receiving any inquiries. Part of the problem is
low wages. A beginning engineer at the firm earns
only about $115 per month. Most university engineer-
ing graduates would rather try to work abroad than
accept a job at that salary.
Some companies, however, achieve rare successes. A
textile firm located in Alexandria bases its success on
high-quality management techniques and automated
is incentive pay for quality and productivity, as well
influx of large amounts of capital into the region over
the past decade, area countries have shown limited
ability to develop and sustain effective and profitable
agricultural systems.' Food imports have increased
rapidly throughout the region, rising in value by about
as management concern for the well-being of workers.
Thefirm's management claims that the average wage
at the company is $430 per month-a high wage for a
factory worker, by Egyptian standards. Working con-
ditions are good. Shop .floors are clean; machinery is
well maintained; and the company maintains a club
that is open to workers as well as management and
provides an outdoor park for the use of workers and
their families.
650 percent between 1973 and 1985-from about $4
billion to just under $30 billion, according to academ-
ic research and the US Department of Agriculture.
The region's food production has not kept up with its
rapid population growth. In Libya, for example, food
production in 1985 increased 31 percent over the
average for the period 1976-78, according to US
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Figure 6
Food Imports as a Share of Total
Consumption in Selected Countries, 1986
Kuwait
UAE
Saudi Arabia
Iraq
Egypt
Algeria
Libya
Mauritania
Department of Agriculture data, but the population
increased by 42 percent. Overall, per capita Middle
Eastern and North African food production in 1985
was 96 percent of the level for 1976-78 , according to
US Department of Agriculture data.
The selection, adaptation, and diffusion of up-to-date
technology are key elements in stimulating economic
growth. But the nations of the Middle East and North
Africa must overcome a number of obstacles before
technology can be effectively used.
Culture
We believe that cultural factors play a major role in
inhibiting popular acceptance of technology in North
Africa and the Middle East-particularly among the
rural and lower classes, which perceive inherent con-
flicts between technology and traditional values and
practices. The more traditional segments of the
region's societies usually consider basic skills, hard
work, and self-reliance to be the only necessary tools
for everyday life. Modern gadgets and innovations
generally are viewed as unreliable and confusing or as
attempts by the West to gain influence and control
over the region. Moreover, creativity and indepen-
dence are generally regarded as negative traits in
most Middle Eastern societies, and the high value
placed on conformity almost certainly has an adverse
impact on technological development. In many in-
stances, traditional populations have to be convinced
of the usefulness of technology before they will even
experiment with it:
? An American academic believes that many Arabs
do not accept technology as important because they
either derive little direct benefit from it or do not
understand its application.
? According to a contractor study, most societies in
the region are fundamentally tribal in structure and
inclination and resist absorbing modern concepts of
organization and technical operations.
The widespread aversion among the native popula-
tions of Saudi Arabia and the other wealthy Arab
states of the Persian Gulf to performing technical
work also inhibits technological development. The
rapid economic development of these oil-rich states
over the past 30 years, coupled with this aversion, has
been responsible for the mass import of foreign work-
ers to perform jobs that require semiskilled or skilled
labor. Gulf Arab governments have faced serious
problems encouraging their young people to pursue
technical and vocational training that requires hands-
on work. Virtually no middle-class parents want their
children to perform what they regard as menial labor.
Technical education carries the stigma of being the
last resort of those who are academically less astute.
The shortage of Middle Eastern and North African
nationals with technical skills is compounded by
cultural prohibitions-and government restrictions in
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Figure 7
Literacy Rates in the Middle East and North Africa, Newly Industrialized
Countries, and Developed Nations, Selected Countries, 1986
Algeria
Bahrain
Egypt
Iran
Iraq
Jordan
Kuwait
Lebanon
Libya
Mauritania
Morocco
Oman
Qatar
Saudi Arabia
Sudan
Tunisia
UAE
North Yemen
South Yemen
Newly Industrialized Countries
Argentina
Brazil
Chile
Ilong Kong
Mexico
Singapore
South Korea
France
Japan
UK
US
Saudi Arabia, the smaller Gulf states, and Iran-on
women's participation in the labor force. Women in
Iraq, Lebanon, and Morocco have the greatest free-
dom to work, but only about 15 to 20 percent of
working-age females in these countries participate in
the work force.' We believe the inclusion of more
women in the work force would improve productivity,
especially because women would be more willing than
men to remain in their home country after graduation
from college, according to a contractor study. A
larger number of Middle Eastern and North African
women are seeking entry into the labor force than a
decade ago, according to a contractor study. The
Saudi Government is allowing limited female employ-
ment in new fields, such as computer operations and
programing. Isolated successes in allowing women to
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I 3ecrer
participate more actively in the labor force probably
will continue, but we doubt that Saudi leaders will
permit a widespread challenge to traditional cultural
values by allowing large numbers of women to enter
the work force in the foreseeable future.
Education
For the most part, Middle Eastern and North African
educational systems have not adequately prepared
their populations to absorb modern technologies. Lit-
eracy rates range from 15 percent in North Yemen to
75 percent in Lebanon, compared to 75 to 94 percent
in newly industrialized countries such as Argentina
and South Korea, according to CIA statistics. Litera-
cy among women and the poor averages less than 15
percent
Only half of the children in the region
between the ages of five and 15 attend school. School
enrollment reaches about 90 percent in the cities but
often does not exceed 15 percent in rural areas,
Some improvements in the region's educational sys-
tems have enhanced economic potential. Many more
elementary and secondary schools have been built
within the last decade, and university enrollments are
doubling about every five years. A widening gap,
however, has developed over the last decade between
the relatively uneducated and the highly educated,
leaving a relatively small pool of people able or
inclined to take positions in the broad middle range of
technical and administrative jobs. By the end of the
1970s, expatriates occupied about 90 percent of these
middle-level positions in Saudi Arabia and the smaller
Gulf states
Many of these positions remained unfilled in other
numbers of skilled workers to the Gulf.
Governments in the region have tried to promote
technical or vocational education in order to adapt to
the demands of imported technology. Several coun-
tries have updated their university systems to offer
more courses in engineering and medical sciences.
Others offer scholarships abroad to study technical
subjects unavailable at home. Some Jordanian schools
have introduced children to various types of machin-
ery and mechanical devices, teaching them assembly
procedures. In the wealthier Gulf states schools intro-
duce computers at an early age. Governments
throughout the region are trying to counsel good
students to go into nontraditional fields to acquire
"industrial" skills (electrical engineering, machine
repair) and "management" skills (bookkeeping, coin-
munications).
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Despite these attempts at improvement, many em-
ployers believe that current educational standards are
woefully inadequate and they choose to retrain the
graduates they hire, according to business journals. In
some cases, the educational systems are little more
than outmoded extensions of those of the former
colonial powers and sustain curriculums largely irrele-
vent to current social and economic demands: 25X1
i
i
i
l
h
il
eav
y on rote memor
za-
? Un
vers
ty systems re
y
tion and parroting knowledge during examinations.
? Many students in Jordan complain that by gradua-
tion they have not become good beginning engineers
or computer programers but have learned only how
to pass examinations.
? Syrian high schools and universities offer only ele-
mentary courses in specialized areas such as elec-
tronics and computers.
? Many students with an aptitude for science choose
other fields because of limited opportunities for
hands-on experience and the lack of qualified staffs
in technical schools.
The higher cost of technical institutes has slowed
efforts to expand enrollment in them. Per-student
costs in vocational and technical schools are 1.5 times
greater than in general schools, according to a con-
tractor study. Most graduates are prepared to operate
only outdated machines because schools cannot afford
new equipment. The contractor reports that students
in computer science at Damascus University must
make do with a purely theoretical education because
they never see a computer.
Language barriers also hamper technical education.
We do not believe that critical subjects such as
telecommunications, information technology, medi-
cine, and computer technology can be taught ade-
quately in the universities unless more literature
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Figure 8. Several expensive
technical institutes have been
built throughout the region
Figure 9. Often, however, the
equipment used in workshops is
outdated, and the schools have
difficulty attracting talented
appears in Arabic or unless more students and profes-
sors use English in the classroom. Universities in
Egypt, Libya, Morocco, and the Gulf restrict class-
room use of English-the language in which most
scientific textbooks are written-in order to limit
Western influences.
Although governments in the region have increased
their attention to technical and vocational training,
many young people still lack interest in these career
options. less
than 30 percent of university students in the Middle
East and North Africa major in scientific fields. Even
technical school graduates are not committed to the
idea of performing skilled labor as a career. Some
students say that it is "something one does while
waiting to see if something better comes along,"
We believe that there is a growing public opposition to
government policies emphasizing technical education
in several countries. Elite groups in Jordan attacked
such an educational emphasis, according to a contrac-
tor study. Students in several countries-particularly
Jordan, Saudi Arabia, Kuwait, and the United Arab
Emirates-continue to resist pursuing technical
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A recent survey of Jordanian technical school gradu-
ates and employers-conducted for the World
Bank-indicates the low esteem with which such
graduates view themselves, the inappropriate work
attitudes they bring to the job, and the inadequacies
of the training they received:
? Seventy-five percent of technical school graduates
aspire to a university-level liberal arts education
and view their present circumstances as temporary.
? Only 20 percent of the graduates want to achieve a
high degree of competency in their chosen vocation-
al or technical education field.
? Over 60 percent of the graduates indicate that their
education did not sufficiently prepare them for their
first job.
? Eighty percent of the graduates had only average or
below-average scholastic performance. (Trainees
can drop out of the program by themselves but are
never failed because of inadequate performance.)
? Two-thirds of the employers of graduates note that
technical schools are not imparting responsible
attitudes toward work or high skill standards to
their students.
careers and believe that a university degree will
provide entry into a white-collar job even if such jobs
are becoming difficult to secure.
Islamic Fundamentalism
In our judgment, most Islamic fundamentalists
throughout the Middle East and North Africa believe
that Western technology-which is often accompa-
nied by unwanted cultural and social innovations-
undermines Islamic religious and cultural values.
According to a contractor study, some fundamental-
ists criticize modernization because it is based on
secular scientific knowledge rather than on religious
canon. Others denounce what they perceive as the
moral decay caused by modernization and believe that
the economy suffers because Muslims imitate un-
Islamic Western models. They demand that the gov-
ernment abandon Western-style education in favor of
traditional Islamic instruction, with its emphasis on
religious education. So far, public protest against
imported industrial technology has been rare. Funda-
mentalists have focused more on trying to ban other
Western introductions, such as video clubs and
movies.
We believe that a few fundamentalists-those who
have had more exposure to the benefits of moderniza-
tion and technology, and who are located mostly in
Iran-do not share the view that most Western
advances must be rejected. They believe that some
modern elements-such as Western medical technol-
ogy, computers, and communications systems--can
be incorporated into society without disturbing
Muslim values. They believe that importing technol-
ogy is acceptable if Islamic values are upheld.
The introduction of technology into Kuwait over the
last decade has spawned conflicting attitudes, accord-
ing to a public opinion poll administered by the US
Information Agency in 1986. Three-quarters of the
respondents-especially young, educated males-be-
lieve that Kuwait needs all the modern technology it is
getting and that more technology brings a better
quality of life. At the same time, however, many
Kuwaitis hold negative views of the influence of 25X1
Western popular culture, which they associate with
modernization. Over 70 percent of the respondents
view Western music and videotapes as morally cor-
rupt rather than reflecting a better standard of living.
Older and less-educated respondents were most con-
cerned about Western influences.
Brain Drain
We believe that the lack of incentives for scientists 25X1
and engineers to remain in their own countries will
continue to impede the development of science and
technology in the Middle East and North Africa.
Countries in the region annually lose hundreds of
talented youths-most of whom have gone abroad for
technical education-mainly to the United States and
Western Europe. An expert on the brain drain phe-
nomenon estimates that over 250,000 Arab profes-
sionals live in the United States, Europe, and Latin
America because of poor salaries and living condi-
tions, political discontent, or lack of job opportunities
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at home. Many professionals in fields such as medi-
cine, engineering, or teaching also have emigrated,
mainly to the richer Arab oil states
? Iran continues to send students abroad to study but
would like to reduce the flow in order to have more
control over the Islamic aspects of their education,
according to Iranian press reports. Iran's President
Ali Khamenei has suggested publicly that Iran
invite foreign professors to teach science and other
subjects to offset the domestic shortage of university
educators and to stem the emigration of talented
students.
? The Syrian Government has attempted to combat
the brain drain by demanding that graduates who
have been financed by the state work in Syria for
several years after graduation or repay their loans
and grants. Iraq has followed a similar policy.
? Sudan would like to send more agricultural special-
ists to the United States for advanced training,
according to US State Department officials, but it
almost certainly will lose more skilled workers if it
pursues this policy.
? According to the US Embassies in Cairo and Am-
man, Egyptian and Jordanian officials support a
limited brain drain because it serves as a safety
valve for domestic unemployment and underemploy-
ment, and it brings in remittances-an important
source of foreign exchange for both countries.
Military Siphon
The military sector particularly in Egypt, Iran, Iraq,
Libya, Saudi Arabia, and Syria-absorbs the most
experienced technical manpower and has seriously
curbed the ability of the civilian economy to meet
production targets. Although there are not enough
qualified nationals to maintain and operate sophisti-
cated military equipment in some instances, the quali-
ty of most armed forces personnel pilots, engineers,
electronic technicians-generally is better than that
found in the civilian population, according to a con-
tractor study. The military services in Syria and
Saudi Arabia, for instance, attract better personnel by
maintaining their own technical training facilities and
by providing salaries and other incentives that surpass
those at civilian institutions, according to a contractor
study. This disparity contributes to the shortage of
competent technical manpower in civilian sectors such
as industry, construction, telecommunications, and
transportation.
Competing Demands for Scarce Financial Resources
The regional decline in real economic activity of 2
percent in 1985 and 4 to 5 percent in 1986 reduced
the abilities of countries in the area to maintain plans
for acquisition and development of technology. Some
budget items have suffered, even though most Middle
Eastern and North African states have continued to
allocate resources for health care, sanitation, commu-
nications, public transportation, and housing. Several
governments in the Gulf states, for example, have
postponed or scrapped projects to construct schools
and training centers. Iran has reduced the number
and amount of educational scholarships for study
abroad because of the recession and budget cuts.
Economic reforms such as privatization and diversifi-
cation are foundering because businessmen and gov-
ernments do not have sufficient capital to promote
new projects.
Burgeoning populations are straining government wel-
fare systems and forcing leaders to pay more attention
to social services and consumer subsidies that can
have an immediate impact on political and social
stability. As a result, long-term stability could be
jeopardized if funds for modernization plans and
technology imports fall lower on the list of priorities.
Syria, Jordan, and the Gulf states face some of the
most serious limitations to technological advancement
because of high population growth. Although some
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Figure 10
Middle East and North Africa: Economic Indicators, 1982-87
Real GDP Growth Foreign Exchange
Rate a Reserves b
Percent Billion US $
11
1
Note: Data for 1986 and 1987 are projected.
a Weighted average, estimated.
b Estimated.
Current Account Budget Deficitb
Balances b
Billion US $
25
shortsighted Egyptian officials suggest that "excess
labor can work in agriculture," US Embassy officials
in Cairo believe that population growth is one of
Egypt's most pressing problems.
Low Wages
Besides the lack of prestige associated with working in
technical and vocational fields, workers are disen-
chanted because wages and working conditions do not
meet expectations. Government development policies
are inconsistent because they support salary and wage
practices that do not correspond to what the govern-
ment recognizes as critical shortages in technical
manpower. Many unproductive administrators with
college educations or nondegree entrepreneurs with
small shops make better livings than skilled industrial
workers. Some firms in Egypt are having trouble
attracting engineers because wages are too low, ac-
cording to US Embassy reporting.
We believe that modernization policies in the Middle
East and North Africa will continue to suffer unless
area governments restructure wage scales or allow
free-market forces to work to reward technical skills.
In some cases, even this approach may not be success-
ful. The Jordanian Government's attempts to restruc-
ture wages have not corrected structural problems in
the labor market. Jordanians seem to be indifferent to
the new higher wage levels for skilled and semiskilled
work, according to a contractor study.
Impact of Technology on Labor Markets
There is a downside to promoting a more efficient
infrastructure using capital-intensive and labor-saving
technology. Fewer workers are required, but they
must be more highly skilled. Most countries in the
region already have serious difficulty in trying to
lower unemployment, raise worker productivity, and
train their work forces adequately.
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There is a serious shortage of qualified nationals at
the middle and lower levels of industry in most area
countries. Most civil service trainees are inadequately
prepared to use advanced technology and methods in
key areas such as accounting, statistics, communica-
tions, and computer operations. According to the
World Bank and the ministries of labor throughout
the region, there are severe shortages of managers,
engineers, doctors, and computer programers and
there are large surpluses of graduates in fields such as
Arabic language and literature, sociology, and law.
We believe that chronic, structural unemployment is a
growing problem in most countries-except for tech-
nical jobs, where employment opportunities are abun-
dant-and could contribute to political unrest. Urban
unemployment is compounded as many rural residents
move to the cities, hoping for higher wages and a
more rewarding life. Where capital-intensive and
labor-saving technology is successfully introduced, we
believe that unemployment problems could become
more severe. In many cases, management is proud of
its new Western equipment and does not appear
concerned that the introduction of more capital-
intensive machinery has spawned an attrition policy of
not hiring new employees to replace those who retire
or quit. We believe-on the basis of interviews of
officials in the US Embassies in Jordan, Egypt, and
Unemployment Among Nationals, Percent
and Population Growth in Selected
Countries, 1986
Unemployment Annual Population
Growth
Algeria 30 a
Egypt 10
Jordan
3
30 a
a Includes underemployment. People eligible to work are considered
underemployed if, for example, they do not have full-time jobs or if
they do nonessential jobs or services (for example, selling gum on
the street, washing windows of cars stopped in busy traffic).
Morocco-that the work forces in several increasingly
capital-intensive industries such as textiles, petro-
chemicals, and telecommunications have been de-
creasing steadily over the last two to three years.
Many university-educated Egyptians, especially those
without the personal connections so often needed to
find a job in Egypt, either cannot find jobs in their
field or take blue-collar jobs that pay more, such as
driving taxis. Urban unemployment is growing as
large public-sector plants reduce their work forces,
and we believe the private sector will not be able to
create jobs fast enough to keep pace with the expand-
ing work force.
Although much of the Jordanian population is well
educated and supports government efforts to modern-
ize and provide technical jobs, some lesser educated
Jordanians fear that technological advances will elim-
inate their jobs,
Where positions have become obsolete follow-
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equipment, displaced Jordanians frequently have been
kept on the payroll and assigned other duties, such as
security. Broad government modernization plans call
for retraining displaced employees to operate new
equipment, but no programs have been established so
far,
In the long run we expect that modernization will
proceed slowly in the Middle East and North Africa
because of cultural and economic constraints that are
difficult to surmount. We believe that the general
population in the region will continue to be ill pre-
pared to handle the technology that the public and
private sectors plan to acquire over the next decade.
Area governments probably will establish more tech-
nical schools and training centers in order to try to
fulfill modernization plans, but persistent negative
attitudes toward technical education will work against
the success of these plans.
Technology acquisition and development almost cer-
tainly will not push economic development forward in
the Middle East and North Africa in the way that it
has in newly industrialized countries such as Brazil
and Hong Kong, because natural resources other than
oil are limited and labor force deficiencies will take
decades to correct. We believe that area countries will
be unable to compete successfully in most commercial
technology markets because of their delayed start,
expensive production factors, and the difficulty of
breaking into markets where trade ties are well
established. We believe advanced Western technol-
ogies such as automation, biotechnology, genetic engi-
neering, information and computer sciences, and ro-
botics will have little immediate relevance to countries
in the region.
The poorest countries-Lebanon, Mauritania, North
Yemen, South Yemen, and Sudan-have the least
chance for technological development. Saudi Arabia
and Kuwait, on the other hand, are in a good position
to achieve technical advances because of their greater
financial and hydrocarbon resources. These richer
countries probably will continue to advance in areas
such as petrochemicals and oil refining. We believe
that Iraq and Iran will have moderate chances for
industrializing when the war ends because of their
significant natural resource bases and large popula-
tions. Egypt and Jordan have good chances to achieve
isolated technical successes in fields such as agricul-
ture and water management because of their relative-
ly strong educational systems.
Islamic fundamentalism will complicate regional
modernization plans. We believe that the conflict
between modernization and Islamic fundamentalism
will be most acute in states-such as Saudi Arabia
and the United Arab Emirates-that have been iso-
lated from Western influences and whose wealth has
sparked rapid expansion of technological develop-
ment. Despite concern for the growing political power
of fundamentalism, governments in the region will
continue to acquire Western technology that helps
improve the standard of living while attempting to
limit the penetration of Western cultural values. Most
government leaders probably are prepared to risk the
fundamentalists' ire by continuing to turn to Western
nations to provide support in meeting critical needs in
such areas as health care, sanitation, communications,
public transportation, and housing construction.
Modernization and the Oil Market
We believe that the region's short-term outlook for
technological development depends to a large extent
upon oil prices, which are likely to average between
$15 and $18 per barrel over the next two years. With
these prices, the entire region probably will achieve
growth in real GDP of about 2 percent in 1987. Area
governments probably will press ahead with their
modernization plans, resuming some programs that
they were forced to cut over the last five years.
In the unlikely event that the OPEC price and
production agreement collapses, a prolonged recession
and increased unemployment would result. Although
most area governments would try to avoid severe
austerity measures by drawing down their foreign
exchange reserves or increasing foreign borrowing,
some technological development programs-for ex-
ample, computer training and agricultural research-
almost certainly would suffer.
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Figure 12
Meeting Selected Requirements for Potential Industrialization
0 Very high Low
wr High Very low
Medium
Middle East and Algeria
North Africa Bahrain
Egypt
Iran
Iraq
Jordan
Kuwait
Lebanon
Libya
Mauritania
Morocco
North Yemen
Oman
Qatar
Saudi Arabia
South Yemen
Sudan
Syria
Tunisia
UAE
Newly industrialized Brazil
countries Taiwan
Industrialized United States
countries Japan
d Includes health care, agricultural improvements, schools, etc.,
to help foster a strong work force.
b Country can take advantage of natural and human resources to
finance and provide inputs for industrialization.
c Not the sum of the previous three columns; other factors also
affect the ability to produce a broad range of products and services
for consumption and export.
d If war ends.
C Actual industrialization.
Resources and Diverse Potential
c
revenue industrial industrialization
generation b infrastructure
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We believe a few governments in the region-particu-
larly the Gulf states and Egypt-will continue to
promote competition and privatization to boost eco-
nomic growth. Uncertainty about the outlook for the
economy and oil revenues, however, will discourage
most private domestic investment in technology.
Modernization and Indigenization
Gulf state leaders probably will promote technological
development and economic modernization more than
indigenization of the labor force, despite their fears of
the threat to social and political stability posed by
large numbers of foreign workers. Saudi Arabia and
the smaller Gulf states will continue to depend heavily
on expatriates-particularly in critical technical areas
such as computers, electronics, petrochemical produc-
tion, and telecommunications. Generally, the more
sophisticated the technology, the greater will be the
dependence on foreign labor.
Indigenization remains a goal, but we believe the Gulf
states will continue to employ expatriates at rates near
recent levels unless their economies worsen substan-
tially. Labor offices in Saudi Arabia issued more than
500,000 work permits to foreigners during 1986, and
the country continues to import labor at a steady rate,
according to press reports. We believe that indigeniza-
tion will progress least in areas requiring technical
and skilled manpower.
According to a contractor study, Saudi Arabia's
economy may be destined to contract for its future,
with entire segments the permanent preserves of
foreign workers and Saudi nationals presiding over
all. We believe that Gulf modernization will depend
heavily upon the abilities of Saudi Arabia and the
smaller Gulf states to attract large numbers of expa-
triate workers. Under this scenario, modernization in
the labor-exporting countries of the Middle East and
North Africa probably will lag because many trained
workers will have left for higher paying jobs in the
Gulf.
industrialized nations-particularly Japan, France,
West Germany, and the United Kingdom-to provide
technical equipment and to promote educational and
scientific development. Japan probably will be the
most important competitor of the United States as a
supplier of technology because of its active marketing
campaigns in the region. In addition, many Japanese
technological goods probably are less expensive than
their US counterparts. We expect that Japan will
sponsor technical exchanges-including sending tech-
nical specialists to the Middle East and inviting
engineers to Japan-and give aid for research and
development. The Middle Eastern and North African
states will depend less on Soviet and East European
equipment and assistance, which is cheaper but less
reliablel
We believe area countries will shift their imports from
finished goods toward capital equipment, support 25X1
systems, and technical services. The region will wel-
come foreign investment and technology imports in
areas such as security systems, military goods, water
resource management, arid land agriculture, geologi-
cal studies, coastal development, and nonconventional
energy sources. According to US Embassy reporting,
the United States can be most useful if it focuses on
programs to increase agricultural production and if it
invests in private-sector initiatives for industrial devel-
opment.
We expect that several countries in the region will
approach the United States to develop joint projects in
order to assure continued access to technical exper-
tise. Egypt would like to train more technicians and
production managers in the United States-particu-
larly as Egyptians engage in more industrial ventures
with the United States. Oman has requested US
assistance to tap underground water resources.
We believe that opportunities for US investors and
technology equipment exporters will decline if the
recession in the Middle East and North Africa contin-
ues. Nevertheless, area countries almost certainly will
request the United States to disseminate more techno-
logical knowledge and to relax restrictions on patent
agreements. US technology exports to the region have
Even though the oil boom is over, we believe that the
Middle Eastern and North African countries will
continue to depend on the United States and other
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not grown as rapidly as those of its competitors over
the last decade because of increased trade restrictions
on items such as computers and military equipment,
according to a contractor study. The Europeans and
Japanese have been far more willing to make such
technology available to the Middle East and North
Africa. We believe that Iran, Libya, and Syria will
continue to try to acquire US technology which is
not legally available to them because of US trade
sanctions or bans on technology transfer-through
third parties such as France, Switzerland, and
Kuwait.
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Appendix
Selected Technology Interests and
Acquisitions in the Middle East
and North Africa'
Algeria
? Acquired computerized equipment and technical
assistance for oil refining industry.
? Is cooperating in research, manufacturing, and op-
eration of satellite communications with India.
Iran
? Seeks computer spare parts-memory boards, print-
ed circuit boards, diodes, and resistors-for main-
frames in government ministries and provincial
computer centers.
Bahrain
? Plans to establish a computer network for govern-
ment ministries.
Egypt
? Has nuclear research center; interested in using
radioactive isotopes in scientific and medical re-
search. United States has provided 40 to 50 techni-
cians to help with cooperative program in nuclear
science.
Iraq
? Is cooperating with West Germany to establish
photovoltaic energy plant.
? Acquired battery charge production technology
from West Germany.
? Government officials recently advocated that more
government agencies and private companies fund
scientific research, that the government emphasize
adapting imported technologies to local capabilities,
and that laboratories conduct more research to
detect new and endemic diseases in Egypt.
? Approached Israel to learn latest irrigation
techniques.
? Plans to encourage more scientists and engineers to
work in areas such as energy and improvement of oil
products, environmental protection, agricultural
cultivation, and building materials.
' These items illustrate the range of technology items that Middle
Eastern and North African states have acquired or are trying to
obtain. We cannot determine with great precision who runs this
equipment, but we believe that indigenous personnel operate most
technical equipment in nonoil states after an initial phase where
foreign supervision is required. Foreign workers probably operate
most technical equipment in Saudi Arabia and the smaller Gulf
Jordan
? Encourages US companies to share technology in
order to make potash industry more efficient.
? Wants to explore alternative sources of energy and
to devise new technological methods for saving
existing energy.
? Seeks to improve irrigation methods.
Kuwait
? Ministry of Interior keeps track of Kuwaitis and
large expatriate population by using computers to
monitor arrivals and departures at airport and land
borders.
? Has sought assistance from Denmark to construct
iron and steel foundry.
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Morocco
? King Hassan has developed a strong personal inter-
est in computers
North Yemen
? Is developing oil sector with assistance from US
firms.
? Plans to have science and technology exchanges
with Pakistan.
Oman
? Sultan Qaboos hopes US assistance and technology
can help to locate new sources of water, hydrocar-
bons, and minerals.
Syria
? Has purchased turnkey communications and micro-
electronics plants from the United Kingdom.
? Has sought assistance from France to train techni-
cians to operate telephone systems.
? Is constructing sewerage treatment plants but has
asked West German firms to supply and install
electrical and mechanical equipment and to train
personnel.
? Uses advanced surface geochemical techniques for
petroleum exploration.
Qatar
? Has sought economists and administrators from
Turkey, Egypt, and Pakistan to work in the oil
sector in order to help market oil products.
Saudi Arabia
? Is acquiring computers to communicate flight infor-
mation to defense and civil aviation officials, to
modernize government ministries, and to enable
Ministry of Interior to track nationals, expatriates,
and Hajj pilgrims.
United Arab Emirates
? Telecommunications firm has purchased transport-
able satellite earth stations from the United States,
which have been mounted on small trucks and are
now part of a government communications system.
? Abu Dhabi National Oil Company has acquired a
US "supercomputer" for oilfield reservoir engineer-
ing and management.
? Saudi firms seek distribution rights to market Japa-
nese and Taiwanese computers and printers in
Middle East.
? Depends on several US firms for machine tools-
including drill presses, flanging machines, armature
lathes, break drum lathes, and metalworking lathes.
Sudan
? Seeks aid from United States, Saudi Arabia, and
Japan to help develop manpower training programs,
modernize the public and private sectors, and spon-
sor development projects-such as hospitals, irriga-
tion systems, and an electric power program.
25X1
Sanitized Copy Approved for Release 2011/06/08: CIA-RDP88T00096R000700840001-3
 Sanitized Copy Approved for Release 2011/06/08: CIA-RDP88T00096R000700840001-3
Secret
Secret
Sanitized Copy Approved for Release 2011/06/08: CIA-RDP88T00096R000700840001-3