In an interview with His Excellency Dr. Ali Mohammed Al-Khouri, Advisor to the Council of Arab Economic Unity and Chairman of the Arab Federation for Digital Economy, to “Erem News” newspaper:
Q: How do you view the reality of the digital economy in the Arab world today? Are we heading in the right direction?
I believe the digital economy in the Arab world is witnessing tangible development, but it varies from country to country. Many Arab governments have adopted ambitious digital transformation strategies and launched initiatives in the areas of e-government and digital commerce, which has led to significant growth in e-services and technology startups.
For example, the Gulf countries have made significant progress in digital infrastructure and adopted national plans to support the foundations of the knowledge economy. The Arab Digital Economy Index report shows that the digital economy could reach approximately 15% of Arab countries’ GDP by 2030, equivalent to approximately $900 billion, highlighting the magnitude of the economic opportunity.
However, the digital divide persists, with some lower-income or conflict-affected Arab countries lagging behind. Overall, the current trend is positive and on the right track, with a growing recognition of the importance of the digital economy and its inclusion among development priorities. However, there remains a pressing need to accelerate implementation in a more integrated and comprehensive manner, as well as to invest continuously and systematically in digital infrastructure, develop digital skills, and adopt an integrated regional system to ensure that all Arab countries benefit from this transformation.
Q: What are the most prominent challenges facing Arab countries in digital transformation, particularly in terms of legislation and infrastructure?
Despite progress in digital transformation projects, Arab countries face a number of structural and legislative challenges. The most prominent of these challenges include:
- Deficiencies in digital legislation and policies: Many countries lack updated legal frameworks that comprehensively regulate the digital economy, whether in relation to e-commerce, data protection, or cybersecurity. This legislative shortcoming means that digital transformation sometimes occurs in a legal vacuum or under outdated, inappropriate laws.
- Lack of digital talent and skills: The skills gap also stands out, as Arab markets suffer from a shortage of IT, AI, and data analytics specialists, making it difficult for both the public and private sectors to keep pace with the digital transformation.
- Weak digital infrastructure in some countries: Access to high-speed internet and modern communication services remains uneven across the region. Many countries suffer from a lack of broadband networks and uneven deployment of 5G technologies, hindering the expansion and spread of digital services.
- Technical costs and weak investment: Modern digital infrastructure and innovative and emerging technologies require huge investments. Countries with limited resources may struggle to bear the costs of comprehensive digital transformation, and the return on investment requires a long-term vision that may conflict with other more pressing development priorities.
To address these challenges, Arab countries must update their legislation to keep pace with rapid technological developments—such as enacting national laws for data protection and digital transactions—and allocate sufficient budgets for developing digital infrastructure, especially in areas far from urban centers. Furthermore, investment in education and training is essential to bridge the skills gap, as well as enhancing cooperation among Arab countries to exchange expertise and establish unified regulatory standards that support the establishment of a common Arab digital market.
Q: What role can big data and artificial intelligence play in supporting economic and social development? Big data and artificial intelligence play a fundamental role in transforming economic and social development. By analyzing massive amounts of data, governments and businesses can make evidence-based decisions, contributing to improving service efficiency and performance quality, reducing costs, and allocating financial resources and investments to priority areas.
For example, many Arab countries, most notably the UAE and Saudi Arabia, have begun employing artificial intelligence systems to analyze demographic and economic data, with the goal of improving the accuracy of development planning and enhancing the efficiency of services.
It’s also important to note the extent to which artificial intelligence (AI) can contribute to increasing productivity across various sectors. In agriculture, it can be used to improve crops by analyzing weather and soil patterns. In the healthcare sector, it can diagnose diseases early and improve patient care. In education, it can support smart learning that adapts to students’ abilities.
Economically, AI is a driver of innovation and a tool for creating quality job opportunities in new fields. According to reports from the Arab Federation for Digital Economy, AI is estimated to contribute more than $300 billion to the gross domestic product of Arab countries over the current decade, half of which will be allocated to Gulf countries, which have begun boldly investing in AI projects. This includes the UAE’s experience in establishing a dedicated AI data center in Abu Dhabi, the largest of its kind outside the United States.
In addition, data-driven technologies and artificial intelligence provide solutions to social challenges such as improving traffic safety through intelligent transportation systems, and addressing health crises through predictive models and the spread of diseases and epidemics.
In short, big data and artificial intelligence have become the new fuel for the global economy and enable sustainable development, provided there is an appropriate digital infrastructure and legislation that guarantees data privacy and ethical use.
Q: How do you view the relationship between national security and the digital economy? Are there threats that require new strategies? The digital economy has become a fundamental pillar of national security in the modern era. With countries increasingly relying on technology to manage vital infrastructure (such as energy, water, transportation, and the financial sector), securing cyberspace has become a pivotal part of securing the national system as a whole. Any disruption or cyberattack on systems such as banks or electricity grids could paralyze the economy and threaten the stability of the state. Hence, the relationship between national security and the digital economy is complementary; the expansion of the digital economy requires a stable and secure cyberspace, while this same expansion may lead to increased exposure to new cyber threats that require more advanced and proactive defense strategies.
There are indeed escalating digital threats that require new strategies. Prominent among these threats are sophisticated cyberattacks carried out by outlaws or even state-sponsored actors, which leverage artificial intelligence and modern technologies to penetrate electronic systems.
Recently, risks related to data sovereignty and privacy have emerged. The digital transformation has generated a massive amount of sensitive data, and the exploitation of this data or its falling into the wrong hands poses a security risk.
Also, the Arab digital economy relies heavily on imported technologies and global infrastructure (such as foreign cloud computing systems), which opens the possibility of exposure to external pressure points or embedded malware.
Global losses from cyber threats reached approximately $9.5 trillion in 2024 and are expected to rise to more than $10.5 trillion annually by 2025. In the Arab world, the number of successful cyberattacks doubled in a single year (2023–2024), with the energy, critical infrastructure, and government sectors being the most targeted, particularly in the Gulf. According to reports, the average financial damage from attacks in the Middle East is approximately twice the global average, due to the concentrated and sophisticated nature of attacks in the region.
In light of these realities, countries are currently formulating strategic responses, such as establishing specialized cybersecurity bodies at the national level, developing policy frameworks to protect critical infrastructure, and developing information-sharing systems among security agencies to proactively confront cyberattacks.
The bottom line is that digital economy security has become an urgent necessity and a key component of the national security system. This requires new strategies that include updating legislation, training specialized personnel, investing in advanced insurance solutions, and a new level of international and regional cooperation to mitigate cross-border risks.
Q: As the head of the Arab Federation for Digital Economy, what are the most prominent initiatives you are currently working on to support Arab economies? At the Arab Federation for Digital Economy, we focus on supporting comprehensive Arab strategic initiatives aimed at enabling Arab economies to seize the opportunities of the digital economy and build a connected, developmental future. Among the most prominent projects we are working on:
- Arab Digital Economy Vision 2030: This vision was developed in partnership with international institutions such as Harvard University, the United Nations, and the World Bank, with the participation of more than 120 global experts. It was adopted by Arab leaders in 2022. We are currently updating and implementing the vision to encompass all dimensions of the Arab digital transformation. It will include detailed plans to support digital integration among Arab countries and enhance the competitiveness of the digital economy regionally and globally. The goal of this vision is to build interconnected and more sustainable digital economies through the unification of technical standards and the development of shared infrastructure.
- Launching joint initiatives and projects: The Union is working on several applied projects that serve the Arab digital transformation, such as the Arab e-learning and training platform “Masarat,” to develop young digital talent, and the Arab Food Platform to digitize agricultural supply chains and support food security using modern technology. The Union also supports digital innovation incubators in various countries to encourage entrepreneurs and startups in advanced technology fields.
- Arab Digital Economy Index: The Union has developed a biennial index to measure digital performance in Arab countries. This index aims to identify each country’s strengths and weaknesses and encourage decision-makers to adopt appropriate policies. This index provides objective data to help guide investments and reforms in the most needed digital areas.
- International Partnerships and Investments: We recognize the importance of openness to the experiences and expertise of developed countries. Therefore, we recently entered into a strategic partnership with China in the field of the digital economy, with the aim of transferring technology and knowledge and attracting Chinese investments to support Arab digital infrastructure and projects. We are also exploring expanding partnerships with international organizations and global companies to form an international support network for the Arab digital economy.
- Hosting forums and capacity-building programs: The Union is a key partner in organizing international conferences in collaboration with the public and private sectors. It has successfully organized more than 27 international conferences in the past five years, attracting nearly 260,000 participants from 190 countries. It also organizes workshops and training courses to help Arab governments formulate effective digital policies and share best practices.
In short, the Union’s efforts focus on empowering Arab countries digitally by developing a unified vision and implementing practical initiatives covering policy, legislation, infrastructure, building qualified human capital, and attracting investments. This will ensure that our entry into the digital economy era will be a driving force for comprehensive development in the Arab world.
Do you have any estimates of the economic gains that Arab countries have achieved or may achieve due to the digital transformation?
Digital transformation holds tremendous economic potential for Arab countries. Studies by the Arab Federation for Digital Economy indicate that the digital economy currently contributes approximately 4% of the Arab region’s GDP, and this contribution is expected to rise to 15% by 2030, equivalent to $900 billion.
At the infrastructure level, analysis shows that a 10% increase in broadband penetration would lead to a 0.71% growth in per capita GDP in Arab countries. Taking into account the population of the Arab region (456 million), this translates into an annual contribution of approximately $24 billion to the regional economy.
The e-commerce sector is considered a promising sector, with its value exceeding $76 billion in the Gulf Cooperation Council (GCC) countries, while its size in the Middle East and Africa region has reached approximately $135 billion, with expectations that its value will double to $264 billion by 2029. Furthermore, digital transformation strategies in the region will support further improvements in the efficiency of government services and reduction of spending, as in the UAE Blockchain Strategy, for example, which aims to save approximately $3 billion annually.
What are the opportunities that can be reaped from establishing a common Arab digital market?
Establishing a common Arab digital market opens up broad prospects for economic growth and integration and addresses many of the challenges facing previous integration attempts, particularly given the low levels of intra-Arab trade, which currently do not exceed 10% compared to 66% in the European Union.
Shared digital platforms can stimulate trade and incentivize Arab producers, particularly in the agricultural and industrial sectors, increasing their ability to reach millions of Arab consumers. Open competition on these platforms will also lead to lower prices and reduced inflation rates due to reduced operating costs.
Joint digital platforms will stimulate trade and increase the popularity of Arab products, particularly in the agricultural and industrial sectors, and encourage producers and manufacturers to expand their production and reach millions of consumers in the region.
Open competition across these platforms will also lower commodity prices and inflation rates, due to lower operating and capital costs. The common market will support business growth and business-to-business (B2B) trade, improve supply chain efficiency, and enhance the integration of economic sectors. The expansion of e-commerce and digital services will lead to the creation of new job opportunities in emerging fields such as technical support, digital marketing, data analysis, and logistics.
On the other hand, technological solutions enable overcoming bureaucratic obstacles that have hindered the implementation of the Arab Free Trade Agreement for decades, such as the electronic issuance of certificates of origin and transparent product tracking.
There is a real opportunity for a common Arab digital market, and our expectations indicate that it could attract significant investments from Arab investment funds and businessmen. This market could provide an attractive environment for repatriating a significant portion of Arab capital currently invested outside the region, estimated at more than $1.5 trillion. The presence of large-scale common Arab digital platforms, with easy access to millions of Arab consumers, could encourage investors to direct their investments toward this promising market, which would directly support regional economic development.
What percentage of Arab youth are digitally qualified today compared to the needs of the digital labor market? Are there studies or data to support this?
Arab youth represent the primary driver of digital transformation, but there is a clear gap between their digital skills and the changing demands of the labor market.
While the percentage of young people in the Arab region who possess digital skills ranges between 40% and 50%, more than 35% of them lack the advanced digital skills required by the labor market in modern technology sectors.
What’s worrying is that by 2040, approximately 127 million young Arabs will enter the labor market, and it will be essential to equip them with skills that keep pace with rapid developments in the fields of artificial intelligence, health technology, and climate technology.
This problem is exacerbated by the weakness of current education systems, as educational curricula remain inadequately aligned with the demands of future jobs. This is evident in the high unemployment rates among Arab university graduates today, reaching approximately 40%, while the youth unemployment rate in the region as a whole exceeds 24%, double the global average.
In general, there is a shortage of technical specializations, with the percentage of graduates in IT-related specializations not exceeding 13%. This poses a significant challenge in light of the growing demand for these specializations in the job market.
Q: Based on your argument in your book “The Global Economy in the Shadow of Drugs,” published last year, how do you estimate the economic losses countries incur as a result of drug trafficking and abuse, particularly in the Arab world?
This study revealed alarming and staggering figures regarding the scale of the parallel drug economy and its negative repercussions. Globally, the illicit drug trade is estimated to generate more than $320 billion annually, making it one of the largest criminal industries in the world.
These massive revenues come at the expense of economic losses incurred by countries and societies that are several times greater when indirect damages are taken into account. The spread of drugs imposes enormous financial burdens on governments through healthcare and addiction treatment costs, massive spending on security agencies and prisons, and lost productivity due to the exclusion of a segment of the workforce, particularly young people, from economic activity.
For example, international studies estimate that the cost of drug abuse to some advanced economies is equivalent to about 0.5% of GDP or more, and even higher in severe drug crises, such as the opioid crisis, which recently cost the US economy about 3-4% of GDP.
If we shift our focus to the Arab world, we find that although the losses are less quantitative than those in some Western countries with high consumption, they have a significant relative impact on the region’s economies. Arab countries bear the burden of combating international smuggling networks operating across borders, exploiting the unrest in some countries. They also bear the cost of treating and rehabilitating drug users in healthcare systems already suffering from multiple pressures. Added to this is the long-term impact of drugs in dismantling the social fabric, weakening national productivity, and hindering human and economic development efforts.
Today, in our region, we see evidence of rampant drug trafficking, such as Captagon, which has become a source of funding for criminal groups and is causing security tensions in some countries. Experts estimate this trade to be worth billions of dollars annually in the Middle East. These illicit funds mean wasted resources that could have been directed to investment in education, infrastructure, and development projects.
Hence, it can be said that the drug scourge imposes complex losses, including direct losses in the form of wasted spending and resources, and indirect losses in the form of weakening human capital and undermining the social stability necessary for sustainable economic growth.
| Key findings of the drug study prepared by the Arab Federation for Digital Economy:Drug trafficking fuels violence, corruption, and instability around the world.
The global economic damage of addiction exceeds half a trillion dollars annually. 260 million internet users participate in illegal drug transactions. 15% of drug trafficking is done online. 152 million young people aged 18-25 use drugs. 50% of teens are more likely to use drugs when exposed to videos on YouTube or Instagram. 300 million users worldwide More than 70 million new users last year alone. 105 million women use drugs Drug addiction cases have increased, with the widespread use of opioids in the medical industry. · The widespread use of synthetic drugs under names such as energy, focus, and happiness pills! More than a billion people suffer from mental disorders, most of which are due to addiction. The illicit drug trade funds 20% of armed conflicts in the world. |
Q: In your opinion, what are the most prominent challenges facing Arab policies in dealing with the drug scourge?
There are complex and intertwined challenges facing policymakers in the Arab world when addressing the drug phenomenon, the most important of which are:
- The multidimensional nature of the problem: Drugs are no longer merely a separate criminal or health issue; rather, they are a crisis that affects social security and economic stability, as the study indicated. This nature requires a greater awareness among public policymakers that we are dealing with a complex problem with security, health, and economic aspects combined. This is sometimes absent in traditional perceptions that limit combating the problem to the policing or enforcement aspect.
- Limited regional and international coordination: Drug trafficking is inherently cross-border, and smuggling networks exploit any gap between countries. The Arab world faces a challenge in coordinating its security and intelligence efforts to pursue these networks. Despite the existence of bodies such as the Council of Arab Interior Ministers concerned with security cooperation, the practical implementation of information exchange and joint operations still needs to be developed and intensified.
- Corruption and money laundering: A major challenge is that drug trafficking often thrives on corruption and weak financial oversight. Drug traffickers may be able to exploit banking systems and shell companies to launder their profits, and weak legislation or enforcement creates an environment conducive to the growth of this criminal economy. Addressing this challenge requires high levels of transparency and accountability within institutions.
- Lack of treatment and rehabilitation programs: Many policies prioritize punishment and incarceration, while the region as a whole faces a lack of infrastructure for addiction treatment and the reintegration of recovering addicts into society. The social stigma associated with addiction makes it even more difficult, as addicts or their families hesitate to seek help. The absence of comprehensive treatment programs turns the drug problem into a vicious cycle.
- Turbulent geopolitical situations: Some Arab countries are experiencing conflict or instability (such as Syria and parts of North Africa). These conditions provide fertile ground for drug gangs, both as producers and traffickers. Arab policies face the challenge of dealing with drug sources coming from these conflict zones, over which governments may not have full control. The spread of drugs in displacement and refugee areas also poses a particular challenge, requiring both humanitarian and security cooperation.
- Youth and Unemployment: The Arab population is predominantly young, and unfortunately, drug networks target this age group, sometimes exploiting leisure time and unemployment. The challenge facing policymakers is to protect youth through awareness, education, and job opportunities. Without addressing internal demand factors, the threat of drug use will persist, regardless of the success of security campaigns in controlling supply.
These challenges, in general, require a comprehensive vision for policy-making. Isolated security or health-related solutions cannot be sufficient. Rather, all national efforts (educational, health, awareness-raising, developmental, and economic) must be integrated under a single strategic framework to combat drugs.
Q: What are the most important recommendations or solutions you have proposed to address this growing threat?
The study recommended a set of integrated solutions to combat the drug scourge more effectively and sustainably. The most prominent of these recommendations are:
- Adopting a comprehensive treatment and preventive approach , meaning a shift from reactive to proactive policies, is essential. The recommendation here is to develop modern treatment and rehabilitation programs based on a more accurate understanding of the cultural and social aspects of Arab societies. This may include increasing the number of treatment centers and improving their quality, and integrating mental health services and community support programs. Care, treatment, and prescription services must also be redesigned to ensure an effective treatment system that supports recovery and prevents medication abuse. On the preventive side, we recommend sustained awareness campaigns targeting youth, particularly those on the dangers of drugs, using modern communication methods and content that aligns with their culture and interests.
- Develop legislation and law enforcement policies to strictly control trafficking networks and dealers. It is essential to close legal loopholes that drug traffickers may exploit, whether by increasing penalties for trafficking crimes or updating laws to keep pace with new types of synthetic drugs. At the same time, it is essential to distinguish between drug users who are victims of addiction and drug dealers in legal treatment, so that users are directed to treatment centers instead of prison whenever possible. Restorative justice in this area is more effective and efficient than traditional punitive policies. Therefore, national policies and systems must also be updated to change the perception of drug use as a healthy behavior requiring treatment, not mere punishment.
- Combating corruption and money laundering . The study recommended intensifying efforts to track illicit funds generated by drug trafficking, developing the capabilities of financial investigation units, and tracking suspicious cross-border financial flows. It also emphasized the importance of holding accountable anyone complicit in facilitating the work of smuggling networks, given that integrity and transparency in official institutions constitute the fundamental pillar in combating these criminal networks.
- Investing in technology and scientific research. Focus on further investment in the use of digital technology to enhance the efficiency of law enforcement agencies and treatment centers, enhancing their ability to effectively combat the phenomenon. The study also called for supporting research centers to study the drug phenomenon and its causes, and to guide public policies based on the results of these studies.
- International and Regional Cooperation: Isolated solutions will not bear fruit in the face of transcontinental international networks. Therefore, the study called for activating channels of security cooperation and information exchange between Arab countries, on the one hand, and with specialized international organizations such as the United Nations Office on Drugs and Crime (UNODC) and Interpol, on the other. Recommendations included the establishment of joint regional task forces targeting major smuggling gangs and the unification of counterterrorism strategies in accordance with international best practices.
- Addressing the social and economic roots of the problem: The recommendations emphasized that the war on drugs cannot be won solely through security confrontations, but also by drying up the social resources that feed the phenomenon. The study similarly recommended development policies that reduce unemployment and poverty—two fertile environments for the spread of drugs—by creating job opportunities for young people and rehabilitating those who have slipped into addiction so they can become productive individuals. The study also suggested integrating drug control into private sector social responsibility programs and encouraging community initiatives, such as youth centers and sports and cultural activities, that would occupy young people’s time and keep them away from the clutches of drugs.
In general, the proposed solutions focused on balancing treatment and deterrence mechanisms, engaging local actors at the national level and international cooperation, and innovating new approaches rather than relying solely on traditional methods. The goal is to adopt a more comprehensive and effective approach that will make our Arab societies more capable of confronting this growing threat and preserving their human and economic resources.
Q: How can Arab and international cooperation be enhanced to curb the spread of drugs and ensure sustainable development?
Arab and international cooperation is a pivotal and indispensable element in confronting the drug crisis, given the transnational nature of this scourge and the intertwining of its impacts with development paths. To enhance this cooperation, I propose several basic steps:
First, building on the Unified Arab Strategy for Combating Drugs (2023–2028), launched by the League of Arab States in cooperation with the United Nations Office on Drugs and Crime, by developing practical implementation mechanisms. This strategy could establish Arab coordination centers to exchange intelligence on smuggling networks and their routes, bridging the gaps that gangs may exploit between countries. It could also unify local legal frameworks as much as possible. It is also important to periodically evaluate the effectiveness of this strategy and continuously develop it in line with developments and challenges posed by the changing and evolving methods of drug networks.
Second, expand international security and judicial cooperation agreements . On the broader international level, partnerships with international bodies such as the United Nations Office on Drugs and Crime should be intensified to support border control programs and exchange technical expertise in drug detection. Technical and logistical support from developed countries will be valuable, both in training our personnel and in providing advanced surveillance and detection technology. It is also important to actively participate in global and regional initiatives (such as Operation Safe Corridors and others) to control drug smuggling by land and sea.
Third, focus on sustainable development as a preventative line of defense. Drug control cannot be separated from the sustainable development agenda. The proliferation of drugs undermines the achievement of development goals in health, education, and the economy. Therefore, drug control policies must be integrated into national and regional development plans. For example, regional indicators should include efforts to reduce drug use and expand treatment for all. Donor countries and international institutions can also link aid and development programs in areas affected by drug cultivation or trafficking with initiatives to create economic alternatives for communities there, so that drugs no longer remain a means of livelihood and a source of income.
Fourth, establishing the principle of “shared and balanced responsibility” in the global fight against drugs. This means that major drug-consuming countries have a responsibility to support countries combating trafficking and production on their territory. In turn, producing or transiting countries need to cooperate in curbing the supply. Through this shared responsibility, a balance can be achieved that ensures equitable burden-sharing, so that no country is left alone to confront powerful networks funded by billions of dollars. In the Arab context, enhancing cooperation with regional neighbors such as Iran, Turkey, and Africa is also essential for the success of any national efforts, given that smuggling routes and risks are intertwined with this broader geography.
Ensuring sustainable development in the Arab world is closely linked to our ability to combat the scourge of drugs and curb its spread. The health of society and its productive capacity are key factors in achieving economic and social development. Therefore, investing in Arab and international cooperation to combat drugs is, in essence, a strategic investment for the future, security, and stability of our societies and the entire world.
Note: The full interview content was published on the Union’s website.
To view what was published by Erem News: : Electronic link
