Washington, D.C. – The following statement was prepared for delivery by U.S. Rep. Eliot L. Engel, the top Democrat on the House Foreign Affairs Committee, at Tuesday's committee hearing, "The Call for Economic Liberty in the Arab World."

The statement follows:

Chairman Royce, I want to thank you for calling this important hearing. Mr DeSoto, I am intrigued by your thesis and look forward to hearing your testimony. Secretary Albright, as someone who served this country with great wisdom and courage during a time of great political and economic transformation around the world, you offer unique insight into how the U.S. can best respond to the challenges we face in the Middle East today.

Over the past three years, this Committee has spent much time examining and debating various U.S. policy responses to the Arab Spring. And while it is critical that our Committee continue discussing discrete issues such as support for the Syrian opposition, the rise of political Islam in Egypt, and instability in Yemen, we would be particularly remiss if we did not also focus on understanding the root causes of ongoing political upheaval throughout the region.

That upheaval is often traced to a fateful act of self-immolation by Mohammed Bouazizi, a young Tunisian street vendor, after his produce cart was confiscated for his failure to pay a bribe to a local official. This young man’s horrific death by his own hand seemingly encapsulated the frustrations of an entire generation of Tunisian and Arab youths fed up with corrupt and oppressive regimes.

Corruption, cronyism, and lack of mobility for the poor are endemic throughout the region. And this economic discrimination is often exhibited in forms far more pernicious than the confiscation of a vending cart. For example, Cairo is replete with shanty-town neighborhoods in which most residents do not even hold formal title to their homes. Even pro-regime Syrians often privately acknowledged, prior to the rebellion, that the economy was run primarily to benefit the Assad family and its cronies. And in Yemen, economic decisions have long been based on regional and tribal loyalties. Indeed, lack of economic – and political -- freedom has been a common denominator of much of the region, and we’ve seen its explosive implications over the past two-plus years.

The United States has not been blind to the economic dimension of the Arab Spring. In fact, the President’s budget request both this year and last contained a proposal to create a Middle East North Africa Incentive Fund, which would inaugurate a new paradigm for foreign assistance in the region.

Modeled on the Millennium Challenge Corporation, which has been quite successful in encouraging partner governments to pursue policies that promote economic growth, the MENA Incentive Fund has been described by the Administration as a tool to challenge and hold governments accountable for their economic policies. This would be a dramatic departure from the manner in which much, if not most, of our assistance is provided to the region -- that is, largely determined by strategic considerations alone and all too often regarded by recipient governments as an entitlement. The Fund would also give the State Department more flexibility, pending Congressional oversight, to direct funds to wherever breaking events determine they are needed most.

While I have many questions about the Fund’s details, and some concerns about the broad authorities requested by the Administration for the program, I am glad that at least some policy-makers at the State Department are thinking big. And I’m hopeful that this year Congress will pass this Fund into law in an appropriate form.

After the fall of the Berlin Wall, Congress reacted by passing the Freedom Support Act, and several years later, the Support for Eastern European Democracies Act. We gave the State Department and USAID the resources and authority to promote democratic and free market transitions in former Communist states. Now the same must be done for the Middle East, where the Arab Spring presents arguably the largest regional political transformation – and the largest political challenge -- since the end of the Cold War.

If we are serious about promoting political and economic liberty in the region, then our foreign assistance programs in the region can’t be run on autopilot. Tackling the roots of the Arab Spring will require a radical rethink of how we operate in the region. The Middle East North Africa Incentive Fund is one aspect of this rethinking process, though surely it isn’t the last word. In undertaking this rethinking process, we must accept that it is indeed a process. There are no certainties, but given the stakes – will yet another generation of Arab youth be alienated and led into unproductive and often destructive activity? – I believe we have no choice but to be fully engaged.

I do want to make one additional point, and I direct it mainly to Dr. de Soto. I am skeptical that lack of economic liberty was the main cause of the Arab Spring – and I am convinced that it is not the only cause. Many other, greatly inter-related factors were at play, including ossified regimes, the youth bulge, religion, and – never to be underestimated – the simple yearning for freedom, even by those who understand its practical application imperfectly. That said, I am eager to listen to your message – and to Secretary Albright’s – with an open mind. I hope the two of you can provide insights into the roots of this transition in the Middle East, as well as recommendations for how the U.S. can best respond to the many challenges this ongoing, turbulent transition poses.

Mr. Chairman, thank you again for holding this hearing.