To understand the most pressing crisis facing the future of the Middle East, place a job advertisement in a local newspaper. In Tehran, an ad seeking a clerk for a Western company prompted more than 1,000 applications. Included among them: a PhD in economics, a medical doctor, dozens of software engineers and hundreds of Iran's top university graduates. In Cairo, a senior accountant told me he was shocked at the highly educated who applied for a low-level position with his company.

All across the region, high unemployment, widespread underemployment, and an overwhelmingly young population are putting tremendous pressure on strained labor markets. With more than half of Arabs and Iranians under the age of 21 and two-thirds under 30, the region will need to create 100 million jobs by the year 2020 just to keep up with rising demand. The normally understated World Bank describes the situation as "the most intense pressure on labor markets observed anywhere in the world in the post-World War II period."

With few exceptions, the region is plagued by corrupt, state-dominated economies, excessive regulation and bureaucracy, and poorly constructed legal and regulatory frameworks that hinder private sector development, foreign direct investment, and job creation. The 280 million people of the 22 Arab countries combined have a gross domestic product less than that of Spain; 25 percent of Arabs live below the poverty line; foreign direct investment rose everywhere last year, except the Middle East; total nonfossil fuel exports from the entire region amount to less than the total exports of Finland; the Arab world has witnessed a near zero percent growth rate over the past 30 years, while all other developing countries grew at 2.5 percent per annum.

The result? Distressed populations who consistently rank jobs and financial concerns among their top concerns, and a younger generation susceptible to the simplistic exhortations of antidemocratic radical Islamists.

As Washington and Brussels contemplate Middle East democratization, no issue will be more important than economic development. Widespread unemployment is an enormous human tragedy and a destabilizing social force, but it is also the largest obstacle to democratization. The transition to democracy is more feasible and sustainable when a country has a vibrant middle-class, a healthy employment market, a dynamic and independent entrepreneurial community, and vigorous economic development.

So, what is to be done? Group of Eight leaders have thus far come up with small-scale initiatives but a far more ambitious effort, backed by the resources of the international community and the wealthier Arab states, will be required. Right now, we have a partial plan. What we need is a Marshall plan.

The G-8 and the international community should consider a bigger idea: the establishment of a well-endowed Middle East regional development bank modeled on the lines of the European Bank for Reconstruction and Development. The EBRD, created in 1991 to help the former Soviet states develop democracy and market economies, is today the largest source of foreign investment for the 27 states from central Europe to central Asia.

This new Middle East finance bank would lend money on commercial terms, providing much-needed risk capital -- the key ingredient to job-creation and economic growth. Further, it could help attract private capital, including some of the $1.3 trillion in Arab private capital that is currently invested abroad.

A new international finance bank would also become a central knowledge bank, disbursing not just money, but technical assistance and advice to countries interested in embracing reforms.

Good governance and far-sighted leadership is the best development policy, but a well-structured, well-regulated, dynamic development bank could bolster substantially the economic transformation necessary for sustainable democratization in the Middle East.