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How the wars of MENA are hitting growth and jobs

War-affected children in Syria aided by Al Madad charity. Photo: Al Madad Foundation
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War-affected children in Syria aided by Al Madad charity. Photo: Al Madad Foundation

Ongoing conflict in the Middle East and North Africa region “is costing” Arab economies around $1 trillion, Thomson Reuters quoted in Alzawya said 7 July 2015.

“Arab economies have lost more than US$ 1 trillion since Islamic State declared its caliphate in Iraq and Syria a year ago, with the Sunni Muslim militant group managing in that time to take control of a third of Iraq and more than half of all Syrian territory, according to figures compiled by TR Zawya,” the website said, in reference to Daesh, the self-styled Islamic State of Iraq and the Levant, ISIL, also known as ISIS.

Iraq and Syria have borne the brunt of “direct war costs,” but Islamic State fighters and supporters have also carried out attacks in Tunisia, Kuwait, Saudi Arabia, Egypt, Libya and Yemen, “dampening investor confidence and undermining economic activity in several countries,” the report said.

In addition, cross-border trade and investment in the region has been stifled, the influx of refugees has strained resources in several countries and military spending in several Gulf Arab states, including Saudi Arabia, Qatar and the United Arab Emirates, has surged at a time when state revenues have been hit by weaker crude oil prices, added the report.

Although timely and detailed in its reportage, the Thomson Reuters article tells only a part of the whole story. Further analysis by The Middle East in Europe suggests the war costs are probably much higher, deeper and more widespread and not all are being reported. Major sovereign fund depletions across the board in the oil exporting states of MENA were noted recently by J P Morgan and other authoritative economic research analysts. The money being spent by Saudi Arabia, the United Arab Emirates, Oman and Qatar already exceeds $109 billion according to calculations started in 2014 and now generally attributed to The International Institute for Strategic Studies (IISS), London. A large part of this money may have been diverted from sovereign funds meant for those countries’ development programmes and preparations for sustained growth for future generations when oil and gas run out.

Joblessness is already a major blight on the economies of oil-exporting countries in the MENA region, seen as a potential flashpoint in some of the affected societies. Some of the well-heeled MENA families, ie not those fleeing conflict, are setting up alternative homes in Europe, investing in real estate or starting new businesses as a hedge against political stability beyond the zones of conflict in MENA.

Also adding to the costs and challenging any reliable estimates of current spending is the Arab coalition’s continuing attacks on Yemen. Presented in the news media as air strikes against “Shi’ite Muslim rebels” the war on Yemen is causing a humanitarian crisis of enormous proportions, as reported by Amnesty International.

 

Author: Editor

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