Middle East. The New Mail, May 21st. MIDDLE EASTERN CONFLICTS : WHAT ARE THE ECONOMIC AFTEREFFECT ? It’s obvious that war causes great human suffering and bears lasting damage to the economy and infrastructure of a country. But what is the exact extent of these consequences?
One can get an idea by quantifying welfare gains with populations affected by conflict have benefited in the absence of war.
It is precisely this work that has harnessed the latest edition of the quarterly bulletin of economic information in the MENA region (the Middle East and North Africa region): This report analyzes the impact of current conflicts in the Middle East and North Africa on the physical and human capital, wondering what would the economic fate of countries at peace.
The wars currently prevalent in Iraq, Libya, Syria and Yemen directly affect some 87 million people, about a third of the population of the MENA region. The fighting that raged in these four countries are affecting all aspects of life: housing, health, education, work, food, water supply …
The figures are alarming: about 13.5 million people need humanitarian assistance in Syria, Yemen 21.1 million, 2.4 million and 8.2 million in Libya and Iraq.
Five years ago, everyone hoped that the new governments in the region would work in favor of a more equitable and inclusive growth, by stimulating the creation of jobs for many unemployed youth. But the opposite happened: according to estimates, across the region, lost production (unrealized growth) due to the Syrian crisis stood at $ 35 billion, measured in 2007 prices, equivalent to the Syria of GDP in 2007.
The wars in the MENA region also have repercussions in neighboring countries. Thus, Turkey, Lebanon, Jordan and Egypt, already economically very affected, are facing huge budget problems. The World Bank estimates that more than 630 000 Syrian refugees flooding into Jordan are costing the country more than $ 2.5 billion per year, or 6% of GDP and a quarter of its annual revenue.
The war in Syria not only harms boxes neighboring states, but also their people: it is estimated that the average per capita income is lower today by 1.5% to the level it would have achieved without the Syrian conflict Turkey, Egypt and Jordan, and 1.1% in Lebanon.
The unemployment rate remains high among the Syrian refugees, particularly for women, and, when there is work, pay is low. Some 92% of Syrian refugees in Lebanon have no employment contract, and more than half are paid weekly or daily. The war has displaced half of the Syrian population (over 12 million) both in the country and towards foreign countries. The total number of displaced persons inside Iraq and Yemen reached 6.5 million; Libya, about 435 000 people were displaced, including 300 000 children.
Lebanon and Turkey, farmers and traders benefit from a foreign labor cheap, but local workers suffer. In addition, Lebanon has had to accommodate more than one million Syrian refugees, which offset the gains resulting from lower oil prices. According to estimates of the World Bank, the annual growth of real GDP was packed by 2.9 percentage points between 2012 and 2014, boosting to 170,000 the number of poor Lebanese and doubling the national unemployment rate which is now greater than 20%.
Is it still possible to remedy the economic effects of the wars in the MENA region?
The end of these conflicts would improve local macroeconomic indicators, and if government revenues were not devoted to military spending, but to education and health, social indicators would rise too. However, the pace of recovery is dictated by the commodity sector. The Lebanese economy took two decades to recover from the war, Kuwait only seven, and Iraq one year. Oil economies are recovering more quickly because it is relatively easy to restart oil production. But if oil remains cheap and modest international aid, recovery will be more difficult for Libya, Syria, Iraq and Yemen, all oil countries. It will require private investment.
“If we consider that these wars and conflicts have replaced the Arab Spring – which in part represents the aspiration of the citizens of the Arab world to promote the strengthening of democracy in society,” says Shanta Devarajan, chief economist of the Bank World’s Middle East and North Africa, “we can ask ourselves this question: assuming that there is peace, citizens seeking to promote democracy, they manage to achieve, what will then economic growth? What is the ‘democratic dividend’? “The democratization results in a higher GDP per capita, mainly by supporting everything a country ravaged by war needs to raise: investments, education, economic reforms and access to public goods. In the long term (thirty years), compared to non-democratic countries, the level of GDP per capita will be higher by about 20% in democratic countries. If the countries of the MENA region had democratized in 2015, growth of GDP per capita could reach 7.8% in five years, against 3.3% in the absence of transition to democracy.
One of the examples to follow : The Kurdish people
“The Iraqi Kurdistan is an example of what communities can do together, how they can live together. France is committed to this diversity, this plurality of the Middle East where Christians live alongside Muslims, alongside other faiths “said the president Francois Hollande visiting Erbil, capital of Iraqi Kurdistan, then as fighting raged between Kurdish fighters and the Islamic State (ISIS), in Mosul Kurdistan.
Kurds now appear as a perfect contrast to Islamist fighters « ISIS » terrorizing the world.
Since the prime minister Nechervan Barzani negotiations with Turkey , great strides are initiated.
The question of a nation-state for the Kurds split between Turkey, Iraq, Syria and Iran seemed stalled, buried with the promises made after the fall of the Ottoman Empire. Yet the role of the Kurds in the conflict against the ISIS now gives them a unique opportunity to bring to the front of the stage their identity characteristics and their political demands.
The New Mail, Written by Laaroussi Riad & Piccitto Maxime aka The Frenchies™