Gulf wealth: all that glitters is not gold. Little suggests that fabulously wealthy Gulf states and their Middle Eastern and North African beneficiaries have recognized what is perhaps the most important lesson of this year’s popular uprisings in Algeria and Sudan and the 2011 Arab revolts: All that glitters is not gold.
Saudi Arabia, the United Arab Emirates and to a lesser extent Kuwait have in the last decade invested billions of dollars in either reversing or hollowing out the revolts’ achievements in a bid to ensure that political change elsewhere in the region does not come to haunt them.
Qatar, in a counterintuitive strategy that has earned it the ire of the rulers of Saudi Arabia and the UAE, has sought to achieve the same goal by attempting to be on the right side of the region’s forces of change.
The irony is that both approaches, despite also involving huge investments at home in economic diversification, education, and healthcare, could produce the very result Gulf states seek to avoid: a region that has many of the trappings of 21st century knowledge states but that is incapable of catering to the aspirations of a youth bulge expected to annually increase the work force by a million people over the next 12 years.
UNICEF, the United Nations Children’s Fund, concluded earlier this year, that the region’s youth bulge was a double-edged sword. It could either pose a threat to regional stability or be an asset for development.
Turning the youth bulge into an asset “requires urgent and significant investment to create opportunities for meaningful learning, social engagement and work, all of which are currently limited, particularly for young women and the most vulnerable,” the UN agency said in a report entitled MENA (Middle East and North Africa) Generation 2030.
UNICEF arrived at its conclusion even though Gulf states have adopted grandiose plans that envision them becoming within a matter of a decade or two diversified, knowledge-driven economies that enact the social reforms needed to create opportunity for all segments of society.
The group’s conclusion applies as much to the wealthy Gulf states as it does to the Arab beneficiaries of their politically motivated financial largesse.
The problems with the flexing of the Gulf states’ financial muscle as well as the implementation of reform plans are multi-fold.
They relate as much to quality of the upgrading of services such as education as they are about how political intent shapes development efforts and how high domestic debt in countries like Egypt, where 27 percent of government expenditure goes to interest payments, and Lebanon, which spends 38 percent of its budget on debt servicing, benefits Gulf banks and stymies social and economic development.
Credit rating agency Fitch recently downgraded Lebanon’s credit rating to CCC from B- because of “intensifying pressure on Lebanon’s financing model and increasing risks to the government’s debt servicing capacity.”
“In Lebanon, just over 50 percent of the country’s bank assets are held by GCC-related banks, in Palestine this figure is 63 per cent, and in Jordan it is as high as 86 percent,” Mr. Advani wrote in a review of political economist Adam Hanieh’s study of Gulf finance, Money, Markets, and Monarchies.
Mr Hanieh argues that the bulk of the debt payments are to financial establishments whose major shareholders include Gulf institutions in a process in which “the Arab state…increasingly mediates the transfer of national wealth to large Gulf-related banks.”
Mr Advani warned that “indebted governments are compelled to intensify a politics of austerity, further trapping these societies in cycles of debt. Investments in social programs or infrastructural developments are often stalled. Popular movements are unable to realize their demands at the state level due to the requirements of foreign creditors and domestic capitalists. The ensuing scenario is one where alternative politics are asphyxiated and increasingly circumscribed by an atrophied status quo.”
That may well be the purpose of the exercise with economic diversification efforts in the Gulf being driven more by the need of autocracies to upgrade their autocratic style and create opportunity for a restive youth in a bid to ensure regime survival rather than by the acknowledgement of a government’s responsibility to serve the people.
The result is a flawed approach to all aspects of reform.
In Saudi Arabia, Crown Prince Mohammed bin Salman’s Vision 2030 economic and social reform plan that calls for greater private sector involvement has turned into a top down effort that emphasizes state control with the government’s Public Investment Fund (PIF) as the key player.
A combination of depressed oil prices and the recent replacement of energy minister Khalid al-Falih as chairman of the board of Aramco by PIF head Yasir al-Rumayyan, a close associate of Prince Mohammed, raises questions about the state oil company’s positioning in advance of a much-touted initial public offering.
Ellen Wald, an energy analyst and author of a history of Aramco, the kingdom’s main source of revenue, noted that at PIF Mr. Al-Rumayyan had overseen investments more geared towards speculative gains than the sustainable growth of Saudi wealth.
Nonetheless, Ms Wald cautions that Mr Al-Rumayyan’s appointment “doesn’t necessarily bode well for Aramco, which is a different kind of company. It has to make stable decisions for the long term,” she said.
By the same token, UNICEF warned that poverty, violent conflict, restrictive social norms, patriarchy, rights violations and lack of safe spaces for expression and recreation were limiting opportunities as well as civic adolescent and youth engagement.
Gulf emphasis on geopolitical dominance, regime survival and return on financial investment produces short term solutions that often exacerbate conflict, produce little trickle-down effect and few prospects for long-term stability.
“As a result, adolescents and youth in MENA (the Middle East and North Africa) feel disillusioned, with girls and young women, refugees, those with disabilities and the poor being particularly marginalised and underrepresented,” the UNICEF report said.
“Youth unemployment in the region is currently the highest in the world. Education systems are failing to prepare adolescents and youth for the workplace, and markets are not generating urgently needed jobs,” the report warned.
Gulf wealth glitters but if the UNICEF report is anything to go by, it has yet to demonstrate that it can produce the gold of a development that is sustainable and benefits not only all segments of Gulf societies but also of those across the region that have become dependent on it.
Dr James M. Dorsey is a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, an adjunct senior research fellow at the National University of Singapore’s Middle East Institute and co-director of the University of Wuerzburg’s Institute of Fan Culture.
The skills gap poses a genuine threat to economic progress and could leave nations stalled, millions unemployed and prosperity dwindling.
Only one in five working-age women in the Middle East and North Africa (MENA) has a job or is actively looking for one, according to the World Bank and the region has one of the lowest female labour force participation rates in the world.
If the MENA region continues along this trajectory, it could take at least another 150 years to match the current global average for female labour force participation.
Despite good progress in some countries, challenges and inequities persist.
Increasingly, there is a realisation that the levels of female unemployment are not simply a mirror of the business cycle, but a persistent structural issue that has distinct causes and requires specific solutions that cut across socio-economic and education policies.
This not only represents a great loss of human capital, but it also seriously hinders the region’s potential for social and economic development.
Across MENA, restrictive barriers including limited mobility, restrictive laws and closed industries, coupled with long-standing political and social issues, continue to impede women’s access to the labour market.
However, one factor that stands out is that education does not always lead to employment. There is a persistent mismatch between employers and jobseekers – whether in terms of skills, attitudes or expectations.
For example, in Saudi Arabia, female enrolment in tertiary education has doubled in the last decade (68.5% in 2017 compared to 34.2% in 2007), but still only two in ten working-age women participate in the labour force.
In Egypt, unemployment among women with advanced education is almost six times that among those with basic education only, according to World Bank Development Indicators. While in Tunisia, only 41% of women are enrolled in tertiary education and they represent just 26.5% of the total labour force in the country.
This skills gap poses a genuine threat to economic progress and has the potential to leave nations stalled, millions unemployed and prosperity dwindling.
I believe that women can be change-makers for the political, economic and social development of MENA.
However, participation from governments, employers and education providers is needed to bridge the gender gap, increase regional output, and put MENA on a more sustainable and inclusive growth path in the long run.
Companies can do their part by engaging in thoughtful planning, cooperating with others and getting strategic about their staffing practices. This could range from supporting access to soft and technical skills programmes, endorsing philanthropic partnerships, designing policies and spearheading discussions among the education community to pushing inclusive job opportunities.
Over the next decade, it is estimated that 50 million women will come of working age in the region. Therefore, corporations are in a unique position to bring about significant change through empowering a previously untapped human resource.
Despite increased focus and spending over the past decade, MENA governments still have a long road ahead in improving women’s social and political barriers to employment. Without a drastic overhaul of personal development and soft skills programmes, companies will continue to struggle to fill jobs across the region.
The influence and investment of companies is crucial to start to re-shape the position of women across MENA and successfully bring them into the workforce – ultimately shaping a stronger, more inclusive economy.
Carmen Haddad is the Chief Country Officer of Citigroup Saudi Arabia and the Citi Saudi Arabia Business Governance Head. Citi Foundation has partnered with international NGO Education for Employment to tackle the MENA unemployment crisis.
* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Chatham House Reports of one of its Middle East and North Africa Programme elaborates on the still on-going conflict economies of Iraq, Libya, Syria and Yemen. The excerpts of the published Executive Summary reproduced here below do not include its Recommendations for Western policymakers, etc.
The conflicts in Iraq, Libya, Syria and Yemen have killed hundreds of thousands of people and displaced millions. In seeking to explain the violence that has struck the Middle East and North Africa (MENA) over the past two decades, analysis to date has focused predominantly on ideological and identity-based factors. This report expands this discourse by incorporating approaches adopted from the literature on the political economy of war to examine the conflict economies of Iraq, Libya, Syria and Yemen.
motivations, at the individual and group level, are key to understanding
the wars in these countries, yet have tended to be overlooked
in the MENA context. (As the wars have progressed and evolved, the
national and local economies in which conflict is embedded have also changed.)
Such motivations can offer an alternative or complementary
explanation for armed group membership and armed group behaviour. While some
groups will fight to promote or defend a particular identity,
others fight for economic survival or enrichment. For many more actors,
these motivations are tied together, and separating out ‘greed’ and ‘grievance’
is a difficult, if not impossible, task. Even
if economic motivations did not spark the wars in Iraq, Libya, Syria and
Yemen initially, it is clear that such factors now play a critical
role in the persistence of open fighting, localized violence and
objectives of this report are twofold. First, it seeks
to develop a framework for comparative analysis of conflict
economies at the local level in the MENA region. Traditionally, the
idea of a conflict economy has been tightly linked to the
funding for arms, ammunition and fighters. Further, most analyses
of conflict economies are conducted at the national level. Even where
research is conducted on a regional basis, discussion
of the impact of conflict is brought back to the national
level. In contrast, we see a broader political economy
of war at work in the region. Our analysis illustrates how
a conflict economy is embedded within a complex local socio-political
system, in which many variables and agendas interact. We deliberately
avoid characterizing conflict economies in terms of ‘black’ and
‘grey’ markets that somehow need to be ‘cleaned up’, as this
erroneously implies that they can eventually be converted into licit
markets like their peacetime counterparts.2 A more
nuanced and multifaceted reading is essential. For the purposes
of this report, we define a conflict economy
as a system of producing, mobilizing and allocating resources
to sustain competitive and embedded violence, both directly and
we show that a ‘political economy of war’ framing offers new
approaches for reducing competitive and embedded violence. ‘Competitive
violence’ can be defined as violence ‘deployed by warring elites
to contest or defend the existing distribution of power’.4 Fighting
between rival armed groups for control over resources and rents, among other
things, usually falls into this category. ‘Embedded violence’,
in contrast, underpins ‘how a political settlement5 works,
as the deals agreed between elites may revolve around who has the “right”
to use violence’.6 In practice,
this could mean that one group is ‘permitted’ to use violence against
another group – and no punishment will be enforced. In the
context of this study, the use of armed force to assert the
status quo to limit the number of ruling elite members is one
example of embedded violence.
of conflict economies has mostly focused on state-level dynamics.7 However,
less attention has been paid to the development of conflict sub-economies that are specific to certain types of
location. This study demonstrates three distinct types of conflict sub-economy:
(1) capital cities; (2) transit areas and borderlands; and (3) oil-rich areas.
Our analysis highlights how each sub-economy creates distinct location-based
patterns of resource production, mobilization and allocation
to sustain competitive and embedded violence. The rents available
in these areas vary. In capital cities, rents focus on control
of the distribution of revenues and assets from the state and private
sector. In transit areas and borderlands, rents centre around taxation and
arbitrage. In oil-rich areas, rents are related to control
of the area itself (and therefore the ability to levy taxes upon
the oil sector), bearing in mind that the level of achievable
taxation depends on the extent to which a given actor controls
the supply chain.
As this report will elaborate, factors specific to each sub-economy type play a role in conditioning the nature of economic activities in each locality, and in determining whether and by which means violence is dispensed. For this reason, national-level generalizations and in-country comparisons of conflict economies are inadequate: for example, the conflict sub-economy of Baghdad has more in common with that of Tripoli than that of al-Qaim, an Iraqi town on the border with Syria. In turn, the conflict economy observed in al-Qaim has more in common with that of al-Mahra in Yemen than al-Mahra does with Sanaa, the Yemeni capital.
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A new study shows 15m Facebook subscribers in the MENA region; a big increase in Arabic language users. In fact, it was found that not only this platform does help socialise but does also contribute above all to informing on the goings-on in any particular country and/or intercountry affairs.
There are more subscribers to Facebook in the Middle East and North Africa (MENA) than there are copies of newspapers circulated in the region, a new report has said.
The study by Spot On Public Relations said Facebook has more than 15 million users in the region, while the total regional Arabic, English and French newspaper circulation stands at just under 14 million copies.
“Facebook doesn’t write the news, but the new figures show that Facebook’s reach now rivals that of the news press,” said Carrington Malin, managing director of Spot On Public Relations.
“The growth in Arabic language users has been very strong indeed: some 3.5 million Arabic language users began using Facebook during the past year, since the introduction of Arabic support and we can expect millions more Arabic language users to join the platform,” he added.
Five country markets in MENA now account for some 70 percent of Facebook users – Egypt, Morocco, Tunisia, Saudi Arabia and the UAE, the report added.
The study said only 37 percent of Facebook users in the Middle East are female compared with 56 percent in the US and 52 percent in the UK.
Egypt’s 3.5 million Facebook subscribers helped to make North Africa the largest Facebook community in MENA accounting for 7.7 million out of a total of 15 million MENA users.
It added that 33 percent of the UAE’s population uses Facebook and it also now stands as the country’s second most visited website after google.ae, according to websites ranked by Alexa.com.
Some 68 percent of Facebook users in the UAE are over 25 years old, flying in the face of perceptions that social media is a ‘generation Y’ phenomenon.
However, much of Facebook’s growth across the rest of the region has been driven by the under 25s, the report said.
Over 48 percent of Facebook subscribers in Saudi Arabia are under 25 years old, with an equal split between English and Arabic users.
However, about three times the number of Arabic users have joined Facebook in Saudi over the past year, compared with the number of English language users.For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Muscat Daily on June 12, 2019, commented on Oman Fourth Most Peaceful Country in MENA as “Peace in the world’s least peaceful region (MENA) improved marginally last year, based on improvements in 11 countries.” Oman Fourth Most Peaceful Country in MENA is not alone for Qatar, Kuwait and the UAE preceded it in the ranking.
Oman has been ranked fourth among the MENA countries and 69th in the world on the Global Peace Index (GPI) 2019. Oman earned 1.953 points this year.
The report has been published by the Australia-based Institute of Economics and Peace. Iceland remains the most peaceful country in the world, a position it has held since 2008. It is joined at the top by New Zealand, Austria, Portugal, and Denmark.
Bhutan has recorded the best improvement and is now the 15th most peaceful nation in the world. According to the report, Qatar made the next best improvement. Economic strains can increase the risk of unrest by fomenting internal divisions and civil and political unrest, the report stated.
According to the report, Afghanistan is now the least peaceful country in the world, replacing Syria, which is now the second least peaceful. South Sudan, Yemen, and Iraq comprise the remaining five least peaceful countries.
Peace in the world’s least peaceful region (MENA) improved marginally last year, based on improvements in 11 countries. The regional average improved in all three GPI domains in 2019, with reductions in population displacement, political terror, terrorism, deaths from internal and external armed conflicts, military spending, and armed services personnel.
In the 2019 GPI, 86 countries improved while 76 countries deteriorated, with the global average GPI score improving by -0.09 per cent. The 2019 GPI finds that the world became more peaceful for the first time in five years, with the average level of country peacefulness improving slightly by 0.09 per cent.
Of the 23 GPI indicators, eight recorded an improvement, 12 had a deterioration, with the remaining three indicators not registering any change over the past year.
This is the thirteenth edition of the GPI, which ranks 163 independent states and territories according to their level of peacefulness.
On June 2, Algeria’s constitutional council cancelled the July 4 presidential elections, which were constitutionally mandated to replace ousted President Abdelaziz Bouteflika. The cancellation of elections is a win for protesters, who had rejected the “constitutional” path imposed by the regime. With their cancellation, Algeria will enter a constitutional vacuum and with it, political uncertainty on the road ahead. However, unshackling the transition from the existing constitution will also provide an opportunity for a more genuine transition to democracy.”
Since Bouteflika’s ousting on April 2, the remnants of the Bouteflika regime had invoked Article 102 of the constitution, which necessitated presidential elections within 90 days of Bouteflika’s resignation (July 9). As also mandated by the constitution, President of the Senate Abdelkader Bensalah became the interim president, while the government at the time—led by Prime Minister Noureddine Bedoui—could not be changed.
The regime, led de facto by army chief Ahmed Gaid Salah, claimed that this roadmap was the legitimate and constitutional path forward. But as the protesters had observed, this path was also the one most likely to allow the reconsolidation of the Bouteflika regime. The figures shepherding the “transition”—Bensalah, Bedoui, and to a greater extent, Gaid Salah—were all holdovers from the Bouteflika regime. Moreover, the 90-day transitional period provided no guarantees of free and fair elections nor meaningful time for the protesters to organize politically. As the result, the protesters rejected the “constitutional” path en masse every Friday since Bouteflika’s ouster. They instead invoked Articles 7 and 8 of the constitution, which observe that political power derives from the people.
In the face of this popular rejection, only two relatively unknown candidates put forth their names to run in the July 4 presidential elections. The constitutional court on June 2 then rejected those two candidacies and declared that the elections would be impossible to hold. As a result, Algeria will not see elections within 90 days of Bouteflika’s ouster, and the constitutional path will be unmet.
These developments will likely tip the balance of power in favour of the protesters. The regime’s preferred strategy appears to be to ask interim President Bensalah to remain in office beyond his July 9 end date and task him, as the constitutional council did, with organizing elections at a later date. But the regime will no longer be able to use a shroud of constitutional legitimacy to impose this preferred roadmap. Such an extension of the 90-day period is unconstitutional.
Without the constitution, the sole source of legitimacy will be the street.
Without the constitution, the sole source of legitimacy will be the street, and the protesters are certain to reject an extension of the previous roadmap. The only solution out of the coming political crisis, as Gaid Salah himself recognized, would be through dialogue between the regime and the protesters.
The cancellation of the elections not only makes negotiations more likely, but also removes arbitrary constraints from those negotiations. With the constitutional path void, the constitution can no longer be used as a “straitjacket”—to use the words of Georgia State University’s Rochdi Alloui—to limit the possible options. Now, the regime can no longer use the constitution to prevent the removal of the 2Bs—President Bensalah and Prime Minister Bedoui—and a national unity government can instead be formed.
The United States and the international community should encourage the regime to negotiate with the protest movement, and to meet their demands. These demands likely include a revision, if not rewriting, of the constitution and the creation of independent institutions to guarantee the credibility of presidential, parliamentary, and municipal elections.
For these negotiations to be accepted and respected, the protesters will need to organize and choose leaders they find credible to negotiate on their behalf. But as important for the transition are the representatives the regime chooses. While the military cannot be ignored, it is important that it not chair or preside over the negotiations, which would legitimize the military as a political actor and as the referee of the upcoming transition.