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Saudi Arabia ready to take over G20 reins

Saudi Arabia ready to take over G20 reins

Ellen Francis of UK Reuters informs that With young prince and PR push, Saudi Arabia ready to take over G20 reins. Here is her difficult to believe story.

NAGOYA, Japan (Reuters) – Saudi Arabia is set to take over the G20 presidency for a year as it seeks to bounce back from an uproar over its human rights record and last year’s killing of journalist Jamal Khashoggi. Foreign ministers attend a dinner during the G20 foreign ministers’ meeting, in Nagoya, Japan November 22, 2019. Charly Triballeu/Pool via REUTERS

The kingdom’s new foreign minister, a prince with diplomatic experience in the West, landed in Japan’s Nagoya city on Friday to meet with his counterparts from the Group of 20 nations.

Prince Faisal bin Farhan Al Saud was appointed in October in a partial cabinet reshuffle, joining a new generation of royals in their 40s who rose to power under Crown Prince Mohammed bin Salman, 34, the de facto ruler of the world’s top oil exporter.

Saudi Arabia – a key U.S. ally in confronting Iran – has faced heavy Western criticism over the murder of Saudi national Khashoggi, its detention of women’s rights activists and its role in the devastating war in Yemen.

Diplomats say the G20 might help put Riyadh’s problems behind it and could prompt it to close more disputed files such as the Yemen war and the boycott of Gulf neighbour Qatar, though they have yet to see much progress.

King Salman has hailed the kingdom’s G20 presidency as proof of its key role in the global economy. [nL8N28041F]

Prince Faisal will pick up the baton at a ceremony on Saturday in Nagoya, where G20 foreign ministers have gathered for talks.

Japan – which headed the G20 this year – was the kingdom’s second-largest export market last year, at $33 billion, according to IMF trade data.

Apart from its reliance on Saudi oil, Japan has deepened its ties to the kingdom thanks to Japanese technology conglomerate SoftBank Group. Riyadh has been a big supporter of SoftBank’s massive Vision Fund.

Japanese Foreign Minister Toshimitsu Motegi told Prince Faisal he was pleased to meet him for the first time and both sides wanted to boost relations, according to a read-out from Japan’s foreign ministry.

Motegi praised Saudi work to stabilise southern Yemen, where Riyadh orchestrated a deal to end a power struggle between Yemen’s government, which it backs, and southern separatists. [nL8N27L6J1]

PR PUSH

King Salman also said this week Riyadh wants a political settlement in Yemen, where it has battled Iran-aligned Houthis in a nearly five-year war that has killed tens of thousands and drive parts of the country to the brink of famine.

A diplomatic source said there had been an “apparent de-escalation” in Yemen’s conflict in recent weeks. The source said Saudi airstrikes killing civilians would not be “a great backdrop for hosting the G20” and would not mesh with the kingdom’s message of opening up.

Diplomats said that Saudi Arabia plans more than a dozen G20 summits throughout the year on tourism, agriculture, energy, environment and digital economy.

Top diplomatic and business contacts suggest Riyadh has already gotten over much of the opprobrium it received over Khashoggi’s murder, but it still struggles to attract foreign investors, said analyst Neil Partrick.

A Saudi court charged 11 suspects in a secretive trial and Western allies imposed sanctions on individuals. But Riyadh still faces heat from some governments saying the crown prince – known as MbS – ordered the murder. He has denied this though said he takes ultimate responsibility as de facto ruler.

Riyadh has sought to fix its image or turn attention to its social reforms since Khashoggi’s 2018 killing at the hands of Saudi agents in Istanbul.

A share sale of giant Saudi state oil firm Aramco this month and a bond sale earlier this year – under a drive to diversify the largest Arab economy away from oil – attracted interest in the traditional sectors of energy and finance.

After boycotting the Saudis’ annual “Davos in the Desert” summit in 2018, Western executives returned to the 2019 gathering last month. “Davos in the Desert” is unrelated to the annual World Economic Forum in Davos, Switzerland.

Reporting by Ellen Francis in Nagoya and Stephen Kailin in Bahrain with additional reporting by David Dolan in Nagoya; Writing by Ellen Francis; Editing by Mark Heinrich

The Thomson Reuters Trust Principles.

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Chicagoans with MENA roots feel erased by census

Chicagoans with MENA roots feel erased by census

White? Asian? African? Chicagoans with Middle Eastern and North African roots feel erased by census.

Local groups say it’s essential for people to participate even if they don’t see a racial/ethnic category on the form that fits them.

By Alexis Kwan and City Bureau@city_bureau

Chicagoans with MENA roots feel erased by census
Arab American Family Services cofounders Nareman Taha and Itedal Shalabi in their office in suburban Worth.
MAX HERMAN

On a hot Saturday in August, the parking lot of the Middle Eastern Immigrant and Refugee Alliance in West Ridge is filled with the sound of festivities. Kids jump in a bouncy house, Arabic pop music blares on the speakers, and a group of aunties chat as they watch over their charges. The organization, formerly known as the Iraqi Mutual Aid Society, hosts this yearly event as a way to connect the families they serve with the rest of the immigrant community.

Children gather round a foldable plastic table with a tawula set, playing a Turkish version of backgammon popular throughout the Middle East. Among them is Asal Alshammari, 11, who lives in West Ridge with her grandparents and sister. She immigrated to America with the rest of her Iraqi family after living in Dubai for nine years. Since moving to Chicago, Alshammari has been puzzled by the way Americans categorize race. “I identify myself as Middle Eastern, but [on school forms] it says I’m white, and that’s kind of confusing,” she says.

Sometimes she’ll even whip out her smartphone to show other kids at school exactly where Iraq is located: western Asia. “If someone says, ‘Oh, you’re white,’ I tell them ‘No, I’m Asian.’ But they’re always like, ‘What? You don’t seem Asian,’ because I have blue eyes from my grandpa,” she says. Alshammari wishes there were a box that was a better fit for people from countries like Iraq, Syria, and Libya, and she’s not alone.

As the 2020 U.S. Census approaches, local groups are working to ensure there’s an accurate count of their communities. But the census has never included any racial or ethnic category for Middle Eastern or North African communities. That, along with the current climate of fear surrounding immigration status, is a big challenge for folks hoping a full census count can help the community build political representation and gain access to crucial social services.

More than 20 years ago, when the federal government made major changes to the way race and ethnicity are reported on official forms, the U.S. Office of Management and Budget recommended additional testing on a category that would be called Middle Eastern North African, or MENA. Without a MENA option on the form, people from this region usually chose the white category, according to the U.S. Census Bureau’s 2015 Race and Ethnicity Analysis.

Chicagoans with MENA roots feel erased by census
Ekram Hanna of the Iraqi Mutual Aid Society
MAX HERMAN

In a 2015 community forum held by census officials to discuss the MENA category, participants indicated that “MENA responses should not be classified as White. They thought classifying this group as White makes them invisible in the data, even though they face discrimination in many aspects of society.”

With the support of advocacy groups like the Arab American Institute, the census bureau began testing a potential MENA category addition in 2015, and in 2017 released preliminary results that stated, “The use of a distinct Middle Eastern or North African category appears to elicit higher quality data for people who would identify with MENA.”

Despite all this, the bureau announced in 2018 that a MENA category would not be included in the 2020 census, claiming that “more research and testing is needed” since some in the MENA community felt that the designation should be treated as an ethnicity rather than a race.

“Some of us identify as white, some as Brown, some as Black,” says Maya Berry, executive director of the Arab American Institute. “We don’t necessarily need a category that reduces us to one race, but we do need visibility, inclusion, and to be seen as a group of Americans with needs and not just the focus of counterterrorism programs or political bigotry.”

With the decision made, local groups serving MENA residents in the Chicago region are now focused on ensuring that their community participates, period.

An accurate count is essential, they say, since census numbers determine the allocation of funding for services like cultural diversity training for institutions that interact with the community. Though federal funding formulas are complex, a George Washington University study in 2018 estimated that for every Illinois resident not counted, the state would lose $840 in Medicaid funding.

Chicagoans with MENA roots feel erased by census
Fouzia Othman works with a client at the Arab American Family Services office. Case managers help community members with translating mail, applying for WIC and SNAP benefits, immigration paperwork, and other needs.
MAX HERMAN

In Cook County, where an estimated 100,000 residents are of Middle Eastern, North African, or Southwest Asian descent according to a Los Angeles Times analysis, outreach efforts are beginning. It won’t be easy, says Imelda Salazar, an organizer for the Southwest Organizing Project, noting that many MENA residents are descended from immigrants or are immigrants themselves. Salazar says outreach to immigrants in general is difficult given the Trump administration’s policies, including increased restrictions on who can seek asylum and the executive order restricting entry of foreign nationals from some Muslim-majority countries.

“We give a lot of know-your-rights trainings and we tell people, Do not open the door [for Immigration and Customs Enforcement agents],” she says, which makes it hard to allay their anxiety about opening the door for census workers. To try to dissipate these fears, SWOP precedes many of its workshops with a conversation about current deportation and detention issues and then talks about the legally mandated confidentiality of U.S. Census data. Salazar emphasizes that “fear won’t take us anywhere” and that if “we really want to build power, we need to be counted.”

Distrust of the federal government is particularly salient in the sizable Arab American community of Bridgeview, a southwest suburb. In the 2018 documentary The Feeling of Being Watched, Bridgeview native Assia Boundaoui uncovered evidence that Muslim residents were under FBI surveillance as far back as 1985 as part of a counterintelligence effort known as Operation Vulgar Betrayal.

With Trump administration policies like the public charge rule and the Muslim ban, some people have become wary even of receiving public benefits, according to Nareman Taha, cofounder of Arab American Family Services, a nonprofit social service agency in the southwest suburbs. They’re afraid the government is collecting their personal information through the institutions that dole out benefits.

“Clients would come and say, ‘Close my file. I don’t want anything from the government. I don’t want food stamps. I don’t want medical cards,'” she says. “And these are people who are working poor, they’re eligible. . . . Imagine that detriment and the impact that had on families.”

Chicagoans with MENA roots feel erased by census
Samir Alomar at the Festival on Devon in September. Alomar, who performs classical Arabic music and is originally from Syria, came to Chicago’s West Ridge community two years ago after spending four years in a refugee camp in Turkey with his family.
MAX HERMAN

To counteract that fear, groups like AAFS are relying on the relationships and trust built over years working within communities.

AAFS founded the Arab American Complete Count Committee, which meets at their office, and they are local members of the national Yalla Count Me In campaign—both are aimed at increasing census participation. AAFS is asking people to mark the “other” box on the form and write in “Arab” or their country of origin, in the hopes that when the Census Bureau reevaluates the MENA category there will be evidence to support its inclusion. Other groups, like the Arab American Action Network, say they have not yet decided what to recommend; they’re planning more conversations with community and national partners before making a decision.

Though race and ethnicity data in the census are rarely tied directly to federal funding, local organizations say that if the data were available, it could help them raise money from other sources and draw publicity for their work.

When Hatem Abudayyeh of the Arab American Action Network raises funds for the group’s work to protect youth against discrimination in schools, he says government representatives and donors will ask questions like, “What are the academic levels? How do they do in school? What are their literacy rates?”

“We were in a coalition with Black and Latino organizations, and they all had these stats about how Black and Latino kids were being suspended and expelled from school at much higher rates than whites for the same alleged activities,” he explains. “And we didn’t have any numbers for the Arab kids, even though anecdotally we knew that those things were happening to Arabs as well.”

Taha, at AAFS, says most of their funds come from state government, corporations, foundations, and private donors. The group has been encouraging local universities and other nonprofits to collect data using the MENA category to help them make the case for the services they provide, like domestic violence prevention and immigration legal consultation. One funder, the Illinois Criminal Justice Information Authority, did just that, adding a MENA category to collect better health data statewide.

Some organizations rely on their own surveys or draw noncensus data from sources like Chicago Public Schools. CPS conducts an annual survey asking what languages are spoken in students’ homes, and Arabic was the third-most common non-English language in 2019, preceded only by Spanish and Cantonese, according to data City Bureau received through a public records request.

Laura Youngberg says the census category gets at “the bigger issue of, how does a community define itself and how the families define themselves.”
MAX HERMAN

Laura Youngberg, the executive director of the Middle Eastern Immigrant and Refugee Alliance, says her group was able to use CPS data to advocate for federal and state grants that support its youth and family services. “It’s a battle of like going back to the state and saying, your data is wrong,” she says. “This is the correct data [from the school district]. This is why we deserve to have funding.”

The census category gets at “the bigger issue of, how does a community define itself and how the families define themselves,” Youngberg says. Better data around MENA communities could improve language access for Arabic-speaking people, increase visibility and political representation, and contribute to a larger sense of belonging.

Beyond the census, Taha wants to push for the MENA category at the state level, asking newly elected governor J.B. Pritzker, “How would you recognize the Arab American community? I mean, you came to us when you needed our votes.” Now, more than ever, her community needs to be counted.   

Sarah Conway contributed reporting.

This report was produced by City Bureau, a civic journalism lab based in Woodlawn. Learn more and get involved at citybureau.org.

More from Chicago Reader: NewscensusimmigrationMiddle Eastern and North AfricanMENAwhiteIraqSyriaLibya

NB: The top picture is of The Arab Weekly that touched on the subject of How significant is rejection of MENA category from the 2020 US census? back in March 2018. MENA-Forum published many articles on how immigrant populations are treated in their host countries.

It’s when not if China’s Middle Eastern tightrope snaps

It’s when not if China’s Middle Eastern tightrope snaps

Dr James M. Dorsey says it’s when not if China’s Middle Eastern tightrope snaps. How is that?

China is manoeuvring to avoid being sucked into the Middle East’s numerous disputes amid mounting debate in Beijing on whether the People’s Republic will be able to remain aloof yet ensure the safety and security of its mushrooming interests and sizeable Diaspora community.

China’s challenge is starkest in the Gulf. It was compounded when US President Donald J. Trump effectively put China on the spot by implicitly opening the door to China sharing the burden of guaranteeing the security of the free flow of energy from the region.

It’s a challenge that has sparked debate in Beijing amid fears that US efforts to isolate Iran internationally and cripple it economically could lead to the collapse of the 2015 international agreement that curbed Iran’s nuclear program, accelerate Iran’s gradual breaching of the agreement in way that would significantly increase its ability to build a nuclear weapon, and potentially spark an unwanted military confrontation.

All of which are nightmare scenarios for China. However, Chinese efforts so far to reduce its exposure to risk are at best temporary band-aid solutions. They do little to address the underlying dilemma: it is only a matter of time before China will have no choice but to engage politically and militarily at the risk of surrendering its ability to remain neutral in regional conflicts.

Israeli intelligence reportedly predicted last year that Iran’s gradual withdrawal from an agreement that Mr Trump abandoned in May 2018 would ultimately take Iran to a point where it could create a nuclear military facility within a matter of months. That in turn could provoke a regional nuclear arms race and/or a pre-emptive military strike.

That is precisely the assessment that Iran hopes will persuade China alongside Russia and the European Union to put their money where their mouth is in countering US sanctions and make it worth Iran’s while to remain committed to the nuclear accord.

The problem is that controversy over the agreement is only one of the multiple regional problems. Those problems require a far more comprehensive approach for which China is currently ill-equipped even if it is gradually abandoning its belief that economics alone offers solutions as well as its principle of no foreign military bases.

China’s effort to reduce its exposure to the Gulf’s energy supply risks by increasing imports from Russia and Central Asia doesn’t eliminate the risk. The Gulf will for the foreseeable future remain a major energy supplier to China, the region’s foremost trading partner and foreign investor.

Even so, China is expected to next month take its first delivery of Russian gas delivered through a new pipeline, part of a US$50 billion gas field development and pipeline construction project dubbed Power of Siberia.

Initially delivering approximately 500 million cubic feet of gas per day or about 1.6 percent of China’s total estimated gas requirement in 2019, the project is expected to account with an increased daily flow of 3.6 billion cubic feet for 9.5 percent of China’s supply needs by 2022.

The Russian pipeline kicks in as China drastically cuts back on its import of Iranian liquified petroleum gas (LPG) because of the US sanctions and is seeking to diversify its supply as a result of Chinese tariffs on US LPG imports imposed as part of the two countries’ trade war.

China is likely hoping that United Arab Emirates efforts to stimulate regional talks with Iran and signs that Saudi Arabia is softening its hard-line rejection of an unconditional negotiation with the Islamic republic will either help it significantly delay engagement or create an environment in which the risk of being sucked into the Saudi-Iranian rivalry is substantially reduced.

Following months of quietly reaching out to Iran, UAE minister of state for foreign affairs Anwar Gargash told a recent security dialogue in Abu Dhabi that there was “room for collective diplomacy to succeed.”

The UAE official said the UAE envisions a regional order undergirded by “strong regional multilateralism” that would provide security for all.

Mr Gargash made his remarks against the backdrop of a Chinese-backed Russian proposal for a multilateral security arrangement in the Gulf that would incorporate the US defense umbrella as well as an Iranian proposal for a regional security pact that would exclude external players.

Presumably aware that Gulf states were unlikely to engage with Iran without involvement of external powers, Iran appeared to keep its options open by also endorsing the Russian proposal.

The various manoeuvres to reduce tension and break the stalemate in the Gulf put Mr. Trump’s little noticed assertion in June that energy buyers should protect their own ships rather than rely on US protection in a perspective that goes beyond the president’s repeated rant that US allies were taking advantage of the United States and failing to shoulder their share of the burden.

Potentially, Mr Trump opened the door to an arrangement in which the United States would share with others the responsibility for ensuring the region’s free flow of energy even if he has given no indication of what that would mean in practice beyond demanding that the United States be paid for its services.

“China gets 91 percent of its oil from the Straight, Japan 62 percent, & many other countries likewise. So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships…,” Mr Trump tweeted.

China has not rejected Mr Trump’s position out of hand. Beyond hinting that China could escort Chinese-flagged commercial vessels in the Gulf, Chinese officials have said that they would consider joining a US-backed maritime security framework in the region that would create a security umbrella for national navy vessels to accompany ships flying their flag.

Chinese participation would lay the groundwork for a more comprehensive regional security arrangement in the longer term.

China’s maritime strategy, involving the development of a blue water navy, suggests that China already de facto envisions a greater role at some point in the future.

Scholars Julia Gurol and Parisa Shahmohammadi noted in a recent study that China has already “decided to take security concerns in the (Indian Ocean) into its own hands, instead of relying on the USA and its allies, who have long served as the main security providers in this maritime region… If tensions continue to escalate in the Persian Gulf, Beijing may find it has no other choice but to provide a security presence in the Middle East.”

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

Posted by The Turbulent World of Middle East Soccer on 12 November 2019 and republished on MENA-Forum with our compliments.

Walls are obstructing Hope in the Arab world

Walls are obstructing Hope in the Arab world

Walls are obstructing Hope in the Arab world

Oussama Romdhani, chief-editor of the Arab Weekly, wrote on Saturday 09/11/2019 that 30 years after Berlin, walls are obstructing hope in the Arab world.


In any part of the region, interconnected populations realise the commonality of their dreams and they want a stake in their respective countries.

Lebanese demonstrators gather outside the the Telecom company during ongoing anti-government demonstrations in Lebanon's southern city of Sidon (Saida) on November 8. (AFP)

Lebanese demonstrators gather outside the Telecom company during ongoing anti-government demonstrations in Lebanon’s southern city of Sidon (Saida) on November 8. (AFP)

The fall of the Berlin Wall, 30 years ago, on November 9, 1989, was a testament to the irrepressible human yearning for freedom.

Restrained for too long by communist rulers, Eastern Europeans just wanted out. They saw greener and freer pastures beyond their borders.

Well before East German border guards opened the Berlin passageway in October 1989, the authoritarian governments of the time saw the writing on the wall.

In June 1989, Hungarian and Austrian foreign ministers were cutting through the barbed wire separating their countries. Others soon followed suit. They were removing long-standing separations that much of Eastern Europe erected after Hungary built a 260km fence on its Austrian border in 1949.

More than simply physical barriers, these were ideological and political walls consecrating the regimes’ distrust of their citizens and their inability to move away from dogmatic constraints.

History shows crossing borders is always the last resort when resources are scarce or when living conditions become unbearable.

Similarly, for decades, breaking through geographic barriers has been the goal of too many among young Arabs. Disillusioned and surrounded by nothing but dead ends at home, they look to emigrate — even illegally.

Today, many desperate people in the MENA region are more than willing to risk their lives to escape on the makeshift boats of human traffickers, voting with their feet in much the same way Eastern Europeans did for many decades until the 1980s.

Nearly 700 people died while trying to break through the Iron Curtain from East Germany and many more in MENA are no less committed to their cause. Thousands have died trying to cross the Mediterranean during the past few years, driven by poverty, war and a lack of opportunity.

However, unlike Eastern Europeans who fled authoritarian environments, MENA’s desperate youth have few places to find safe harbour.

Since independence, governments south of the Mediterranean have been striking deals with Europeans to fight illegal emigration and, while cooperation in that area was in order, the governments lacked the political vision and ability to draw the right lessons from the steady exodus from their shores.

Many Arab youths, unwilling or unable to leave home, have grown angry staring at walls that need to be torn down. They see prohibitive and oppressive obstacles of sectarianism, failed post-independence policies, bureaucratic and corrupt practices and a lack of freedom. More than anything else, there is a huge wall of distrust between them and their politicians, whom they see as responsible for making their lives miserable and robbing them of their chances for a better future.

Arab protesters may not be acting out against authoritarian communism but they are rebelling against equally rigid norms and obsolete rules. It is not the conflicting interests of a regional power such as Iran that will change the equation. Much like the unhappy populations that suffered under Soviet rule, they see their leaders clinging to the past, or worse, living on another planet.

If the governments of Iraq, Lebanon, Algeria and a few other Arab countries are having a tough time dealing with protests, it is because for too long they have been reluctant to initiate genuine reform. They felt they had too many vested interests at stake to volunteer change.

After years of procrastination, such change is much more difficult to introduce in a way that satisfies demanding and disgruntled populations. Much more than in the 1980s, the value systems of good governance, equal opportunity and, above all, freedom have gone global and the Arab region is no exception.

Such forces overpower the image of strength, awe and fear that assailed political regimes used to project and rely upon to preserve their rule. Whatever tools of repression they possess are not enough anymore.

In any part of the region, interconnected populations realise the commonality of their dreams and they want a stake in their respective countries.

With a lack of real and timely reform, radical and abrupt regime change often becomes the alternative.

As Soviet Union President Mikhail Gorbachev told East German President Erich Honecker in October 1989: “Life punishes those who are too late.”

Algeria: distinguishing economic time from political time

Algeria: distinguishing economic time from political time

The new Law of Hydrocarbons in Algeria: distinguishing economic time from political time was enacted despite concurrent street demonstrations against it. It was debated at length by Professor Abderrahmane MEBTOUL, International Expert, in interviews to Radio Algeria International – Paris France on 04/11/2019, to Algerian Radio Channel-3 and to Radio France International on 05/11/2019. Here are some excerpts of each.

Algeria: distinguishing economic time from political time

Question – 1. Will Algeria with high domestic consumption be able to meet its international commitments?

Indeed, if we take natural gas, domestic consumption is likely to exceed 60 billion cubic meters of gas by 2030 and 100 billion cubic meters of gas between 2035/2040, the Ministry of Energy has announced the depletion of reserves would be at about 60%. An urgent need to review the current energy policy and move towards a clean energy transition policy that revolves around four axes, to meet its international commitments.

-First: an energy efficiency policy (energy sobriety) that affects all sectors and households by reviewing construction methods, cars/trucks fleet consumption, energy-intensive industrial units; the simple referring to a policy of targeted subsidies, but which do not penalize the disadvantaged, existing new technologies that save about 30% of energy consumption.

-Secondly: the development of renewable energies whose cost has fallen by more than 50% for both thermal and photovoltaics, where Algeria has significant potential.

-Thirdly: to continue to invest in upstream, which can make discoveries as part of a win-win partnership, SONATRACH with lower prices and physical production, which has dropped significantly since 2008, technological or financial capabilities, but no longer have to be deluded by large deposits like Hassi-Messaoud or Hassi-Ramel.

-Fourthly: avoid precipitation whilst developing SHALE oil and gas, Algeria having the third world reservoir, only by 2025, as I recommended to the authorities of the country, through this study with experts pending new technologies that replace hydraulic fracturing, saving freshwater and injecting more than 90% of the chemicals into wells, thus protecting the environment, but requiring in-depth social dialogue.

To answer your question directly, I highlighted the points at the 5 + 5 Meeting of Algeria, Morocco, Tunisia, Mauritania, Libya with France, Italy, Spain, Portugal, Malta in Marseille in June 2019. I had the honour of chairing the Energy Transition’s workshop in which the subject of a clean energy transition policy, and the modification by Algeria, a major energy player in the Mediterranean basin, as it has always done, to meet its international commitments by 2030.

Question – 2. Will the amendment of this law attract foreign investors?

Depending on several factors, such as:

-First: the revision of this law as I have pointed out since its enactment at the beginning of 2013 is unsuited to the current situation, in particular the tax component and the nature of the contracts in which Sonatrach supports the majority of the financing, the world having evolved from where the importance of its revision to take account of new global energy changes.

-Secondly: however, a law is only a legal instrument, being a necessary but sufficient condition of the attractiveness of foreign investment, where any company attracted by direct profit rate, and also as long as the level of foreign exchange reserves is high. Depending on the business environment where Algeria was in the latest report of the World Bank of 2019 was very poorly classified because of its paralyzing bureaucracy, corruption, financial and unsuitable socio-educational systems.

-Thirdly: the political climate is decisive, and according to international observers no serious investor would engage in Algeria without the resolution of the political crisis, political stability especially in a country like Algeria, where politics and economics are intertwined, being a determining factor in the attractiveness of a foreign investment.

-Fourthly: as I have just pointed out recently, to your colleagues on France 24 television, and several Algerian websites and daily newspapers, it would be desirable to postpone the adoption of this law after the presidential election. Only a president and a legitimate government can secure the future of the country where this resource, directly and indirectly, provides about 98% of the country’s foreign exchange resources. Some company executives fear that a new president would challenge this law, which would be passed by a transitional government, responsible for current affairs, while legal stability is a golden rule for all investor.

-Fifth: to answer this second question directly, the positive impact of this law would depend on the future global energy map, the entry of new producers and the sale price on the world market both of oil and gas returning at the cost of production in Algeria therefore to a new strategic management of SONATRACH and the impacts would not be felt only in three to four years, subject to the lifting of environmental constraints. Why this haste, which risks further sharpening social tensions in the run-up to the presidential election, thus possibly harming the voting turnout?

ademmebtoul@gmail.com 

Rebuilding Syria – without Syria’s oil

Rebuilding Syria – without Syria’s oil

The picture above is that of the country before the war. Will it ever return to that state, wonder most of us?

Compare US pillaging with Russia-Iran-Turkey’s active involvement in a political solution to normalize Syria or Rebuilding Syria – without Syria’s oil all as per PEPE ESCOBAR.

Rebuilding Syria – without Syria’s oil

What happened in Geneva this Wednesday, in terms of finally bringing peace to Syria, could not be more significant: the first session of the Syrian Constitutional Committee.

The Syrian Constitutional Committee sprang out of a resolution passed in January 2018 in Sochi, Russia, by a body called the Syrian National Dialogue Congress.

The 150-strong committee breaks down as 50 members of the Syrian opposition, 50 representing the government in Damascus and 50 representatives of civil society. Each group named 15 experts for the meetings in Geneva, held behind closed doors.

This development is a direct consequence of the laborious Astana process – articulated by Russia, Iran and Turkey. Essential initial input came from former UN Envoy for Syria Staffan de Mistura. Now UN Special Envoy for Syria Geir Pedersen is working as a sort of mediator.

The committee started its deliberations in Geneva in early 2019.

Crucially, there are no senior members of the administration in Damascus nor from the opposition – apart from Ahmed Farouk Arnus, who is a low-ranking diplomat with the Syrian Foreign Ministry.

Among the opposition, predictably, there are no former leaders of weaponized factions. And no “moderate rebels.” The delegates include several former and current parliament members, university rectors and journalists.

After this first round, significantly, the committee’s co-chair, Ahmad Kuzbari, said: “We hope that our next meeting could take place in our native land, in our beloved Damascus, the oldest continuously inhabited capital in history.”

Even the opposition, which is part of the committee, hopes that a political deal will be clinched next year. According to co-chair Hadi al-Bahra: “I hope that the 75th anniversary of the United Nations next year will be an opportunity to celebrate another achievement by the universal organization, namely the success of efforts under the auspices of a special envoy for political process, who will bring peace and justice to all Syrians.”

Join the patrol

The committee’s work in Geneva proceeds in parallel to ever-changing facts on the ground. These will certainly force more face-to-face negotiations between Presidents Putin and Erdogan, as Erdogan himself confirmed: “A conversation with Putin can take place any time. Everything depends on the course of events.”

“Events” seem not to be that incandescent, so far, even as Erdogan, predictably, releases the whiff of a threat in the air: “We reserve the right to resume military operation in Syria if terrorists approach at the distance of 30km to Turkey’s borders or continue attacks from any other Syrian area.”

Erdogan also said the de facto safe zone along the Turkish-Syrian border could be “expanded,” something that he would have to clear in minute detail with Moscow.

Those threats have already manifested on the ground. On Wednesday, Turkey and allied Islamist factions launched an attack against Tal Tamr, a historic Assyrian Christian enclave 50km deep inside Syrian territory – far beyond the scope of the 10km patrol zone or the 30km “safe” zone.

Poorly-armed Syrian troops pulled out under fierce attack, and with no apparent Russian cover. The Syrian military on the same day issued a public statement calling on the Syrian Democratic Forces to reintegrate under its command. The SDF has said a compromise must be reached first over semi-autonomy for the northeastern region. Thousands of residents in the meantime fled farther south to the more protected city of Hasakeh.

Two facts are absolutely crucial. The Syrian Kurds have completed their pull out ahead of schedule, as confirmed by Russian Defense Minister Sergey Shoigu. And, this Friday, Russia and Turkey start their joint military patrols to the depth of 7km away from the border, part of the de facto safe zone in northeast Syria.

The devil in the immense details is how Ankara is going to manage the territories that it now actually controls, and to which it plans to relocate as many as 2 million Syrian refugees.

Your oil? Mine

Then there’s the nagging issue that simply won’t go away: the American drive to “secure the oil” (Trump) and “protect” Syrian oilfields (the Pentagon), for all practical purposes from Syria.

In Geneva, Russian Foreign Minister Sergey Lavrov – alongside Iran’s Javad Zarif and Turkey’s Mevlut Cavusoglu – could not have been more scathing. Lavrov said Washington’s plan is “arrogant,” and violates international law. The very American presence on Syrian soil is “illegal,” he said.

All across the Global South, especially among countries in the Non-Aligned Movement, this is being interpreted, stripped to the bone, for what it is: the United States government illegally taking possession of natural resources of a third country via a military occupation.

And the Pentagon is warning that anyone attempting to contest it will be shot on sight. It remains to be seen whether the US Deep State would be willing to engage in a hot war with Russia over a few Syrian oilfields.

Under international law, the whole “securing the oil” scam is a euphemism for pillaging, pure and simple. Every single takfiri or jihadi outfit operating across the “Greater Middle East” will converge, perversely, to the same conclusion: US “efforts” across the lands of Islam are all about the oil.

Now compare that with Russia-Iran-Turkey’s active involvement in a political solution and normalization of Syria – not to mention, behind the scenes, China, which quietly donates rice and aims for widespread investment in a pacified Syria positioned as a key Eastern Mediterranean node of the New Silk Roads.

Iraq’s discontent – its roots and how to begin fixing it

Iraq’s discontent – its roots and how to begin fixing it

The lecture below could be reused many a time in many situations in the MENA region. It is about Iraq’s discontent – its roots and how to begin fixing it by Bamo Nouri, City, University of London.


Iraq’s recent wave of protests against poverty, a lack of basic services, unemployment, and the interference of Iran in the country’s domestic affairs showed a country at the end of its tether. Official figures put the number killed in the violent crackdown of protesters at 157.

Since 2011, protests and popular movements that challenged elite dominance or questioned the government have been violently repressed. The presence of Iran has increased as the Shiite-dominated government in Iraq has become dependent on the Iranian Popular Mobilisation Forces (PMF) to maintain order in Iraq. Indeed, there have been reports that snipers were deployed by Iranian-backed militias in the latest round of protests in October.

The problems for Iraq are deep-rooted and institutional, and if not addressed may yet escalate into a full-scale revolution. What’s needed is reform of the country’s 2005 constitution, which was written during a period of political instability after a war and occupation ridden by conflict. The only way for Iraq to have a chance at prosperity and peace is by addressing its flawed foundations which were heavily influenced by the occupiers.

Iraq’s 2005 constitution, which was influenced by the US, failed to create a unified, representative government. Ambiguities within the document have been abused by those in power and it has exacerbated sectarian divisions within Iraq’s politics. The constitution created a system in which public sector and government roles are allocated based on sect and ethnicity.


Read more: Iraq’s rushed and divisive constitution was always doomed to fail


Unrepresentative elites

Iraq has become a nation that is for the few and not the many, as unrepresentative Iraqi political elites bid to share out its resources. Millions of Iraqis are left unrepresented and without prospects.

While the majority of citizens are discontented and struggling, Iraq’s elites remain fortified and continue to govern through a system known as “wasta”, which involves serving those you favour and hold close, such as friends and family. Divides along ethnic and sectarian lines remain a key theme when identifying the causes of disagreement between competing sects who unite to form political blocs in Iraq’s government.

The lengthy government formation process that takes place after elections is dependent on the division of key state institutions based on ethnic and sectarian identities. To achieve this, political parties form blocs with and against each other to achieve their goals, with the biggest becoming the governing bloc. Although Iraqi elites are divided based on ethnicity, sect and religion, this race for power – and with it the ability to distribute and share the country’s resources – creates a unity between elites.

For example, in three separate parliamentary elections since 2003, the winning candidate has not become prime minister. In the 2014 elections, Nouri al-Maliki, as the head of the State of Law coalition, won the largest number of seats in parliament, yet due to disagreements over government formation and the fight against Islamic State, he was replaced by Haider al-Abadi. In the 2018 elections, Muqtada al-Sadr’s Saairun coalition won a majority, but it was eventually Adil Abdul-Mahdi, an independent, who was chosen as prime minister.

Ministerial fiefdoms where political parties are given ministries in exchange for support to form governing blocs have created a dysfunctional government. It means there is no clear governmental strategy, which in turn severely impedes development.

Iraq's discontent – its roots and how to begin fixing it
Supporters of Shiite cleric Muqtada-al Sadr protest against corruption and poor public services on October 19 in Karbala, southern Iraq. Furqan Al-Aaraji/EPA

The mechanics of this power-sharing system are illustrated by coalitions of oligarchs who use public institutions to distribute favours to clients. Political parties control government procurement and reconstruction contracts, who either auction them off or set up shell companies to award contracts to themselves. These contracts are then sub-contracted, or simply never fulfilled, with funds ending up being drained in the process, ultimately benefiting a narrow Iraqi elite. Iraq was ranked 168 out of 180 countries in Transparency International’s 2018 corruption perception index.

Democracy in theory only

Freedom of speech is non-existent and those who speak out against the government are targeted and often killed, as are protesters. On the whole, democracy in Iraq only exists in theory.

In order for Iraq to ever be able to meet the growing demands of its people and the challenges of prospering on the global stage, immediate political reform is needed. The reform process must directly address the rushed and divisive constitution. This needs to be followed by the democratisation of Iraq’s institutions and the re-creation of Iraq’s national identity so the country can escape the worst of its sectarianism and become more unified as a nation.

Without all of these issues addressed with equal importance, the cycle of adversity will continue as Iraq will remain a reactive as opposed to proactive nation.

Bamo Nouri, Lecturer, City, University of London

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Algeria’s Political deadlock and economic breakdown

Algeria’s Political deadlock and economic breakdown

The political impasse in which Algeria has been mired for more than seven months would result in a sharp economic slowdown in the short term. This Algeria’s Political deadlock and economic breakdown that the World Bank forecasters have reached is by any means comprehensive but could be read as some sort of alert.

By  Hakim Ould Mohamed in REPORTERS DZ of October 12, 2019.

The institution expects non-hydrocarbon sectors, as well as all oil and gas-related activity, to run through an air hole this year; which should have some unavoidable consequences on the country’s GDP growth. In effect, in similar way to other developing countries, it is expected to come down to 1.3% in 2019 from 1.5% the previous year.

Algeria's Political deadlock and economic breakdown

“Uncertainty policy is expected to lead to a slowdown in the non-hydrocarbon sector in 2019,” reads a World Bank report released last Thursday. The Bretton Woods institution has not failed to highlight the impact of the arrests of business leaders on investment morality grounds or lack of these, and more generally, on the economy. “Business leaders from various sectors were arrested in connection with corruption investigations, which has disrupted the economy due to sudden changes in the direction and supervision of these companies, as well as uncertainty over investment,” the same report said. Since the beginning of the crisis, a wave of arrests affected the business community, public institutions, banks and social bodies alike. This blocking situation had worsened over the weeks; appropriation sets did not meet, officials at the level of economic administration were careful not to take the slightest risk. That is to say how violent the shock wave was. The impact on the economy could be disastrous as the situation continues to worsen by the day. As such, the World Bank (WB) estimates that “the pre-election period also risks further delaying the fiscal consolidation process scheduled for 2019, increasing the budget deficit to 12.1% of GDP and increasing the risk of a more abrupt adjustment in the future.” For the WB, widening budget and current account deficits is almost inevitable. While the fiscal deficit would be unlikely to be reduced internally, “on the external front, the current account deficit is expected to widen to 8.1% of GDP, mainly due to a significantly larger trade deficit.”

 Investment is being impacted

 “As the course of political events is expected to have an impact on economic activity, it is also expected that more resources will be allocated to social measures, to the detriment of public investment spending,” the Bank predicts. The report, stating that “private sector activity and investment will be affected by political disruptions and an unfavourable business climate, as well as disruptions caused by delays in payment of workers in several industries.” This is the case, since the draft Finance Bill 2020 foresees a sharp decline in capital expenditure, to the tune of 20.1%, while operating expenses and social transfers are maintained as they are. WB experts are merely saying out loud what Algerian economists and operators are thinking, warning of a situation that could go along if solutions to the political impasse run out. “The delays at the end of the political impasse and political uncertainty could further damage the country’s economy, leading to increased imports and further dwindling foreign exchange reserves,” concludes the WB report. Moreover, macroeconomic indicators are unlikely to improve at any time under current political conditions.

 Economic growth to only 1.9% in 2020

 Moreover, against a background of falling capital spending and low morale among investors, the growth of the Algerian economy would be only 1.9% in the year 2020. A stagnation is due in particular to the “slow” growth of the hydrocarbons sector, combined with the contraction in economic activity, which has limited growth in non-hydrocarbon sectors, according to the WB’s economic monitoring report released on Thursday. “Growth in the hydrocarbon sector has been slow, with economic activity contracting by 6.5% and 7.7% in 2018 and the first quarter of 2019, respectively, partially off-sparing the effects of the slight increase in non-core growth 3.4% and 3.9% in 2018 and the first quarter of 2019, respectively,” the WB noted. The tiny increase in investment in the first half of the year (4.9%) was driven by public investment in construction, public works and hydraulics, as a result of the expansion of social housing programmes, the WB said. Furthermore, the institution believes that “the recent discovery of a new gas field suggests a rebound in gas production and exports, but only in the medium term, and if and only if the framework for investment in hydrocarbons lends it to it.” The World Bank is merely bringing water to the government’s mill, which has called the enactment of the new hydrocarbon law urgent.

Iraq protests expose the fallacy of the country’s democracy

Iraq protests expose the fallacy of the country’s democracy

Streets demonstrations in the vast and populous countries of the MENA region’s Algiers, Khartoum, Cairo and finally, Bagdad chasing some long-time running democratic awakening appear to be stalling. However, these capital cities of the so-called republics’ populations seem to be going through a quasi-general disenchantment with their respective establishments because of all the prospects for future development in political and security terms have become uncertain given this sudden but not surprising worsening regional situation. Like throughout all these countries, Iraq protests expose the fallacy of the country’s democracy. Technological advances in the world and their penetration in the MENA region could definitely be behind all these upheavals.

Whether these media as social or just digital distribution of news, they did help to connect citizens and build linkage to an unprecedented level. Government organisations always in desperate need of credibility fell short to keep up with how fast the region’s peoples demands of more democracy, etc. This article elaborates on the specifics of Iraq’s.

Iraq protests expose the fallacy of the country's democracy
Anger on the streets: protesters in al-Tayaran square in central Baghdad on October 4. Murtaja Lateef/EPA

Violent crackdown against Iraq protests expose fallacy of the country’s democracy

By Balsam Mustafa, University of Birmingham

When Muhanad Habib, a 22-year-old Iraqi from the Sadr City district of Baghdad, posted on Facebook in late September, he probably didn’t imagine that his demands for a better life and basic rights would be met with bullets.

It will be a huge and angry public revolution in Baghdad … We will take to the streets protesting … Enough silence about what’s going on in Iraq. We cannot just watch Iraq being destroyed when we have armies of jobless and poor.

This was how it all started. Angry youth from Baghdad took to the streets. Unaffiliated with any political party or with well-known activists, the protesters – the majority of whom were born in the late 1990s or early 2000s – despaired about any prospect for change in Iraq.

The crackdown by security forces that followed left more than 100 people dead and thousands more injured. Iraqi President Barham Salih condemned the crackdown in a televised speech on October 7, claiming that orders to shoot at the protesters weren’t made by the state or its apparatus. The interior ministry ordered an investigation into the deaths.

Yet, Salih’s statement raised questions about who is actually running the Iraqi state. And despite his and international condemnation, the crackdown continues on the ground.

Calls for a homeland

Endemic corruption, unemployment, flawed institutions and poor public services linger in Iraq and have prompted protests since 2011, including notably in Basra in 2018. The recapture of Iraqi lands from the grip of Islamic State (IS) gave many Iraqis hope that lessons would be learnt about the repeated failures which gave rise to IS, and that those in power would take sincere steps to reform. But that hope has been diminishing every day.

The most recent protests came in the wake of multiple smaller demonstrations by different groups, including PhD graduates, doctors and engineers in September 2019.

They followed government actions that caused widespread anger. Impoverished people were outraged at a recent state campaign to destroy unlicensed properties and market stalls across Iraq, leaving many homeless and jobless.

It also followed the removal of a key general, Abdul Wahab Al Saadi, from his position as commander of the Counter-Terrorism Service, followed by his demotion to a lower post at the Ministry of Defence. The marginalisation of a figure admired for his role in the military campaign against IS enraged many Iraqis.

The new generation want a homeland. “We want a respected homeland,” and “I am taking to the streets to get my right,” were among the slogans on display during the protests. “The issue is not about water or electricity, but about a homeland,” shouted another protester.

Violent crackdown

The immediate crackdown of the protests has surprised, shocked, and shaken Iraqis. The suppression turned a protest about anti-corruption and unemployment into an uprising against the status quo and what participants see as foreign interference, particularly from Iran.

Tear gas, live ammunition, and snipers were used to quell the protesters. As one protestor put it: “They did things to us they never did to IS. They beat and insulted us. They used live fire and grenades. What have we done? All what we are asking for are our rights and all people’s rights.” The protestor’s words were used as the opening of a new rap song titled “Iran’s tails” released in the wake of the crackdown by an Iraqi expat in solidarity with the demonstrators.

Iraq protests expose the fallacy of the country's democracy
The funeral in Baghdad of a protester allegedly killed by Iraq soldiers. Murtaja Lateef/EPA

The violent oppression and state’s authoritarian measures to cover up the carnage are reminiscent of the days of Baathist rule and former president Saddam Hussein’s oppression of a 1991 uprising. In 2019, such measures included an internet blackout across Iraq except in the Kurdistan region, curfews in Baghdad and other provinces in the south, and blocked roads leading to Tahrir square in Baghdad where demonstrators gathered. Comparisons were also made with IS, who also cut off the internet in Mosul when Iraqi troops were advancing to retake the city in 2016.

Offices of media agencies covering the protests were attacked and reports emerged of protesters, activists and journalists being threatened and arrested.

By disconnecting Iraqis from the outside world, the authorities in Iraq tried to control the circulation of videos that showed civilians killed in broad daylight. But they also pushed the narrative of Iran-backed political parties and officials: that “intruders” – an implicit reference to Baathists or actors backed by an external agenda – were responsible for riots. A similar narrative was echoed by Iranian media outlets to undermine the legitimacy of the protests, accusing foreign powers of being behind them, an indirect reference to the US, Israel and Saudi Arabia.

Despite the internet blackout, which remains partially in place, footage of the live shooting at the protestors and ambulances carrying the wounded were shared on social media as some Iraqi protesters resorted to innovative methods with the help of Iraqi expats to reveal the scale of the violence.

The heartbreaking scenes caused uproar among the Iraqi diaspora who protested in several countries around the world in solidarity. But for people inside Iraq, many still don’t know the scale of the atrocities as they haven’t been able to access social media sites.

The fallacy of democracy

Since the fall of Hussein’s regime in 2003, successive governments have failed to put an end to Iraqis’ grievances. Time and again, only empty promises were made, and superficial measures taken. The electoral system has helped to produce and perpetuate a hybrid form of kleptocracy, authoritarianism and kakistocracy – a government run by the worst, or most unscrupulous people. Armed groups, tribes, foreign powers and religious clergy have all maintained this system.

The latest protests may have been suppressed but they revealed that democracy in Iraq is nothing but a facade. What sort of democratic government kills its own people, taking away their hopes and dreams? And can it still be called legitimate? Reacting indifferently to the deadly crackdown of innocent people in Iraq, the world needs to at least recognise that the root causes of Iraq’s ills are in the post-2003 system itself.

Balsam Mustafa, Teaching Fellow, University of Birmingham

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Growth in Emerging Market and Developing Economies

Growth in Emerging Market and Developing Economies

Romain Duval and Davide Furceri, authors of this article that obviously elaborates on the currently so-called developing countries. It does not ignore that there is some differentiation between oil and/or other scarce natural resources and the non-exporters of the same. It might as well be talking about these two categories of countries but perhaps along with the character traits described in the image below. Why you might wonder. Simply because How To Reignite Growth in Emerging Market and Developing Economies as developed here, could well apply to all countries in the MENA region, perhaps worldwide not for the same reasons.

Growth in Emerging Market and Developing Economies
NPR quotes the Associated Press, which says that the term ‘developing country’ is more appropriate than Third World when referring to the economically developing nations of Latin America, Africa, and Asia.

Let us, in the meantime, read what they say.

Growth in Emerging Market and Developing Economies
(photo: Kacper Pempel/Reuters/Newscom)

Emerging markets and developing economies have enjoyed good growth over the past two decades. But many countries are still not catching up with the living standards of advanced economies.

At current growth rates, it would take more than 50 years for a typical emerging market economy to close half of its current income gap in living standards, and 90 years for a typical developing economy.

Our research in Chapter 3 of the October 2019 World Economic Outlook finds that implementing major reforms in six key areas at the same time—domestic finance, external finance, trade, labor markets, product markets, and governance—can double the speed of income convergence of the average emerging market and developing economy to the living standards of advanced economies. This could raise output levels by more than 7 percent over a six-year period.

Structural reforms can yield sizable payoffs.

More room for reforms

Policies that change the way governments work—known as structural reforms—are difficult to measure. They often involve policies or issues that are not easy to quantify, such as job protection legislation or the quality of supervision of the domestic banking system.

To address this, the IMF recently developed a comprehensive dataset covering structural regulations in domestic and external finance, trade, and labor and product markets. The data cover a large sample of 90 advanced and developing economies during the past four decades. To the five indicators, we added the quality of governance (for example, how countries control corruption) from the World Gov­ernance Indicators.

The new indicators show that, after the major wave of reforms in the late 1980s and—most importantly—the 1990s, the pace slowed in emerging market and developing economies during the 2000s, especially in low-income developing countries.

While this slowdown reflects the prior generation of reforms, as in advanced economies, there remains ample room for a renewed reform push, particularly in developing economies—notably, across sub-Saharan Africa and, to a lesser extent, in the Middle East and North Africa and the Asia-Pacific region.

Reforms can boost growth and living standards

Based on our empirical research of reforms in 48 current and former emerging markets and 20 developing economies, we find that reforms can yield sizable payoffs. But these gains take time to materialize and vary across different types of regulations. For example, a domestic finance reform of the size that took place in Egypt in 1992 leads to an increase in output of about 2 percent, on average, six years after implementation. We get a similar result for anti-corruption measures, whose effects are sizable in the short run and stabilize at around 2 percent in the medium term. In the other four reforms areas—external finance, trade, product markets, and labor markets—the gains are about 1 percent six years after the reform.

For the average emerging market and developing economy, the results imply that major simultaneous reforms across all six areas considered in this chapter can raise output by more than 7 percent over a six-year period. This would increase annual per capita GDP growth by about 1 percentage point, doubling the average speed of income convergence to advanced-country levels. Model-based analysis—which captures the longer-term effect of reforms and provides insights on the channels through which they affect economic activity—points to output gains about twice as large as the empirical model over the longer term (beyond 6 years).

One channel through which reforms increase output is by reducing informality. For example, lowering barriers to businesses’ entry in the formal sector encourages some informal companies to become formal. In turn, formalization boosts output by increasing companies’ productivity and capital investment. For this reason, the payoff from reforms tends to be larger where informality is pervasive.

Getting the timing, packaging and sequencing right

Some reforms work best when the economy is strong. In good times, reducing layoff costs makes employers more willing to hire new workers, while in bad times it makes them more willing to dismiss existing ones, magnifying the effects of a downturn. Similarly, increasing compe­tition in the financial sector at a time of weak credit demand may push certain financial intermediaries out of business, further weakening the economy.

In countries where the economy is weak, governments may prioritize reforms—such as strengthening product market competition—that pay off regardless of economic conditions, design others to alleviate any short-term costs—such as enacting job protection reforms now with a provision that they will take effect later. These reforms can also be accompanied with monetary or fiscal policy support where possible. 

Reforms also work best if properly packaged and sequenced. Importantly, they typically deliver larger gains in countries where governance is stron­ger. This means that strengthening governance can support economic growth and income convergence not just directly by incentivizing more productive formal enterprises to invest and recruit, but also indirectly by magnifying the payoff from reforms in other areas.

Finally, to fulfill their promise of improving living standards, reforms must be supported by redistributive policies that spread the gains widely across the population—such as strong social safety nets and programs that help workers move across jobs. For reforms to be sustainable and therefore effective, they need to benefit not just some, but all.

About the IMF Blog

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