(Ethnic Media Services) — For generations, millions of Americans whose roots lie in the Middle East and North Africa — MENA — have essentially become invisible people because the Census Bureau has denied requests for their own racial category.
“Legally, in America, I’m classified as white,” says Dr. Hamoud Salhi, associate dean of the College of Natural and Behavioral Sciences, CSU-Dominguez Hills. “I was born in Algeria, which is part of Africa, so technically I could declare myself as African American, but I can’t.”
Palestinian-American Loubna Qutami, a President’s postdoctoral fellow at U.C. Berkeley specializing in ethnic studies, says that since MENA doesn’t have a classification of its own, it legally falls under the white category.
MENA populations have their own specific needs for health care, education, language assistance, and civil rights protection, but they have no way to advocate for themselves because numerically they are folded into the category of white Americans.
To change this, Dr. Salhi, Dr. Qutami, and other MENA leaders have been mobilizing their communities to participate in the 2020 census, encouraging people to write in their ethnicity. They spoke with other experts and activists on a May 13 two-hour video conference organized by Ethnic Media Services on the historical, linguistic and political challenges that make the MENA population among the hardest to count in California.
Geographically, MENA populations live on three continents — from the border of Afghanistan south to the tip of Africa — and in 22 nations in the Middle East alone, with numerous subgroups such as Kurds, Chaldeans, Assyrians, Armenians.
“North Africa is actually a concept that the French gave to Tunisia, Morocco and Algeria, which they colonized,” says Dr. Salhi. The neighboring countries of Egypt and Libya were added later.
Because of their shared Arabic language and Islamic religion, people in the United States from North Africa were lumped together with people of the Middle East to form the MENA acronym.
For decades, the Census Bureau has turned down requests to add MENA to the official category of races, currently white, black or African American, American Indian, Alaska Native, Asian American and Native Hawaiian and other Pacific Islander.
The result, says Dr. Qutami, artificially props up the white population count, which has been in decline, while suppressing the count of MENA residents who don’t identify themselves as white. According to the 2015 Census Bureau’s “National Content Test – Race and Ethnicity Report, “As expected, the percent reporting as White is significantly lower with the inclusion of a distinct MENA category when compared to treatments with no MENA category.”
California mirrors the challenge to the MENA population of geographic size and diversity, says Emilio Vaca, deputy director of the state’s Complete Count Committee, which directs census outreach. The Census Bureau’s 2017 American Community Survey reported that 11 million of California’s 40 million residents, about 27 percent, are immigrants.
“That’s equivalent to the entire state of Georgia,” Vaca emphasized. At home, most of those immigrants speak one or more of 200 languages other than English.
Homayra Yusufi, from the Partnership for the Advancement of New Americans, broke down the face of diversity in just one San Diego neighborhood that her organization serves: “We have 45 different national origins — from MENA, Asia and Latin America — who speak more than 100 languages in the 6.5-mile City Heights district, a distinct community of refugees and immigrants.” Educating and motivating these groups to participate in the census is a way to engage them in the civic life of the wider city.
Historical necessity — what specific immigrant groups have done to survive — also plays a role in the MENA undercount. Up until the mid-20th century, only whites could own property, and only “free white immigrants” could become American citizens.
To survive and advance, Middle Eastern immigrants successfully petitioned the federal courts to be allowed to identify themselves as white in 1920. North African immigrants, as members of the MENA population, got pulled along and found themselves legally classified as white as well.
The discriminatory policy for citizenship and property ownership favoring whites-only ended with the passage of the Immigration and Nationality Act of 1952. But even then, MENA communities found it difficult to raise funds and mobilize calls for action to address their needs. They didn’t know where their fellow compatriots were located and couldn’t raise official numbers to request funds and resources.
“We were helpless. In many instances, we had to generate our own data,” says Dr. Qutami.
Over the years, the Census Bureau has never clearly answered why they’ve refused to include the MENA classification, despite concluding, in a 2017 report, that “the inclusion of a MENA category helps MENA Respondents to more accurately report their MENA identities.”
The bureau again turned down the 2018 request for the 2020 census. Karen Battle, chief of the bureau’s population division, announced in a public meeting on census preparations that “We do feel that more research and testing is needed.”
MENA advocates believe filling out the 2020 census is the only way to avoid another undercount. Without doing this, Yusui says, “our communities will continue to be invisible and left in the margins because data really matters.”
Gaining services customized to MENA’s needs is only part of what’s at stake. So, too, argues Yusufi, is building power. MENA populations then can elect individuals “who reflect the needs of our communities and hold lawmakers accountable” when they stigmatize MENA communities.
Kathay Feng of the nonpartisan watchdog Common Cause emphasized that participation in the census is the first step to representation. In America, resources and rights are accorded by representation based on the number of residents at all levels, from the state down to the municipality, in proportion to the total population.
“Everyone is counted, regardless of immigration status or whether they are registered voters or not,” Feng said, “because all residents pay taxes in one way or another, and most immigrants would eventually become citizens in the long run.”
Every 10 years, immediately after the decennial census submits population data, electoral districts are redrawn. In California, which has been at the forefront of redistricting reforms, the old practice of allowing legislators to draw district lines based on which populations are sure to vote them back into office — known as gerrymandering — was replaced in 2009 by independently selected commissioners. Nine other states have followed California’s lead.
But, Feng emphasized, to be effective and to ensure their voices are heard, residents have to be engaged at the local level. And this year, there is a danger that anti-immigrant forces will restrict the residents who count in redistricting to voters only.
“In the city of El Cajon, San Diego, we faced a lot of discrimination, especially when the Syrian refugees arrived. Our children got bullied in school but the schools didn’t want to adopt any bullying policy because we don’t have representation,” said Dilkhwaz Ahmed, executive director of License to Freedom. “Representation is very important to us as a Kurdish community, as refugees, and as immigrants.”
Emilio Vaca is optimistic that California can meet the undercount challenge: “As of May 11, California has a self-response rate of 59.6 percent, which is above the national average of 58 percent.” This is all the more impressive, Vaca noted, given how the pandemic has affected outreach.
Many of the speakers on the call testified to the ongoing efforts to shift to virtual outreach and “drive by” caravans and taking the census to where the people are.
“We had a food bank event for the Middle Eastern and Muslim community in south Sacramento that attracted more than 2,000 families who came by cars, and we actually engaged with them about the census in every single car,” said Basim Elkarra, executive director of CAIR in Sacramento. “Many were recent refugees.”
The 2020 census form doesn’t include the MENA racial category, but Question 9 allows respondents to write in “MENA” and their specific ethnicities such as Lebanese, Palestinian, Algerian or Kurd.
Being visible in the 2020 census, the speakers agreed, will lay the foundation for the next few MENA generations to build on what this generation has started.
This article originally published in the May 25, 2020 print edition of The Louisiana Weekly newspaper.
The Peninsula, Qatar’s Daily Newspaper of 21 May 2020 reports that ILO lauds Qatar’s efforts to protect health, rights of domestic workers. Qatar has about2.6 million inhabitants as of early 2017, the majority of whom (about 92%) live in Doha, the capital. Foreign workers amount to around 88% of the population, with Indians being the largest community numbering around 1,230,000. It will host the Football World Cup of 2022.
Doha: The International Labour Organisation (ILO) has lauded the Ministry of Administrative Development, Labour and Social Affairs (MADLSA) for launching SMS campaign to protect health and rights of domestic workers during COVID-19 crisis.
The series of messages in 12 languages was developed by the MADLSA with the support of the ILO Project Office for the State of Qatar, Migrant-Rights.org and the International Domestic Workers Federation (IDWF), said ILO in a report on its official website.
The messages provide helpful tips not only on how to prevent COVID-19 transmission but also how to protect the health and rights of domestic workers at home during this challenging period.
“Domestic workers play an essential role in ensuring the health and safety of the families for which they work, from cleaning and cooking, to supporting teleworking parents, caring for children, the ill and the elderly,” said ILO Technical Specialist Alix Nasri.
“It is vital that they have access to up-to-date information on COVID-19 precautionary measures in languages they understand. At the same time this campaign reaches out to employers so they support the health and welfare of domestic workers in their homes during the COVID-19 lockdown, when their services are being so heavily relied upon.” Messages for domestic workers include basic information on the symptoms of COVID-19 and what to do if they have symptoms, advice on hygiene and sanitation, sending money home via online services as well as keeping in touch with family back home.
There is also information reminding domestic workers of their rights and responsibilities – at all times – according to Qatar’s Law No. 15 of 2017 on domestic work. Messages for employers highlight the need to support the mental and emotional health as well as physical well-being of domestic workers. There are reminders about domestic workers’ rights relating to working hours, rest periods, days off, and the importance of being paid on time. Employers are also encouraged to help domestic workers open bank accounts and transfer their salary online, as well as provide access to the internet and other forms of communication.
Director of MADLSA Recruitment Department, Fawaz Al Rayis stressed the importance of reaching out to domestic workers and their employers. “Raising awareness about precautionary measures, providing useful advice, and recalling rights and obligations is key to ensuring both domestic workers and employers are protected during this pandemic. This campaign is an effective way to quickly and widely share important information with domestic workers and their employers, similarly to what has been done in other sectors,” said Al Rayis.
Humans are amazing creatures, in that they have shown they can live in almost any climate. Think of the Inuit who live in the Arctic or the Bedouins in the deserts of North Africa. But a new study suggests humans, like any animal or plant, have a preferred climate or environmental niche in which they thrive – and climate change will shift billions of people out of this comfort zone.
For now, Climate change does not seem that high enough on the agenda of most countries of the MENA region and yet if there were a region that is closer to the hearth, it is this region as illustrated b this map of the world.
Mark Maslin, UCL asks “Will three billion people really live in temperatures as hot as the Sahara by 2070?” Here is his reply.
World map showing mean annual temperatures. Yarr65 / shutterstock
The study, published in the journal PNAS, was written by international team of scientists led by Chi Xu of Nanjing university. They first showed that for the past 6,000 years a majority of people have lived in regions where the average annual temperature has always been between 11˚C (roughly equivalent to London’s climate) and 15˚C (Rome or Melbourne).
Future climate change will affect this average temperature, and at its most extreme would mean 3.5 billion people would be outside their current climate niche. In fact one in three of us would experience annual average temperatures of more than 29˚C – a climate currently experienced by humans in only a handful of the hottest desert settlements.
The human niche
At the centre of this thought experiment is the concept of the human “climate niche”, or the environmental range in which modern humans thrive. And this range has changed over time. As humans evolved from primates in Africa, our ancestors’ climate niche was controlled by their own physiology. Modern humans are most comfortable between 21˚C and 27˚C, and our ancestors lived in regions of Africa with this average annual temperature.
But this climate range then expanded massively as early humans learned to domesticate fire, to store and transport drinking water, and to make clothes and build shelters. As I found in my own research, these developments eventually allowed us to settle on every continent except Antarctica.
Human climate comfort zone adapted by M.A. Maslin from [T.R. Oke Boundary Layer Climates (1988) Adapted by Mark Maslin from T.R. Oke Boundary Layer Climates (1988), Author provided
Our climate niche narrowed again with the invention of agriculture, starting around 10,000 years ago. The domestication of animals and plants occurred at the end of the ice age and appeared independently in at least ten places round the world including Asia, the Americas, and Africa. From each of these areas the new agriculturalists spread out, competing with the indigenous hunter-gathers and pushing them on to marginal lands. Today, 75% of the world’s food is generated from 12 plants and five animal species that were domesticated during this first wave.
As the agriculturalists expanded from the warmer regions into more temperate lands, their productivity increased significantly. Increased food production led to an expansion of the human population and hence the modelled human climate niche follows where our domesticated crops and animals thrive.
A more detailed look at the new PNAS paper reveals that today there are in fact two distinct human climate niches with two populations peaks between 11-15˚C and 20-25˚C. The latter is largely down to the huge populations who live in the extremely fertile SE Asia monsoon regions.
Our future climate niche
As climate change warms up the planet, the average annual temperature of each region will increase. The new study suggests that extreme climate change would mean 3.5 billion people theoretically would have to move if they wanted to remain under the same climate range as today. Even if strong climate policies were to keep global temperature increase to 2˚C they argue that 1.5 billion people would still theoretically have to move.
Small dark areas currently have annual averages above 29˚C. By 2070, an extreme climate change scenario would expand this area to include all the red shaded regions, will would be home to 3.5 billion people. Xu et al (2020)
What is disappointing about this study is that the focus is mainly on the worst case scenario, which due to changes in energy generation and efficiency is thankfully no longer realistic.
If you dive into the 23 pages of the supplementary material the authors have looked at other future scenarios where global warming is less severe, but who does this except science geeks like me? I would have expected a more balanced presentation, especially as more realistic warming scenarios are still scary enough.
The study also does not take account of the dynamic and adaptable nature of human technology and society. As the climate zones shift it will be possible to transfer the knowledge of societies currently living under a warmer climate to the new region.
Constraints on outside work
The study does, however, make an important point about food security. Half of the world’s food is produced by smallholder farms with most of the energy input from physical labour carried out by the farmers.
Billions of hours of work are already being lost to extreme temperatures. AJP / shutterstock
As the world warms there will be more and more days when it will be physically impossible to work outside, reducing productivity and food security. Climate change has already created areas of the world where heat and humidity are too severe for humans to tolerate. The Lancet climate commission has shown that more than 150 billion work hours were lost in 2018 due to extreme temperature and humidity. This could double or even quadruple depending on how many people stay working in rural agriculture.
Reservations aside, this is a brilliant thought experiment. Using the historic and current human climate niches shows us just how many people in the world, between 1.5 and 3.5 billion, will be shifted out of their current climate range due to global warming. It also highlights that the people most affected by shifting climate zones are the poorest and those that most rely on food that is produced by smallholders working outside.
ZAWYA’s ECONOMY on 7 May 2020, elaborated on IMF reveals how COVID-19 could disrupt Arab economies. Here is how the COVID-19 pandemic by bringing unprecedented challenges, and strict lockdowns in some parts of the MENA region, could make it even worse for those petro-economies of the Gulf, the obvious object of this article.
Governments responded quickly to the pandemic and Arab youth will play a major role in economic recovery.
The Arab economies are facing a multi-level shock from COVID-19 despite the prompt responses by many governments in the region, the regional head of the International Monetary Fund has stated.
Image used for illustrative purpose. Financial Market Charts.GettyimagesBy Atique Naqvi, ZAWYA
Low oil prices will not only further distress producers but will also impact non-oil Arab economies, said Dr Jihad Azour, Director of the Middle East and Central Asia Department at the IMF.
“Starting with long-term structural problems, Arab countries will have difficulties addressing the direct impact of the ongoing slowdown,” said Dr. Azour, adding that one thing that helps in the recovery in Arab countries is that they have young populations.
Two-thirds of the Arab population in the region is less than 30 years old, and this human capital advantage would play a key role in speeding up the regional economic recovery in the post-COVID19 market, he said.
Dr Azour expects Arab countries to continue their technology adoption programs as the economic recovery would depend on the efficiency of such initiatives.
What is needed, he noted, are dedicated efforts to implement what Arab governments and international organizations know are essential reforms to the structure and emphasis of Arab economies.
Economic diversification
Oil producers in the Arab world should continue their economic diversification drive, he said, adding that ongoing COVID-19 pandemic should prompt countries in the Middle East and North Africa to focus on public health and social security. “The countries must work towards reducing trade barriers, decreasing financial vulnerability and avoiding high costs of armed conflicts.”
Dr Azour was answering questions in a webinar last night hosted by Khalil E. Jahshan, who is the executive director of Arab Center Washington DC.
In Tuesday’s IMF podcast on Arab economies, Dr. Azour said all countries in the region were affected by the COVID19-led economic crisis and most of them have introduced a certain number of measures to protect life and livelihoods and also to protect certain sectors in the economy.
“Most challenging moments”
“If we compare to the last hundred years, this is one of the most challenging moments in economic history for both Central Asia Caucuses as well as also for the Middle East and North African countries,” he said.
The IMF’s Middle East head believes the oil exporting countries in the Arab world will face the impact of the shock on their revenues and fiscal situation.
Countries with ample buffers could use them to mitigate some of the repercussions of the shock, but the economic management is going to be more complicated for the nations with less buffers. Oil importing countries will be impacted due the fluctuations in the levels of remittances, capital flows and investment coming from the oil producers, he said.
During the Arab Center webinar, Dr. Azour also provided some global perspective on the impact of COVID19 pandemic.
The current economic crisis caused by COVID19 is not like that of 2008-2009 since it has precipitated a deeper and wider shock to the economies of individual countries as well as to the international economy at large, he said.
What also specifically differentiates the current economic crisis is the degree and level of uncertainty associated with it. He said the international community and organizations knew what instigated the 2008 financial crisis; however, the severity and impact of the current one remains unknown, thus addressing its effects is still indeterminable.
He stressed that the IMF’s current policy, which includes loans and advisory services, is to give breathing space so that “emerging economies and low-income countries are not left behind” in this period.
He predicted that there will be a new globalization effort that may try to address the deficiencies of the former international economy. The international economy, he argued, will have to determine how to address challenges to growth and to make sure that this growth is equitable between low income and developed countries.
(Reporting by Atique Naqvi; editing by Seban Scaria)
Associated Press on May 03, 2020, released this account on Hard-to-count Arab Americans Urged to Prioritize Census. It is about an easy to notice a change in the US population that is taking time to translate into an administratively operational procedure of systematically acquiring and recording information about the members of the newly established community originating mainly from the Middle East.
DEARBORN, MICH. – At a Michigan gas station, the message is obvious — at least to Arabic speakers: Be counted in the 2020 census.
“Provide your community with more/additional opportunities,” the ad on the pump handle reads in Arabic. In the fine print, next to “United States Census 2020,” it adds: “To shape your future with your own hands, start here.”
As state officials and nonprofit groups target hard-to-count groups like immigrants, people of color and those in poverty, many Arab Americans say the undercount is even more pronounced for them. That means one of the largest and most concentrated Arab populations outside the Middle East — those in the Detroit area — could be missing out on federal funding for education, health care, crime prevention and other programs that the census determines how to divvy up.
That also includes money to help states address the fallout from the Coronavirus.
“We are trying to encourage people not just to fill it out because of all the reasons we had given before, where there’s education and health care and all of that, but also because it is essential for the federal government to know who is in Michigan at this point more than ever before,” said Rima Meroueh, director of policy and advocacy with Dearborn-based ACCESS, one of the largest Arab American advocacy nonprofits in the country.
The Arab American community checks many boxes that census and nonprofit officials say are hallmarks of the hardest-to-count communities: large numbers of young children, non-English speakers, recent immigrants and those who often live in multifamily or rental housing.
Arabs arrived en masse to the U.S. as the auto industry ramped up and worker demand grew. By the time those jobs began to decline in more recent decades, communities with strong Middle Eastern cultural roots had been firmly established in the Detroit area. It has remained a destination for people from across the Middle East fleeing conflict, reconnecting with family or simply seeking a better life. Even those who resettle elsewhere often first make their way to Detroit and surrounding cities.
Advocates have pressed ahead with “get out the count” campaigns despite restrictions designed to curb COVID-19. The pandemic has forced the Census Bureau to push back its deadline for finishing the 2020 count from the end of July to the end of October. It’s also asking Congress for permission to delay deadlines next year for giving census data to the states so they can draw new voting maps.
With the changes, ACCESS is stepping up its social media effort, mirroring it to focus as much on the once-a-decade count as their offices, which had been plastered with census posters, Meroueh said.
“If you check out our social media, it’s very census-heavy,” she said.
But groups face a hurdle after the Trump administration decided not to include a category that counts people from the Middle East or North Africa as their own group. The Census Bureau recommended the so-called MENA box in 2017 after years of research and decades of advocacy.
A gas pump message is obvious — at least to Arabic speakers: Be counted in the 2020 census, April 30, 2020.
The decision to scrap the choice angers many Arab Americans, who say it hinders representation and needed funding. Democratic U.S. Rep. Rashida Tlaib, an Arab American representing part of Detroit and several suburbs, expressed her displeasure while questioning Census Bureau director Steven Dillingham on Capitol Hill in February.
“The community did it right — they went through the process,” she said. “You’re making us invisible.”
Dillingham said the form would have a write-in box, allowing people to describe their ethnicity. It falls short for Tlaib, but Matthew Jaber Stiffler, a University of Michigan lecturer and research and content manager at the Arab American National Museum, said it’s better than nothing. Advocates will have to push harder to get people counted, he said.
“The onus is on community organizations, and local and state governments to get the people to complete the form, because it doesn’t say, ‘Are you Middle Eastern or North African?'” Stiffler said. “We’ll get really good data if enough people fill it out.”
Even though the MENA option isn’t there, Stiffler says census officials did preparatory work for it. If someone writes “Syrian” on their form, for instance, Stiffler has been told that the census will code that within the larger MENA ancestry group.
That’s precisely what Abdullah Haydar did when he filled out his census form electronically, which he said took five minutes.
“I definitely filled it out as soon as I got it. I believe in representation,” said Haydar, a 44-year-old from Canton Township, Michigan, who works in LinkedIn’s software engineering department.
But support for the census isn’t unanimous. Some in the Arab community have raised concerns about government questions over their citizenship status if they participate, though that is not part of the form. Many have reported extra scrutiny since the Trump administration issued a ban on travelers from several predominantly Muslim countries in 2017 — creating an overall chilling effect when it comes to interacting with the government.
“They don’t trust the current administration. They don’t trust what they’re going to do with the information. And when you look at the the so-called Muslim ban that was put in, people don’t want to be on the government’s radar,” said Haydar, who assisted some elderly relatives in filling out their forms.
“I just told them, ‘Look, yes, there may be abuses. There’s always a risk of that. This administration seems to be pushing boundaries. But at the end of the day, this is the basis of our system of government, for people to count,'” he said.
Associated Press writer Mike Schneider contributed from Orlando, Florida.
The continued sharp decline in working conditions due to the Covid-19 outbreak means that nearly half of the global workforce stand for having their livelihoods changed to the worse, warns the International Labour Organization. In effect, workers of all countries’ informal economy are the most vulnerable of the global workforce, without welfare protection or access to good healthcare. All MENA region countries especially the heavily populated ones tend to have large informal economies. North Africa and countries of the Levant literally owe it to these workers for their citizens’ daily life. These workers, accounting for more than half of all manpower handle more than 40% of the economies of their respective countries. But let us hear the ILO addressing the issue as reported by the WEF, i.e. nearly half the global workforce at risk of losing their livelihood.
The International Labour Organization has warned that nearly half the global workforce are at immediate risk of losing their livelihood because of coronavirus.
Informal workers are at particular risk as they lack welfare protection, access to healthcare, or means to work from home.
Some 1.6 billion workers in the informal economy, representing nearly half of the global labour force, are in immediate danger of losing their livelihoods due to the coronavirus pandemic, the International Labour Organization (ILO) said on Wednesday.
The U.N. agency’s latest report sharply raised its forecast for the devastating impact on jobs and incomes of the COVID-19 disease, which has infected more than 3.1 million people globally, killed nearly 220,000 and shut down economies.
“It shows I think in the starkest possible terms that the jobs employment crisis and all of its consequences is deepening by comparison with our estimates of 3 weeks ago,” ILO Director-General Guy Ryder told a briefing, foreseeing a “massive” poverty impact.
Already, wages of the world’s 2 billion informal workers plunged by an estimated global average of 60% in the first month that the crisis unfolded in each region, the ILO said.
Low-income countries are especially hard hit.Image: ILO
Informal workers are the most vulnerable of the 3.3 billion global workforce, lacking welfare protection, access to good healthcare, or the means to work from home, it stressed.
“For millions of workers, no income means no food, no security and no future. Millions of businesses around the world are barely breathing,” said Ryder. “They have no savings or access to credit. These are the real faces of the world of work. If we don’t help them now, they will simply perish.”https://open.spotify.com/embed-podcast/episode/6jNDKwt8zdtcQn8sWLBeVi
‘Protect the vulnerable’
The ILO said prolonged lockdowns and office and plant closures are now expected to lead to an “even” worse fall in total working hours worldwide in the second quarter than what was forecast just three weeks ago.
Worst-hit sectors are manufacturing, accommodation and food services, wholesale and retail trade, and real estate and business activities.
Total working hours in the second quarter are expected to be 10.5 per cent lower, equivalent to 305 million full-time jobs, than the last pre-crisis quarter, the ILO said, with biggest declines forecast for the Americas, Europe and Central Asia.
The previous ILO estimate on April 7 was that disruptions would wipe out labour equivalent to the effort of 195 million workers, or 6.7% of hours clocked worldwide.
About 436 million enterprises – businesses or self-employed – face “high risks” of disruption, the agency added.
The long-term panorama was unclear.
“The eventual increase in global unemployment over 2020 will depend substantially on how the world economy fares in the second half of the year and how effectively policy measures will preserve existing jobs and boost labour demand once the recovery phase begins,” it said.
As governments splurge unprecedented cash to counteract the crisis, the ILO urged them to speed procedures for unemployment benefits, extend support to independent workers, and fast-track small and informal businesses’ access to credit and loans.
“As the pandemic and the jobs crisis evolve, the need to protect the most vulnerable becomes even more urgent,” Ryder added.Share
. . . their authoritarian controls and surveillance as per Matthew Hedges, Durham University who elaborates on how the Gulf states use coronavirus threat to tighten authoritarian controls and surveillance. To help put things in their context and, before going into the author’s, here are in a few words, some details of recent happenings.
The Reporters Without Borders (RSF) treated the North African region as made of states accustomed to a lower ranking in its yearly World Press Freedom Index. Thus, in terms of press freedom, Saudi Arabia which still drags the story of Khashoggi, Iran, Egypt or Iraq did not reach their expected levels. Algeria’s ranking, which registers the largest decline in the North African region, responds to not only a conflicting political and social context but also to the recent prevailing lock-down. That situation has been characterised, through a yearlong peoples’ movement, by a campaign of intimidation and pressure on journalists, some of whom have been arrested for their coverage of popular demonstrations. These attacks on press freedom have also recently targeted online media that have been censored in disguise through a proper blockade by the authorities. This is the case of Maghreb Emergent made inaccessible for a few days to the Algerian public. These are “liberticide” procedures. In this regional picture, which is representative of the rest, Tunisia, which retains its 72nd position, is first in the MENA region.
Governments across the Middle East have moved to upgrade their surveillance capabilities under the banner of combatting COVID-19, the disease linked to the new coronavirus.
Overtly repressive policies have been commonplace across the Middle East for years, notably in Egypt, Iraq and Syria, where violent measures have been taken to control populations.
As a result of technological advances, an increase in political engagement and changes of leadership, the states of the Gulf Cooperation Council (GCC) – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) – have also upgraded their form of authoritarianism in recent years. This has seen policies of partial economic liberalisation and market-based reforms used to obscure an increase in repression and surveillance, for example by containing the work of civil society groups.
Following the pattern in which authoritarian states tend to exploit common threats, some of the GCC states are now manipulating the current pandemic to enhance their social power and control – as I’ve explored in a recent article as part of a contribution for the Project on Middle East Political Science at George Washington University.
New controls
In Dubai, nationwide curfews have been put in place and enforced by the security services and surveillance. Authorities in the UAE have also introduced criminal penalties for the dissemination of information about the virus deemed to be false. Meanwhile, Bahrain introduced electronic tags for patients who had tested positive for COVID-19. In Saudi Arabia, people have been arrested for violating strict curfew laws.
Beijing’s recent admission that more people had died than originally reported in Wuhan, the original epicentre of the pandemic, shows the fragile nature of information and truth within authoritarian states. Likewise, it’s difficult to assess the scale of who has been affected so far across the GCC. According to official government statistics as of April 21, there were 10,484 reported cases in Saudi Arabia and 103 deaths from COVID-19. The UAE had reported 7,265 cases and 43 deaths, Qatar 6,105 ases and nine deaths and Kuwait 2,080 cases and 11 deaths.
China’s handling of its own early COVID-19 whistleblowers showed how authoritarian states often react promptly to the dissemination of news which could undermine their authority. Of course, the curtailing of “fake news” during this time is important to prevent hysteria and panic.
But from my own experience of being forcibly detained for six months and falsely accused of spying charges in the UAE, I know full well how these laws can be abused and twisted for ulterior purposes. The real test will be to see if all of these preventative laws are relaxed once the pandemic is under control.
A market in Salmiya, Kuwait, is disinfected in early April. Noufal Ibrahim/EPA
The inherent weaknesses of GCC states are also being further exposed through this pandemic. GCC citizens only inadvertently hold the power of accountability over their monarchies, due to the lack of formal political mechanisms that generate and provide legitimacy in democracies. In essence, the monarchs hold power until they don’t.
In response, Middle Eastern states have introduced programmes in recent years that emphasise cultural traditions in an attempt to further centralise power using key figures within their regime. A recent anti-corruption drive in Saudi Arabia, which climaxed with the Ritz-Carlton incident in which more than 30 elite figures were detained in a luxury hotel, highlighted the ascendancy of Mohammed Bin Salman, the crown prince.
In the UAE, the security state has been intensified through the creation of conscription programmes which emphasise national identity under the patronage of Abu Dhabi Crown Prince Mohammed bin Zayed.
Biopolitics
Central to the current messaging around COVID-19 is the heightened value of “purity” within the nation. This notion has been promoted through the prism of the family, with the region’s rulers extending the meaning to include the nation in an attempt to retain cohesiveness. In the current context, for example, only one member of a family is allowed to pick up food during the lockdown in some Gulf states, and there have been greater protections imposed for nationals than non-nationals, many of whom have been deported.
But this comes at a moment when the so-called purity of the family unit is under threat as dowry costs, marriages to foreigners and divorce rates are all increasing across the GCC. This has helped maintain a heightened significance of the family within GCC politics. As a result, issues such as homosexuality, marriage to foreigners and now even COVID-19 are seen as a threat which has the potential to dilute the national gene pool.
The GCC states are also capitalising on a new vein of conservative nationalism across the region that is highly personalised and driven by security concerns. An era of assertive foreign policy from Riyadh, Abu Dhabi and Doha is now playing out as a matter of principle and survival. As a result, Saudi Arabia and the UAE have fortified their political and military engagements. Their closer ties with regional players such as Libya’s General Khalifa Haftar and pro-government Yemeni forces have helped keep these conflicts alive within a reduced footprint.
Back home, the GCC states have exploited the underlying threats of the virus to bolster their own survival strategies. In the past, authoritarian states such as the former Soviet Union often relied on crude illustrations of force alongside state propaganda. But the modern authoritarians in the GCC take a more co-optive route to manage their populations. They have been able to enact policies which undermine civil liberties, perpetuating their current political designs and generating no protest from their populations. So it’s crucial to understand how these practices are maintained, why they have the population’s consent, and upon what basis they will continue to be applied.
As the coronavirus pandemic hits jobs and wages in many sectors of the global economy that depend on migrants, a slowdown in the amount of money these workers send back home to their families looks increasingly likely. These international remittances will be crucial in transmitting the unfolding economic crisis in richer countries to poorer countries. They will fundamentally shape how, and the pace at which, the world recovers from coronavirus.
Remittances shelter a large number of poor and vulnerable households, underpinning the survival strategies of over 1 billion people. In 2019, an estimated 200 million people in the global migrant workforce sent home US$715 billion (£571 billion). Of this, it’s estimated US$551 billion supported up to 800 million households living in low- and middle-income countries.
The majority of remittances are small sums of money, spent by recipients on everyday subsistence needs including food, education and health. The World Bank projects that within five years, remittances will outstrip overseas aid and foreign direct investment combined, reflecting the extent to which global financial flows have been reshaped by migration.
But the social distancing and lockdown measures used to contain the spread of coronavirus have led to a global economic slump, with the International Monetary Fund predicting the global economy will contract by 3% in 2020. Three issues make this looming crisis particularly salient for the migrant workers who generate remittances.
Migrant workers at risk
First, as the Institute for Public Policy Research think tank illustrated in a recent briefing, migrant workers tend to work in sectors that are particularly vulnerable at times of an economic downturn and have less employee protections. They are also more likely to be self-employed.
Second, the access migrant workers have to public funds is – with some exceptions – specifically restricted as a condition of their visas. So it’s uncertain whether they will be able to access the already limited government interventions to mitigate the effects of the pandemic. For example, the South African government’s initiative to help small- and medium-sized businesses is only available for those with South African citizenship.
Third, and as a result of this, migrant workers adopt a series of strategies or tactics to cope. They often continue to work in compromised circumstances, such as in jobs with lower wages, poor working conditions and, in the current crisis, exposure to infection. They also restrict their spending – and contemplate a return back home.
In the UK, some migrants are hyper-visible NHS doctors and nurses. Their labour has been somewhat belatedly acknowledged by the government, and their importance to the health service demonstrated by the Home Office’s decision to extend all visas of health workers coming up for renewal by a year.
But many more migrants are hidden and largely unsung heroes who continue to work in so-called semi-skilled or unskilled jobs in sectors such as food manufacturing and delivery, social care and cleaning. High rates of infection among Somali migrants in Norway, for example, are partly attributable to their concentration in these “close-contact” professions where home working is not an option.
Shops shuttered in Brooklyn, New York during the coronavirus pandemic. Alba Vigaray/EPA
The 2008 financial crisis
The 2008 financial crash and recession provide some indications of how this crisis in migrant work may affect remittance flows. Between 2008 and 2009, remittance flows declined by 5.5% globally. Some parts of the world saw even more marked declines. Transfers to Latin America and the Caribbean, most originating from the US, decreased by 12%. Migrants remitted smaller amounts, more infrequently, or in extreme cases, stopped altogether as they were laid off and faced uncertain future employment prospects.
Early predictions of the impact of coronavirus on remittances detail significant declines. One study by the Inter-American Dialogue estimated there would be a 7% decline in remittances from the US, which will fall from by US$76 billion to US$70 billion, with receiving households from Mexico and Central America being most affected. According to another study by BBVA Research, remittances to Mexico could fall by 17%.
With the global economy slowing down even before coronavirus, and the pandemic affecting different parts of the world over different timelines, long-term recovery prospects are unclear. The particular vulnerability of poor countries is apparent with the World Bank pledging US$160 billion over the next 15 months to aid both immediate health priorities and longer term economic recovery.
It remains unclear whether that US$160 billion is adequate and will reach vulnerable households, particularly given the negative impact the World Bank and IMF’s historic structural adjustment programmes, in which strict spending conditions were attached to aid, had on the healthcare systems of many developing countries.
In contrast, remittances – often known as aid that reaches its destination – constitute a significant safety net for vulnerable households. Our own research shows that remittances don’t just reach immediate household members but are also distributed among extended family and friends. They also support local economies through family payments to shopkeepers and construction workers. In regions such as the Horn of Africa, where 40% of households are heavily dependent upon remittances, any disruption in flows sent by the Somali diaspora will further exacerbate food insecurity.
How richer nations respond to the current crisis will have significant economic ramifications for countries dependent on remittances. Richer nations must adopt inclusive economic policies which both protect the livelihoods of migrants and reduce the socio-economic impacts of the pandemic. Their jobs are linked to the survival of millions of others.
Well before the sudden irruption of the COVID-19 pandemic, we entered a phase unknown before, that of a slowdown in the world economy. The economies north of the MENA region were first to feel the pinch of the Dollar. The MENA petro-economies know this since the advent of oil. What they did not perhaps know is that it is the worst economic downturn since the Great Depression.
A small story before going into the latest IMF blog of April 14, 2020. In Europe, the German machine seemed running out of steam, with a few small cracks appeared by the questioning the German miracle. The locomotive of Europe tired by putting up so much effort trying to pull and strengthen the stragglers of the union that are Greece, Portugal, Spain, and other Eastern countries.
These countries however were integrated into the European Union for geopolitical reasons aimed at creating a strong Europe in the face of the communist challenge on the one hand and US exuberance on the other. Without going into the technical details of the financial mechanisms and destabilization processes devised by the US, the thinly veiled objectives of the dominant states are first security imperatives and eventually the long-term control over global wealth.
Moreover, the countries lagging above have brought nothing useful to the EU if not ever more unemployed and care to manage. After Brexit, all that remains is Germany and France to pull the EU train. Germany, knowing that these countries were plagued by chronic corruption and mismanagement, did not want to sacrifice itself to fish them, and this is understandable because prestige politics is never good in bad weather. Indeed, the €500 billion injected by the state into the banks was the lifeline to avoid the crash of the entire German financial system and thus the collapse of the European Union.
The world has changed dramatically in the three months since our last update of the World Economic Outlook in January. A rare disaster, a coronavirus pandemic, has resulted in a tragically large number of human lives being lost. As countries implement necessary quarantines and social distancing practices to contain the pandemic, the world has been put in a Great Lockdown. The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes.
April World Economic Outlook projects global growth in 2020 to fall to -3 percent.
This is a crisis like no other, and there is substantial uncertainty about its impact on people’s lives and livelihoods. A lot depends on the epidemiology of the virus, the effectiveness of containment measures, and the development of therapeutics and vaccines, all of which are hard to predict. In addition, many countries now face multiple crises—a health crisis, a financial crisis, and a collapse in commodity prices, which interact in complex ways. Policymakers are providing unprecedented support to households, firms, and financial markets, and, while this is crucial for a strong recovery, there is considerable uncertainty about what the economic landscape will look like when we emerge from this lockdown.
Under the assumption that the pandemic and required containment peaks in the second quarter for most countries in the world, and recedes in the second half of this year, in the April World Economic Outlook we project global growth in 2020 to fall to -3 percent. This is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period. This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.
Bulent Gökay, Keele University elaborates on how Turkey tries to keep wheels of economy turning despite worsening coronavirus crisis. It, contrary to its neighbours, would not go down the same way. Read on to find out why.
Turkey confirmed its first case of the new coronavirus on March 11, but since then the speed of its infection rate has surpassed that of many other countries with cases doubling every two days. On April 2, Turkey had more than 15,000 confirmed cases and 277 deaths from complications related to the coronavirus, according to data collated by John Hopkins University.
The Turkish government has called for people to stay at home and self-isolate. Mass disinfection has been carried out in all public spaces in cities. To encourage residents to stay at home, all parks, picnic areas and shorelines are closed to pedestrians.
Some airports are closed and all international flights to and from Turkey were banned on March 27. All schools, universities, cafes, restaurants, and mass praying in mosques and other praying spaces has been suspended, and all sporting activities postponed indefinitely.
Manufacturing remains open
Many small businesses in the service sector are closed, and many companies in banking, insurance and R&D have switched to working from home. But in many industrial sectors, such as metal, textile, mining and construction, millions of workers are still forced to go to work or face losing their jobs. In Istanbul, where more than a quarter of Turkey’s GDP is produced, the public transport system still carries over a million people daily.
Recep Tayyip Erdoğan, Turkey’s president, has openly opposed a total lockdown, arguing a stay-at-home order would halt all economic activity. On March 30, he said continuing production and exports was the country’s top priority and that Turkey must keep its “wheels turning”.
But in the short term, many of Turkey’s export markets for minerals, textiles and food, such as Germany, China, Italy, Spain, Iran and Iraq, are already closed due to the virus. This has led to enormous surpluses piling up in warehouses. Even where there are overseas customers, getting the goods delivered has proven difficult. The process of sanitising and disinfecting the trucks and testing the drivers before they travel takes many extra hours, sometime days, after waiting in long lines.
Still, Erdogan’s statements give the impression that he sees this pandemic not only as a serious crisis, but also as an opportunity for Turkish manufacturers. The hope is that, after the Chinese shutdown, European producers which depend on Chinese companies for a range of semi-finished products may consider Turkey as an alternative supplier in the longer term. That’s why the government is still allowing millions of workers to go to factories, mines and construction sites despite the huge health risk.
A bruised economy
The Turkish government announced a 100 billion lira (£12 billion) stimulus package on March 18. It included tax postponement and subsidies directed at domestic consumption, such as reducing VAT on certain items and suspension of national insurance payments in many sectors for six months. But this is an insignificant sum for an economy as big as Turkey’s.
Most of the support will go to medium and large companies that were forced to close, and only a very tiny amount to individual workers. In order to benefit from the scheme, a person must have worked at least 600 days in the past three years (450 days for those in Ankara). Those with most need get the lowest level of help or no help from the state.
The tourism sector, which accounts for about 12% of the economy, has already been decimated. Some 2.5 million workers will not be able to work as they had been expecting to in the peak tourist months between April and September.
Limited room for manoeuvre
Even before the virus hit Turkey the economy was already weak, still trying to recover from the impacts of a 2016 coup attempt and a 2018 currency crisis, both of which caused severe stress to Turkey’s economic and financial systems.
In March, Turkey’s Central Bank reduced its benchmark interest rate by 1%, and several of the country’s largest private banks announced measures to support the economy, such as suspending loan repayments. As a result, the Turkish lira initially held up reasonably well, compared with other emerging market economies, but it fell to an 18-month low on April 1 as the coronavirus death rates accelerated. Official interest rates have fallen below 10%, providing some protection to those holding Turkish lira versus some foreign currencies.
Turkey’s financial options to limit the impact of the crisis are limited. Credit rating agency Moody’s revised its prediction for the country GDP from 3% growth in 2020 to a 1.4% contraction. Still, it may get a reprieve from the low oil price. Turkey imports almost all its energy needs, and with the recent fall in the price of oil and gas, this means Turkey could save about US$12 billion (£9.6 billion) in energy imports.
It is hard to see very far ahead. During the next few months, it’s expected that Turkey, alongside South Africa and Argentina, could be sliding toward insolvency and debt default. After that, everything depends on how this crisis progresses and how long it will take to end.
Arshin Adib-Moghaddam, SOAS, University of London comes up with ‘Bani Adam: the 13th-century Persian poem that shows why humanity needs a global response to coronavirus’ to tell us that this novel pandemic per this poem is not locally that much of a novelty, not different from its predecessors and it is all about human connectivity.
Coronavirus is all about human connectivity. From a philosophical perspective, I’ve been thinking about how this virus is forcing us to confront our common fate, highlighting our connections in the process. The novel coronavirus defies geography and national borders. There is no escaping it – exactly because humanity is inevitably interdependent.
In a beautifully emotive poem called Bani Adam (human kind), drafted in the 13th century, the Persian-Muslim polymath Sa’adi used what can be employed as an analogy to our current challenge in order to visualise this common constitution of humanity. It reads:
Human beings are members of a whole, in creation of one essence and soul. If one member is afflicted with pain, other members uneasy will remain. If you have no sympathy for human pain, the name of human you cannot retain.
These verses from Sa’adi’s Bani Adam decorate the walls of the United Nations building in New York and the poem was quoted by US president Barack Obama in his videotaped New Year (Nowrouz) message to Iran in March 2009 to open up a new chapter in Iranian relations with the US. More recently, the British band Coldplay used the poem as the title of a song in their album Everyday Life. It’s a poem that speaks to the inevitability of a common fate of humanity, that unites us into an intimately shared space.
A common fate
This effort of conjoining what has been artificially divided through nationalisms, religious doctrines and other forms of ideology, was equally central to a poem by the German genius Johann Wolfgang Goethe. He was very much influenced by Persian/Muslim philosophy and poetry, in particular by the 14th-century poet Hafez-e Shirazi.
In his magnificent work West-Eastern Divan, a very early manifesto against cultural essentialism – viewing one’s own culture in complete separation of others – Goethe wrote:
When people keep themselves apart in mutual disdain. A truth is hidden from the heart. Their goals are much the same.
As a communicable disease, the coronavirus compounds our inevitable common fate. Our existence cannot be safeguarded in isolation, we can only survive together: my fate is yours, ours is theirs. Social media, for instance, has adopted terms such as “viral” to describe particularly successful Tweets or Facebook posts, which demonstrate the dialogues between our bodies and minds that are ongoing at every second of the day on this global canvass. This interconnected reality of ours merges (rather than divides) categories such as “us” and “them”, “self” and “other” which are at the heart of problematic ideas about today’s eternal cultural wars.
Our leaders continue to speak about the coronavirus in distinctly martial and psycho-nationalist terms. Even in a staunchly secular liberal-democracy such as France, president Emmanuel Macron described the crisis in war-like terms. US president Donald Trump used similar words when he likened himself to a “wartime president” in order to describe his fight against the virus.
And yet at the height of the pandemic, Trump’s administration pushed through more unilateral sanctions against Iran, which has been badly hit by coronavirus, and Venezuelan officials . At the time when countries such as China and Cuba are sending specialists to the epicentres of the crisis, Trump has punished the most vulnerable members of Iranian society for the sake of nationalistic power politics.
In search of a global response
In the meantime, many of us are concerned because we are finding out, tragedy by tragedy, that there is a lack of multilateral cooperation. Our elected leaders are incompetent or helpless and rampant capitalism has focused much of our resources on profit, rather than on institutions that serve the people.
The coronavirus transmuted into such an all-encompassing pandemic for two simple reasons. First, our common biology does not respect any of the mental and physical borders that were created to keep us apart. Second, coronavirus revealed how globalised our contemporary world is. Our lives are so closely interlinked and networked that this outbreak travelled all around the world within weeks.
The speed at which the virus spread demonstrates quite clearly the contracted space that we are all living in on Earth. Yet our politicians speak about national remedies and continue as if nothing has happened, as if we can insulate ourselves forever. It should be the World Health Organization and other UN bodies which take the lead to coordinate global policies for global problems.
Yet, in clear contradiction to what is needed, politicians continue to speak of coronavirus in terms of mere national emergencies. This approach compartmentalises what is conjoined, and contributes to the current crisis which can only be faced properly with global coordination and within multilateral organisations. But the UN and its auxiliary network is despised by the new breed of hyper-nationalist leaders all around the world. It is these leaders who have stunted our ability to resolve borderless challenges such as this current pandemic.
There is a common fate inscribed in our lives which demands global answers to global challenges. “No man is an island,” wrote the poet John Donne in 1624. It’s time that we act upon the science, with the empathy of a poet, and institute a new form of internationalism that acknowledges and celebrates our common humanity.
Nasser Saidi describes in a Project Syndicate article The Arab World’s Perfect COVID-19 Storm. The author holds that this recent pandemic analysed here impacts will be significant. It is perhaps the first time that these are equally shared not only throughout the MENA region but the world at large. Any differences will, however, be in the manner with which this pandemic is specifically confronted locally. Read on for a better perspective view of the GCC region’s future.
March 24, 2020
In the face of the COVID-19 pandemic, policymakers in the Gulf Cooperation Council states are rolling out stimulus measures to support businesses and the economy. But the camel in the room remains oil, especially the immediate impact on demand of the Chinese and global economic slowdown.
BEIRUT – Middle Eastern and Gulf Cooperation Council (GCC) economies are heading toward a recession in 2020 as a result of the COVID-19 pandemic, collapsing oil prices, and the unfolding global financial crisis.
The fast-spreading global pandemic – with Europe its new epicenter – is generating both supply and demand shocks. The supply shock results from output cuts, factory closures, disruptions to supply chains, trade, and transport, and higher prices for material supplies, along with a tightening of credit. And the aggregate-demand shock stems from lower consumer spending – owing to quarantines, “social distancing,” and the reduction in incomes caused by workplace disruptions and closures – and delayed investment spending.
The two largest Arab economies, Saudi Arabia and the United Arab Emirates, are proactively fighting the spread of COVID-19, for example by closing schools and universities and postponing large events such as the Art Dubai fair and the Dubai World Cup horse race. Likewise, Bahrain has postponed its Formula One Grand Prix.
Saudi Arabia has even announced a temporary ban on non-compulsory umrah pilgrimages to Mecca, and has closed mosques. Because religious tourism is one of the Kingdom’s main sources of non-oil revenue, the umrah ban and likely severe restrictions on the obligatory (for all Muslims) hajj pilgrimage will have a large negative impact on economic growth.
True, policymakers across the GCC are rolling out stimulus measures to support businesses and the economy. Central banks have focused on assisting small and medium-size enterprises by deferring loan repayments, extending concessional loans, and reducing point-of-sale and e-commerce fees. And GCC authorities have unveiled stimulus packages to support companies in the hard-hit tourism, retail, and trade sectors. The UAE has a consolidated package valued at AED126 billion ($34.3 billion), while Saudi Arabia’s is worth $32 billion and Qatar’s totals $23.3 billion. Moreover, policymakers are supporting money markets: Bahrain, for example, recently slashed its overnight lending rate from 4% to 2.45%.
But the camel in the room remains oil, especially the immediate impact on demand of the Chinese and global economic slowdown. The International Energy Agency optimistically estimates that global oil demand will fall to 99.9 million barrels per day (bpd) in 2020, about 90,000 bpd lower than in 2019 (in the IEA’s pessimistic scenario, demand could plunge by 730,000 bpd). Indeed, successive production cuts had already led to OPEC’s global market share falling from 40% in 2014 to about 34% in January 2020, to the benefit of US shale producers.
The weakening outlook for oil demand has been exacerbated by the Saudi Arabia-Russia oil-price war, with the Saudis not only deciding to ramp up production, but also announcing discounts of up to $8 per barrel for Northwest Europe and other large consumers of Russian oil. Although the Kingdom’s strategic aim is to weaken shale-oil producers and regain market share, the price war will also hit weaker oil-dependent economies (such as Algeria, Angola, Bahrain, Iraq, Nigeria, and Oman), and put other major oil producers and companies under severe pressure. Indeed, in the two years after oil prices’ last sharp fall, in 2014, OPEC member states lost a collective $450 billion in revenues.
That episode prompted GCC governments to pursue fiscal consolidation by phasing out fuel subsidies, implementing a 5% value-added tax (in the UAE, Saudi Arabia, and Bahrain), and rationalizing public spending. Nonetheless, GCC countries continue to rely on oil for government revenues, and their average fiscal break-even price of $64 per barrel is more than double the current Brent oil price of about $30 per barrel. The UAE and Saudi Arabia have estimated break-even prices of $70 and $83.60, respectively, while Oman ($88), Bahrain ($92), and Iran ($195) are even more vulnerable in this regard. More diversified Russia, by contrast, can balance its budget with oil at $42 per barrel.
The near-halving of oil prices since the start of 2020, the sharp fall in global growth, and the effects of the COVID-19 pandemic will put severe strains on both oil and non-oil revenue. As a result, GCC governments’ budget deficits are likely to soar to 10-12% of GDP in 2020, more than double earlier forecasts, while lower oil prices will also result in substantial current-account deficits.
Governments will respond by cutting (mostly capital) spending, magnifying the negative effect on the non-oil sector. Some countries (Kuwait, Qatar, and the UAE) can tap fiscal and international reserves, while others (Oman, Bahrain, and Saudi Arabia) will have to turn to international financial markets.
But will GCC governments be able to borrow their way out of this phase of lower oil prices? Global equity and debt markets currently are close to meltdown; with investors fleeing to safe government bonds, liquidity is drying up.
The GCC countries will suffer a negative wealth effect, owing to losses on their sovereign wealth funds’ portfolios and net foreign assets. And, given bulging deficits and the prospect of continued low oil prices, sovereign and corporate borrowers will find it harder and more expensive to access markets. The ongoing financial crisis will therefore exacerbate the effects of the oil-price shock and the pandemic.
The pandemic itself is still unfolding, and its eventual global impact will depend on its geographical spread, duration, and intensity. But it is already clear that in the coming weeks, there will be heightened uncertainty about global growth prospects, oil prices, and financial-market volatility. And as the pandemic continues its deadly march, the GCC economies – like many others – will be unable to avoid recession.
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