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.
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.
“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.
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.
Violent crackdown against Iraq protests expose fallacy of the country’s democracy
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.
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.
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.
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.
In the World Economic Forum’s Global Agenda, stories on Migration and Workforce and Employment abound. This one on India‘s record-breaking diaspora is the latest. It is doubly interesting because of a) the significant presence of more than 8 million NRIs (non-resident Indians) in the Gulf and b) it is reflective of a mutual necessity relationship between the Gulf and India.
In 2019, remittance flows to low- and middle-income countries are expected to reach $550 billion, becoming their largest source of external financing. ‘Indians abroad sent back $80 billion, making the country the leading recipient of funds from overseas.’ Per Image above: REUTERS/Pawan Kumar.
Katharine Rooney, Senior Writer, Formative Content, the Indian diaspora elsewhere seem to be not that dissimilar to that of the GCC’s.
Despite a sizeable outflow, India is still home to 1.39 billion people – and by 2027, it’s set to overtake China as the world’s most populous country. While there has been progress in reducing extreme poverty levels, there are still 176 million people living in poverty in India, and money remitted by expatriates is an important part of economic development and growth. In 2018, Indians abroad sent back $80 billion, making the country the leading recipient of funds from overseas.
Robert Malley in this article titled The Unwanted Wars published in September / October 2019 of Foreign Affairs gives some answers to this question that has been marauding everyone for millennia. Why the Middle East Is More Combustible Than Ever, would, sarcasm apart, be a good start to try to understand the multi-layered mess of all past and passing powers. Here are some excerpts of the article.
war that now looms largest is a war nobody apparently wants. During his
presidential campaign, Donald Trump railed against the United States’
entanglement in Middle Eastern wars, and since assuming office, he has not
changed his tune. Iran has no interest in a wide-ranging conflict that it knows
it could not win. Israel is satisfied with calibrated operations in Iraq,
Lebanon, Syria, and Gaza but fears a larger confrontation that
could expose it to thousands of rockets. Saudi Arabia is determined to
push back against Iran, but without confronting it militarily. Yet the
conditions for an all-out war in the Middle East are riper than at any time in
conflict could break out in any one of a number of places for any one of
a number of reasons. Consider the September 14 attack on Saudi oil facilities: it could
theoretically have been perpetrated by the Houthis, a Yemeni rebel group,
as part of their war with the kingdom; by Iran, as a response to
debilitating U.S. sanctions; or by an Iranian-backed Shiite militia in Iraq. If
Washington decided to take military action against Tehran, this could
in turn prompt Iranian retaliation against the United States’ Gulf allies,
an attack by Hezbollah on Israel, or a Shiite militia operation against U.S. personnel in Iraq.
Likewise, Israeli operations against Iranian allies anywhere in the Middle
East could trigger a regionwide chain reaction. Because any development
anywhere in the region can have ripple effects everywhere, narrowly containing
a crisis is fast becoming an exercise in futility.
it comes to the Middle East, Tip O’Neill, the storied
Democratic politician, had it backward: all politics—especially local
politics—is international. In Yemen, a war pitting the Houthis, until not
long ago a relatively unexceptional rebel group, against a debilitated central
government in the region’s poorest nation, one whose prior internal conflicts
barely caught the world’s notice, has become a focal point for the
Iranian-Saudi rivalry. It has also become a possible trigger for deeper
U.S. military involvement. The Syrian regime’s repression of a
popular uprising, far more brutal than prior crackdowns but hardly
the first in the region’s or even Syria’s modern history, morphed into an
international confrontation drawing in a dozen countries. It has resulted in
the largest number of Russians ever killed by the United States and
has thrust both Russia and Turkey and Iran and Israel to the brink of
war. Internal strife in Libya sucked in not just Egypt, Qatar, Saudi Arabia, Turkey,
and the United Arab Emirates (UAE) but also Russia and the United States.
is a principal explanation for such risks. The Middle East has
become the world’s most polarized region and, paradoxically, its most
integrated. That combination—along with weak state structures, powerful nonstate
actors, and multiple transitions occurring almost simultaneously—also makes the
Middle East the world’s most volatile region. It further means that as long as
its regional posture remains as it is, the United States will be just one
poorly timed or dangerously aimed Houthi drone strike, or one particularly
effective Israeli operation against a Shiite militia, away from its next costly
regional entanglement. Ultimately, the question is not chiefly whether the
United States should disengage from the region. It is how it should choose to
engage: diplomatically or militarily, by exacerbating divides or mitigating
them, and by aligning itself fully with one side or seeking to achieve a sort
LOCALLY, THINK REGIONALLY
story of the contemporary Middle East is one of a succession of rifts, each new
one sitting atop its precursors, some taking momentary precedence over others,
none ever truly or fully resolved. Today, the three most important
rifts—between Israel and its foes, between Iran and Saudi Arabia, and between
competing Sunni blocs—intersect in dangerous and potentially explosive ways.
current adversaries are chiefly represented by the so-called axis of
resistance: Iran, Hezbollah, Hamas, and, although presently otherwise occupied,
Syria. The struggle is playing out in the traditional arenas of the West Bank
and Gaza but also in Syria, where Israel routinely strikes Iranian forces
and Iranian-affiliated groups; in cyberspace; in Lebanon, where Israel faces
the heavily armed, Iranian-backed Hezbollah; and even in Iraq, where Israel has
reportedly begun to target Iranian allies. The absence of most Arab states from
this frontline makes it less prominent but no less dangerous.
those Arab states, the Israeli-Palestinian conflict has been nudged to the
sidelines by the two other battles. Saudi Arabia prioritizes its rivalry with
Iran. Both countries exploit the Shiite-Sunni rift to mobilize their
respective constituencies but are in reality moved by power politics, a
tug of war for regional influence unfolding in Iraq, Lebanon, Syria, Yemen, and
the Gulf states.
there is the Sunni-Sunni rift, with Egypt, Saudi Arabia, and the UAE vying
with Qatar and Turkey. As Hussein Agha and I wrote in The New Yorker in March, this is the
more momentous, if least covered, of the divides, with both supremacy over the Sunni
world and the role of political Islam at stake. Whether in Egypt, Libya,
Syria, Tunisia, or as far afield as Sudan, this competition will largely define
the region’s future.
Together with the region’s polarization is a lack of effective communication, which makes things ever more perilous. There is no meaningful channel between Iran and Israel, no official one between Iran and Saudi Arabia, and little real diplomacy beyond rhetorical jousting between the rival Sunni blocs.
The Brookings’ FUTURE DEVELOPMENT elaborated these 5 steps to reshape economic geography and rejuvenate the MENA this Friday, September 20, 2019, as a demonstration that it is possible to do so. The story is by Somik V. Lall and Ayah Mahgoub. Here it is.
The destinies of people in the Middle East and North Africa are shaped more by accidents of where they were born than in any other part of the world (Figure 1). This is considered a problem by governments in the region, and it should be. They have tried many ways to respond to the needs of people in lagging areas; much money has been spent on investment in these places. Thus, to add jobs in poorer areas, policymakers have tried to strong-arm new production facilities into these areas. To meet the need for decent homes and amenities in poor urban neighborhoods, money has been poured into massive housing projects.
Even so, spatial disparities continue to grow, or are closing more slowly than would be expected given the volume of investment directed to these locations. The main reason: the causes of spatial exclusion are not locational and physical but are economic and institutional.
Figure 1: With a few exceptions such as Jordan, spatial inequality is higher in MENA
WHY IS MENA SO FRAGMENTED?
Why is territorial convergence so difficult? In a report that we just completed at the World Bank, we identified four reasons.
Most lagging areas in MENA have not been able to leverage the full returns to their endowments because the business environment and infrastructure in their cities and towns makes it hard for new firms to start and grow (Figure 2). One reason is that outside the capital city in MENA countries, smaller cities invariably lack the authority to raise their own revenues and to manage local service provision.
Most residents in lagging areas are “stuck in place,” unable to take full advantage of jobs that more vibrant urban economies offer. Credentialist education systems may be most to blame for making people immobile.
In leading areas, rigid and outdated regulations distort land markets and stymie development. For example, regulations in Tunisia prohibit residential buildings more than three stories high, and regulations in Jordan impose a minimum lot size of 100 square meters—restricting the supply of affordable formal housing.
MENA’s governments have created formidable obstacles to trade and migration. The main barriers are limits on news and information and practical constraints on travel and trade (visa difficulties, weak infrastructure, logistics hurdles).
Figure 2: It’s tough for firms outside MENA’s capital cities
Notice that while they result in spatial inequalities of opportunity, the reasons for fragmentation are not themselves spatial.
ENGINEERING A CONVERGENCE MACHINE
Increasing the pace of integration and convergence will require fixing these problems. Governments in the region can reduce territorial disparities quickly and effectively by doing five things:
Strengthen coordination and complementarities across initiatives. Development strategies are more likely to succeed if they are multidimensional, including access to energy, transport, land, and markets—in the same place, whether sequentially or concurrently. A good place to start is by anchoring investments in and around cities. Complementary reforms that help get the prices right—for energy and for land—can go a long way in creating the conditions for job creation in lagging areas. The good news is that governments don’t have to pay more to see better results, because spatial coordination will generate cost savings in the medium to longer term.
Redistribute roles and responsibilities across tiers of government. Citizens in different parts of the country have varying needs, and local conditions require flexible service delivery models. Redistributing responsibilities for local revenue generation and local service provision to local governments can make them better equipped and more accountable.
Enable mobility of people between lagging and leading areas. On average, people in MENA are half as mobile domestically as people in other parts of the world (Figure 3). Our research shows that living standards of people moving internally to major cities can increase by an average of 37 percent in the region. Women are more likely to move and find jobs in urban areas, but they need support to do so. Education systems across the region need to be reoriented toward marketable skills.
Build dense and connected cities. Well-functioning cities offer a wide variety of jobs—for women and men. Making land markets in cities more efficient is critical for agglomeration and specialization—two dynamics that enhance job creation and economic prosperity. Whether in larger or in smaller (secondary) cities, agglomeration and specialization require the benefits from high economic density, which concentrates economic activity geographically. For this, the fabric of cities needs to be spatially connected, dense with people, and transit-oriented—not sprawling that perpetuates the dispersion of people and jobs. Planners and regulators can attract firms to invest in cities by reducing frictions such as zoning regulations, impediments to property acquisition and new construction (costs, height limits, density limits), challenges to local business registration and licensing, limits on news and information, and obstacles to developing local business networks.
Enhance market access nationally and regionally. Historically, MENA’s cities were part of economically important global trade networks. Many of these cities persisted into modern times as large urban areas. But governments in the region have managed to shrink the networks from global to local. These networks have, at a minimum, to be expanded to national and regional dimensions. A good place to start would be to improve the links across national borders—reducing tariffs, improving logistics, and facilitating trade, and instituting migration protocols. Such efforts will grow the economies, providing much-needed resources to redistribute in areas left behind.
Figure 3: Just 14 percent of MENA’s people have left their place of birth, compared with 28 percent in countries elsewhere
In other words, MENA’s governments have to start putting together a modern convergence machine. The main parts of the machine are institutions that integrate and infrastructure that connects. MENA is no longer a poor place: Last year, the region’s GDP per capita was nearly $7,000 placing it comfortably in upper middle-income levels. Its people should have access to quality basic services such as education, clinics, sanitation, and public security. Well-chosen infrastructure initiatives—roads, railways, ports and communication facilities—can provide its entrepreneurs access to the region’s sizeable markets (the region’s GDP is $3 trillion) and even bigger nearby markets to MENA’s north and east. Spatially targeted interventions might also be needed, but they are not the main components of the machine.
Perhaps the biggest mistake that governments have been making is to regard these interventions—programs to push economic activity into lagging areas while simultaneously favoring capital cities—as the mainstay of the machine. It’s time to stop these self-defeating measures that exacerbate fragmentation in MENA, and speed up efforts to engineer integration.
Somik V. Lall, Global Lead on Territorial Development Solutions and Lead Economist for Sustainable Development in Middle East and North Africa – World Bank. somikcities
Ayah Mahgoub, Senior Urban Development Specialist – World Bank
Saudi Arabian authorities opted some time ago for the whole and/or part nationalisation of its 9 million-strong manpower, kickstarted and still is going through a programme labelled Saudisation that recently ended up by excluding non-domestic contracting of governments jobs.
On September 16, Jahangeer was deported to Bangladesh along with other Bangladeshi workers.
Jahangeer Hossain was heading to his factory along with other workers in a vehicle around 7:30 am in Riyadh on September 2 like every other day.
Soon, a police patrol car blocked their vehicle and detained them. It never occurred to him even in his dreams that he would be then kept at a Deportation Camp in the Saudi Arabian capital for 15 days without any knowledge of the future.
On September 16, Jahangeer was deported to Bangladesh along with other Bangladeshi workers.
“I had a valid Iqama [work permit for foreign nationals] in Saudi Arabia. It’s still valid for three more months. I have no idea why I was arrested and sent back home,” said the man, who is currently at his village home in Jhenaidah.
He told Dhaka Tribune that about 120 to 150 people were kept in each room at the Deportation Camp.
Jahangeer has no idea how he is going to provide for his family now. On top of that, he still has to pay back Tk1 lakh (more than GB£945) he had taken in loans to travel to Saudi Arabia.
Jahangeer said he could not even ask the Riyadh police why he was being held because he was afraid of getting beaten.
He said an official of the Bangladesh Embassy in Saudi Arabia visited the Deportation Camp, but he said he was not authorized to talk to them.
A total of 389 Bangladeshi workers like Jahangeer were sent back home by Saudi Arabia Arabian authorities in last three days following a crackdown on undocumented workers there.
Of them, 160 arrived in Dhaka on Tuesday night. Most of them complained that they were forced to return despite having valid documents.
What govt says
Government official and experts say the number of migrants is way more than the number of jobs over there, and the recent Saudization policy, officially known as Saudi nationalization scheme or Nitaqat, has led layoffs of Bangladeshi migrant workers.
Rownak Jahan, secretary of the Expatriates’ Welfare and Overseas Employment Ministry, told Dhaka Tribune: “We have asked the Bangladesh Embassy to Saudi Arabia to look into it.
“We will be able to comment after they give us a report on it. Our minister is also visiting Saudi Arabia. He will discuss this issue.”
She said migration does not remain static and recently Saudi Arabia is being very strict about undocumented migrants.
She told Dhaka tribune that more people are migrating to countries like Saudi Arabia for jobs. There are more jobseekers than vacancies, she said and added that sometimes migrants have valid papers but there are no jobs for them.
The Saudization policy of hiring Saudi nationals over migrant workers could be another reason because of which Bangladeshi migrants’ job contracts are not being renewed, the secretary added.
She said every country has its own law and other countries cannot intervene in their internal issues.
13,000 deported in 2019 alone
Shariful Hasan, the head of Brac’s Migration Program, told Dhaka Tribune that at least 13,000 Bangladeshi workers have so far been deported from Saudi Arabia in 2019 alone.
Some recruiting agencies and brokers are luring migrants saying they can go to Saudi Arabia with “free visa,” but there is no such thing, he said.
Shariful said the recruiting agencies and brokers are still sending people abroad without ensuring a secured job because the more they can send, the more money they will make.
As per the law, migrant workers are not allowed to work under any employer they want. They have to work under the employer they signed a contract with. If they leave the job and work under another employer, they will become undocumented.
Shariful recommended solving the problem bilaterally.
“Our embassy should ask the Saudi Arabian government why they are deporting Bangladeshi migrants [even though they had valid documents], and then they can work on the solution based on their response,” he said.
Marina Sultana, program director of Refugee and Migratory Movements Research Unit, said many Bangladeshi workers in Malaysia are not being regularized and as a result, they are being deported.
She also pointed finger at Saudization for the layoffs and eventual deportation of the migrant workers.
According to a Saudi Press Agency report, the Saudi authorities have so far arrested around 3.8 million foreigners as it continues the crackdown on labour and residency violations.
The latest figures indicate that 544,521 people have been arrested since early June.