Deepti Kannapan starts in his article dated August 5 by stating: I tried to go zero-waste in 2019 before adding ‘I bought my groceries bulk or package-free whenever I could, carried my own silverware to the work cafeteria, and stopped ordering food delivered to my house.’ Here is that article.
What Can One Person Do to Protect The Environment?
Three things: Innovate, call their Representative, and organize boycotts
Every time I went to a big-chain coffee store I made sure to pointedly ask for my coffee “for here, in a mug” while making eye contact with the cashier and miming holding a mug. Even with all this emphasis, about every one time in twenty I got handed a disposable coffee cup. At this point I’d be torn: that cup is going in the trash no matter what I did; but I dislike the experience of drinking from a disposable coffee cup. I usually ended up asking the barista to pour it into a mug for me.
Eventually, I told my regular barista that I’d quit disposable coffee cups as a new year’s resolution (which it was not). He changed the order and thanked me for making that resolution.
Most people reacted similarly when I told them what I was doing: with admiration, and then backing away by saying they could never do it themselves. Overall, not an encouraging reaction, because I’m not having much impact by myself. I’m just one person out of billions.
Innovate in your household.
My zero-waste experiment in 2019 resulted in a lot of frustration, but that frustration was useful. I deeply understood the difficulties of eschewing disposable cups.
Using this knowledge, I’ve been experimenting with methods to store my reusable cups and workflows for washing and replacing them. I’m hoping to find or develop a cup that’s fun to drink out of, easy to wash, store, and keep dry.
Innovations like this aren’t particularly high-tech or difficult to do, but that is how progress often happens. According to Eric Von Hippel, a professor who studies innovation at MIT,
Every field we look at in terms of the basic innovations, about half were done by users. And it’s fantastic. Companies very seldom mention the user-developed roots of their innovations.
If you’re frustrated by a problem, you’re uniquely qualified to figure out a solution, whether that’s a trash sorting system, a modified water bottle, or durable clothing.
People modifying products to make them do what they want is how we got the mountain bike. Companies often incorporate the modifications users want, as Von Hippel describes.
And then as a lot of people begin to do it, they say, “Aha! Not only is there a proven innovation, but there’s a signal of general demand.” And that’s the point at which you begin to define what a mountain bike should look like.
Participate in the political process.
Innovating helps create the technologies and processes that push the envelope beyond what we already have. Now the question is, will people use them?
They will if you regulate industries and compel them to adapt with the improvements in the state of the art.
Politics is an area where at first glance, it can seem like an individual voter has no influence. I found the idea of getting involved overwhelming. The 2018 election was the first time I participated beyond voting — I canvassed voters, phone banked, and called my Representatives, as often as I felt up to it, and eased my way into greater engagement.
And the results showed me how momentum can build.
Start small. Sign up for a mailing list of an organization like the Sierra Club, League of Conservation Voters, or any group that resonates with you, and keep aware of environment-related bills that are coming up in your state or country.
Then, after a while, when you feel brave enough, call your Member of Congress or whoever represents you win your government, and tell them how you’d like them to vote on it.
I put this last because this is where most people assume you have to start. I am in favor of boycotts, but only when there is enough leverage to give them a chance of success.
Boycotts tend to work by tarnishing a company’s brand. They work best when the company has a good reputation that is sliding, and that it wants to restore. Boycotts don’t need to significantly impact the company’s revenue to succeed.
Most importantly, they need to be well-organized, focused, and strategic. So just buying what you approve of and not buying what you don’t will not have much of an impact.
[…] we have somehow inculcated a belief that if someone fails to boycott a company, she lacks standing to object to political behavior or to petition Congress for change. People feel guilty about not boycotting, and that guilt gets in the way of full-throated political protest.
There’s no need to feel guilty about the products you buy. You can’t boycott every flawed product in the world at once; you wouldn’t be able to live.
It’s a good idea to learn to plan an effective boycott. It starts with choosing the right target — a company that is sensitive to criticism. Done right, boycotts can succeed.
My avoidance of disposable coffee cups probably didn’t cause the coffee shop to order fewer of them. It probably didn’t cause the overall market for disposable cups to decrease, or fewer cups to be manufactured.
That’s okay because my experiment got me thinking bigger — about the possible products we haven’t yet invented, the legislation we need, and the markets and industries as a whole.
It got me thinking about where we have the most leverage. That’s where we are going to act.
An Analysis dated 7 August 2020 by Dr Tankut Oztas is concerned by The Levant and North Africa with a challenging statement like: on the verge of economic malaise? The pandemic-induced crisis is expected to exacerbate poverty, deepen inequality and constrain households’ access to basic needs, including health service.
ANALYSIS – The Levant and North Africa: on the verge of economic malaise?
ISTANBUL: The spread of COVID-19 undoubtedly has had a catastrophic impact on the most vulnerable communities of the world. According to a recent World Bank report, the Middle East and North Africa (MENA) region is ranked as second-lowest among all regions in the overall Global Health Security Index, and it comes last in terms of both epidemiology workforce and emergency preparedness and response planning. Without an effective and coordinated set of policies to achieve a swift economic recovery, the region is highly likely to suffer from greater political instabilities and become a breeding ground for terror groups.
The COVID-19 outbreak has exacerbated these pre-existing vulnerabilities and risks in the widely-mismanaged economies of the MENA, where medical systems are under-resourced and much-needed infrastructure either destroyed or lacking.
A range of harsh anti-COVID-19 measures such as self-isolation, social distancing, and lockdowns, including total curfews and international travel restrictions have been implemented by governments to control the spread of the virus and protect lives.
These preventive measures, however, led economies across the region to experience severe supply and demand shocks. The most recent regional economic outlook reports published by both the World Bank and the International Monetary Fund (IMF) forecast that regional economies would most likely experience a sharp economic fallout by –4.2 per cent and 4.7 per cent in 2020, respectively.
Still, the real socio-political and economic impact of the COVID-19 pandemic in the MENA remains highly uncertain and will strictly depend on the duration of the outbreak and the effectiveness of the policy responses developed by each nation.
The current predictions, however, suggest that all critical macroeconomic indicators such as fiscal and current account balances, foreign reserves, and the inflow of foreign direct investment will be distressed as a result of the crisis. The pandemic-induced crisis is expected to exacerbate poverty, deepen inequality and constrain households’ access to basic needs, including health services.
The economic repercussions of the COVID-19 pandemic effectively forced almost all countries in the region to request financial assistance from the IMF or other financial institutions to strengthen their economic position and prevent the possibility of a prolonged economic recession. As a result, regional economies have become heavily dependent on the reform directions of the IMF, World Bank, and other investment banks.
Socio-economic and political tensions remain a distinct possibility in the post-pandemic era if policy responses fail to meet the demands of the majority and set a path for swift economic recovery. Countries such as Lebanon, Jordan, Palestine, Egypt, and Tunisia already have debilitated capabilities. Persisting socio-political and economic hardship exacerbated by the COVID-19 pandemic may lead to a vicious cycle of economic malaise.
The same outcome applies to the only two oil-exporting countries of the region, Iraq and Algeria. Their economies were hit by the complete halt of economic activities due to the pandemic and have also been severely affected by the crash of oil prices. A similar assessment is applicable to war-torn countries of the region, Syria and Libya too. Though their economic outlook is linked to a sustainable political order and strong security environment, the spread of the virus and its humanitarian and economic costs are extra burdens on the wellbeing of communities living in these countries.
The only countries in the region with a relatively positive socio-political and financial outlook are Israel and Morocco. While their economies are experiencing the economic consequences of the pandemic, their macroeconomic variables are in a better position compared to their peers. Their public and externals debts are relatively lower in comparison to other nations in the region.
Nevertheless, every country will experience the heavy burden of issues such as collapsing global trade, low commodity prices, major capital outflows, and healthcare-specific challenges inflicted by the COVID-19 outbreak. The crisis is dealing a heavy blow on sectors such as tourism, export companies, and small and medium-sized businesses, which employ the largest share of the workforce and generate a considerable share of the revenue streams for the region’s economic development.
A reduction in income from these sectors, as well as remittances and foreign investment from the oil-rich Gulf countries, subsequently hampered the foreign reserves and deepened the current account deficit across the region as a whole.
Against this challenging backdrop, a range of economic recovery packages have been announced by the governments to mitigate the economic repercussions of the COVID-19. The majority of them are aimed at helping the most hard-hit sectors and communities through temporary tax relief, cash transfers or cheap financing.
The uncertainty about the real economic impact of the pandemic, however, has complicated the policy response. Many of these economies have limited fiscal and external debt capacities. The Lebanese government, for instance, has the highest external debt in the region with approximately 170 per cent of its GDP. Jordan, Tunisia, Egypt and Iraq follow Lebanon with external debts of 97, 90, 87.2 and 80 per cent of their GDP, respectively.
Ultimately, many of these economies had already been battling with high poverty, political instability, and poor healthcare infrastructure; hence the historic economic downturn provoked by the novel coronavirus will aggravate existing economic and humanitarian challenges. The region already has the world’s highest youth unemployment, and it hosts countries that have weak security institutions.
In the period that lies ahead, if the geostrategic vulnerabilities and risks continue to amplify across the region without a stable political leadership, effective civil service, and a well-targeted set of economic recovery programs, the region will likely experience a prolonged economic recession and an increased risk of social unrest.
[ The writer is a researcher at the TRT World Research Centre. He holds a PhD in International Political Economy from King’s College London and specializes in global security, geopolitical risks and the politics of transnational economic affairs ]
Opinions expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Anadolu Agency
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An article Posted by Ankush on July 31, 2020, is on the Point Of Use Water Purifier (POU) Market In MENA (Middle East & North Africa). It is as witnessed by a CAGR of 7.6% by 2020 per Future Market Insights (FMI) Estimates. All despite these years the most severe threat facing the MENA, there exists a market of Point Of Use Water Purifier (POU).
Future Market Insights report examines the ‘POU Water Purifier Market’ in Middle East and North Africa region for the period 2014–2020. The primary objective of the report is to offer key insights about water purifier market in MENA to current market participants or new entrant’s participants across the value chain.
Report includes study of the three key technologies of water purification i.e. Reverse Osmosis (RO),
Ultra Violet (UV) and Media filtration (Gravity). Report offers in depth analysis of market size, forecast and the key trends followed in all three segments.
The report starts with an overview of parent market i.e. water treatment industry in MENA and the part POU water purifier industry plays in it. Report also offer useful insights about global POU water purifier market and the role MENA market is posed to play.
Next section of the report includes FMI analysis of the key trends, drivers and restraints from supply side, demand side and economic perspective, which are influencing the target market. Impact analysis of key growth drivers and restraints based on weighted average model included in the report better equips and arms client with crystal clear decision making insights.
As highlighted before, water purifiers are based Reverse Osmosis (RO), Ultra Violet (UV) and media based filtration technology. Reverse osmosis is estimated to contribute noteworthy proportion of revenue in MENA water purifiers market. However, in the price sensitive regions, media based segment is expected to witness robust growth during the forecast period.
The next section highlights POU water purifier market by region. It provides market outlook for 2014- 2020 and sets forecast within context of water purifier market, including the three technologies to build out a complete picture at regional level. This study discusses the key regional trends contributing to the growth of the water purifier market in MENA as well as analyses the degree at which key drivers are influencing water purifiers market in each region of MENA. For this report, regions assessed are Kingdom of Saudi Arabia, United Arab Emirates, Turkey, Israel, Egypt, Algeria and rest of MENA.
To calculate the revenue generated from POU water purifiers, the report considered total volume sales of water purifier along with the average selling price, and also the revenue generated from water purifier segment of major players in the market. When forecasting market, the starting point is sizing the current market, which forms the basis for how market will develop in future. Given the characteristics of market, we triangulated the outcome of three different type of analysis based on supply side, consumer spending, and economic envelope. However, forecasting the market in terms of various water purifier technologies and regions is more matter of quantifying expectations and identify opportunities rather than rationalizing them after the forecast has been completed.
Also another key feature of report is analysis of the three key technologies of water purifier and regions in terms of absolute $ opportunity. This is traditionally overlooked when analyst forecasts the market. But absolute $ opportunity is critical in assessing the level of opportunity that a provider can look to achieve, as well as to identify potential resources from both the sales and delivery perspective.
Further to understand key growth segments in terms of technology and region FMI developed the MENA water purifier market attractiveness index. The resulting index should help providers identify real market opportunities.
In the final section of report, MENA water purifier market competitive landscape is included to provide report audience with dashboard view based on categories of provider in value chain, presence in water purifier market and their key differentiators. Key categories of providers covered in the report are manufacturers and major distributors. This section is primarily designed to provide client with an objective and detailed comparative assessment of key providers specific to market segment in the POU water purifier value chain. Report audiences gain segment and function specific vendor insight to identify and evaluate key competitors based on in depth assessment and capabilities and success in the POU water purifier market place. Detailed profiles of the providers are also included as scope of the study to evaluate their long term and short term strategies, key offerings and recent developments in the market. Key competitors covered are Eureka Forbes, PureIt, Strauss Water, Panasonic, LG and others.
In this study, we analyze the MENA Water Purifier Market during 2012-2020. We focus on:
Market size and forecast, 2012-2020
Key drivers and developments in POU Water Purifier Market
Key Trends and Developments of MENA Water Purifier Market technologies such as RO,UV and Media
Key Drivers and developments in particular regions such as KSA, UAE, Turkey ,Israel, Egypt, Algeria and Others
A Multi-million national green growth plan launched today is reported in this article of the Jordan News Agency.
Amman, July 6 (Petra) — Jordan on Monday launched a multi-million ambitious green growth plan as part of a broader national drive towards a green economy and sustainable development.
The six-pronged 2021-2025 National Green Growth Plan, which was announced by Minister of Environment and Agriculture Saleh Kharabsheh, comprises executive plans targeting the key sectors of water, waste management, energy, agriculture, tourism and transport.
In part, the blueprint is intended to help build sustainable sectors that are more resilient and adaptive to adverse phenomena, including climate change and the fallout of emergencies, such as the coronavirus pandemic. It was drawn up in collaboration with the Global Green Growth Institute (GGGI).
Kharabsheh told a teleconference with government representatives and global stakeholders that the plan is designed to ensure alignment between green growth, climate change and sustainable development goals within the sectoral strategic framework.
Marshall Brown, Senior Officer/ Jordan Program at the GGGI, underlined the importance of multi-stakeholder cooperation to translate the plan on the ground, and said that the private sector and international partners have a key role to support this effort.
In the energy sector, the plan envisages the development of a smart electric grid, backing the Jordan Renewable Energy and Energy Efficiency Fund’s bid for the Green Climate Fund’s accreditation and a public-private partnership for the construction of EV charging stations at a total cost of $85 million.
The plan sets $965 million as the total cost of water projects, which include the rollout of a financial mechanism to support water harvesting projects, in addition to carrying out a technical project to rationalize industrial water use. Also in the water sector, the plan envisages the construction of an industrial wastewater treatment plant in Zarqa.
With regard to waste management, the plan includes the establishment of an excellence center for waste management, research and development, a feasibility study for the launch of projects aimed at separating organics from municipal solid waste, and finally a pilot project on the extended producer responsibility in the e-waste sector. The total cost of projects in the waste management sector is put at $248 million.
Turning to agriculture, the plan includes an information management and communication capacity-building project within the green growth framework. It also pursues a resource management project in the production of olive and olive oil. Other key projects in this area includes investing in hydroponics and a national afforestation project. The combined cost of these projects stands at $194 million.
Another key focus of the plan is the transport sector, where the total project cost is envisioned at $167 million. The projects in this domain include the rollout of smart transport systems, the establishment of a transport excellence center and the introduction of environmentally-friendly transport solutions in Irbid, Zarqa and Madaba.
As for tourism, the plan contains a set of ambitious projects, which include the establishment of an excellence center aimed at developing the tourism industry and maximizing ecotourism in protected areas, as well as a project for resource rationalization in the tourism and hospitality sectors for a total cost of $173 million.
The Massachusetts Institute of Technology asking Why the Mediterranean is a climate change hotspot came up with A new analysis uncovers the basis of the severe rainfall declines predicted by many models.
17 June 2020
Although global climate models vary in many ways, they agree on this: The Mediterranean region will be significantly drier in coming decades, potentially seeing 40 percent less precipitation during the winter rainy season.
An analysis by researchers at MIT has now found the underlying mechanisms that explain the anomalous effects in this region, especially in the Middle East and in northwest Africa. The analysis could help refine the models and add certainty to their projections, which have significant implications for the management of water resources and agriculture in the region.
The study, published last week in the Journal of Climate, was carried out by MIT graduate student Alexandre Tuel and professor of civil and environmental engineering Elfatih Eltahir.
The different global circulation models of the Earth’s changing climate agree that temperatures virtually everywhere will increase, and in most places so will rainfall, in part because warmer air can carry more water vapor. However, “There is one major exception, and that is the Mediterranean area,” Eltahir says, which shows the greatest decline of projected rainfall of any landmass on Earth.
“With all their differences, the models all seem to agree that this is going to happen,” he says, although they differ on the amount of the decline, ranging from 10 percent to 60 percent. But nobody had previously been able to explain why.
Tuel and Eltahir found that this projected drying of the Mediterranean region is a result of the confluence of two different effects of a warming climate: a change in the dynamics of upper atmosphere circulation and a reduction in the temperature difference between land and sea. Neither factor by itself would be sufficient to account for the anomalous reduction in rainfall, but in combination the two phenomena can fully account for the unique drying trend seen in the models.
The first effect is a large-scale phenomenon, related to powerful high-altitude winds called the midlatitude jet stream, which drive a strong, steady west-to-east weather pattern across Europe, Asia, and North America. Tuel says the models show that “one of the robust things that happens with climate change is that as you increase the global temperature, you’re going to increase the strength of these midlatitude jets.”
But in the Northern Hemisphere, those winds run into obstacles, with mountain ranges including the Rockies, Alps, and Himalayas, and these collectively impart a kind of wave pattern onto this steady circulation, resulting in alternating zones of higher and lower air pressure. High pressure is associated with clear, dry air, and low pressure with wetter air and storm systems. But as the air gets warmer, this wave pattern gets altered.
“It just happened that the geography of where the Mediterranean is, and where the mountains are, impacts the pattern of air flow high in the atmosphere in a way that creates a high pressure area over the Mediterranean,” Tuel explains. That high-pressure area creates a dry zone with little precipitation.
However, that effect alone can’t account for the projected Mediterranean drying. That requires the addition of a second mechanism, the reduction of the temperature difference between land and sea. That difference, which helps to drive winds, will also be greatly reduced by climate change, because the land is warming up much faster than the seas.
“What’s really different about the Mediterranean compared to other regions is the geography,” Tuel says. “Basically, you have a big sea enclosed by continents, which doesn’t really occur anywhere else in the world.” While models show the surrounding landmasses warming by 3 to 4 degrees Celsius over the coming century, the sea itself will only warm by about 2 degrees or so. “Basically, the difference between the water and the land becomes a smaller with time,” he says.
That, in turn, amplifies the pressure differential, adding to the high-pressure area that drives a clockwise circulation pattern of winds surrounding the Mediterranean basin. And because of the specifics of local topography, projections show the two areas hardest hit by the drying trend will be the northwest Africa, including Morocco, and the eastern Mediterranean region, including Turkey and the Levant.
That trend is not just a projection, but has already become apparent in recent climate trends across the Middle East and western North Africa, the researchers say. “These are areas where we already detect declines in precipitation,” Eltahir says. It’s possible that these rainfall declines in an already parched region may even have contributed to the political unrest in the region, he says.
“We document from the observed record of precipitation that this eastern part has already experienced a significant decline of precipitation,” Eltahir says. The fact that the underlying physical processes are now understood will help to ensure that these projections should be taken seriously by planners in the region, he says. It will provide much greater confidence, he says, by enabling them “to understand the exact mechanisms by which that change is going to happen.”
Eltahir has been working with government agencies in Morocco to help them translate this information into concrete planning. “We are trying to take these projections and see what would be the impacts on availability of water,” he says. “That potentially will have a lot of impact on how Morocco plans its water resources, and also how they could develop technologies that could help them alleviate those impacts through better management of water at the field scale, or maybe through precision agriculture using higher technology.”
The work was supported by the collaborative research program between Université Mohamed VI Polytechnique in Morocco and MIT.
This report was compiled before the Covid-19 pandemic and therefore refers to patterns and trends based on data that was current at the time of writing in February 2020. The full impact of Covid-19 on trade is unknown, but the World Trade Organization estimates that trade will fall by anything between 13% and 32% globally during 2020. Alongside this, and ahead of any impact on trade, the Mena region was already being affected by the collapse in global oil prices, which happened in March and, again, was not factored into this report. However, the points in the report remain valid: that the region’s dependency on oil will have an impact on its trade and economic performance, greater in net oil exporting countries than in net oil importers.
There are other general concerns amongst trade finance professionals around the role of the trade credit insurance sector, which is now heavily exposed to the sharp downturn in global trade. Inventories are collapsing as just-in-time distribution models struggle to cope with restrictions on the physical movement of goods. This is affecting invoice payments and, while it is too early to say exactly how this will affect the recovery from the current crisis, it is undoubtedly the case that many businesses in supply chains worldwide will not survive. As a result, the role of government agencies at present is vital in supporting exporters. In addition to fiscal support, countries will also need clear and robust strategies to rebuild economically once lockdowns are lifted.
GTR: 2019 was a sluggish year for trade. How was MENA affected by this general climate of uncertainty?
Harding: Mena has had a tough few years and last year was not really any different. The combined effects of the trade war between the US and China, the UK’s exit from the EU and enduring intra-regional tensions, particularly between the US and Iran, made 2019 a poor year for trade.
This follows five years of sluggish growth. A weak or volatile oil price over the period since 2013 to the end of 2018, which is where the data is actual rather than forecast, has meant that export revenues have dropped at an annualised rate of 6% in Mena – the highest decline of any global region (Figure 1). This has had a spill-over effect on the region’s economies as well, with imports falling back by nearly 3% annually over the period, suggesting weaker demand both within Mena and globally for the goods that are re-exported from the region.
The Mena region is particularly vulnerable to underlying uncertainties globally. It is highly dependent on two things: oil prices and global demand for the goods that are shipped through the Gulf via its largest ports. As a result, the overall picture for the region in 2020 is likely to be mixed and show no particularly clear pattern of recovery from the uncertainty that has dominated the last few years in terms of oil prices, and 2019 in terms of broader geo-economic and geopolitical issues (Figure 2). The collapse of oil prices, following an OPEC meeting in early March, was a product of Saudi Arabia’s decision to launch a price war; this will have major repercussions for the region.
What stands out from Figure 2 is that, in spite of the difficult environment around sanctions and its fraught relationship with the US, Iran is projected to fare well in trade terms during 2020, especially in terms of its exports. That said, care should be taken when interpreting Iran’s data as a lot of its trade is hidden or executed with poor reporting partners.
Even if the figure of a 55% increase in the projected value of Iran’s exports seems extreme, it arguably reflects a slowdown in trade in 2018 as a result of US sanctions, and a pick up into 2020 as the country finds a way to work around the restrictions it now faces. Its largest export partner is China and the projections suggest an increase in export trade during 2020 of around 8%, alongside imports from China of around 17%. But it is not just China where Iran is seeing trade growth. Exports to the UAE are set to grow by nearly 39%, to the Republic of Korea by over 52% and, perhaps most intriguingly of all, to parts of Asia not indicated elsewhere (Asia NIE) of more than 2,000% year on year.
Asia NIE is Iran’s second largest export partner. It is an amalgamation of trading partners that are too small or too unreliable in their reporting to be classified individually as countries in trade statistics. The fact that it is both a large partner and that its growth is volatile but substantial during the course of the coming year suggests some of this growth is a reaction to the political and economic uncertainties that exist in the region.
Morocco is another country in the region which is predicted to see export growth in 2020. This reflects its position as a non-oil-dependent trading nation with an increasingly strong manufacturing base. Its top five trading partners are European, which points to its role as a gateway for trade between Mena, Europe and Africa. Its imports from Spain, for example, are increasing rapidly, with growth predicted at 8% during the course of the coming year. While oil and gas are important imports to Morocco from Spain, machinery and components, automotives and electrical products and equipment imports are also large and growing sectors. Spain has also taken over from France as Morocco’s largest export partner.
Nonetheless, the region remains vulnerable to global trade’s broader fragilities. These are likely to continue into 2020, not least because there is no sense that trade tensions have gone away, even if in an election year for the US there may be a slightly toned-down rhetoric. Trade growth remains negative or flat for most of the region’s countries and this will affect the extent to which GDP picks up.
GTR: Is there any sign that Mena has increased its resilience into 2020 and beyond?
Harding: The real measure of resilience in the region is the extent to which it is managing to reduce its dependency on oil. This is most evident in its imports (Figure 3). The region’s GDP expansion has failed to pick up since the collapse of oil revenues and, according to the IMF, is likely to be around 1.6% in 2020, down from 2.2% in 2017.
The fact that economic growth looks to have slowed somewhat has had an impact on the region’s imports. For example, imports of machinery and components (which includes computer machinery as well as tools for infrastructure development projects), will decline by 0.6% in 2020. The longer-term outlook to 2023 also points to an annual drop in imports of 0.3%. Iron and steel products, aircraft and automotives all exhibit a similar pattern.
This could arguably be a function of two things. First, the region’s infrastructure has gone through a growth phase as ports and airports have been constructed to support its increased role as a trade hub. The slowdown now may well be because this construction process has slowed as more projects have been completed.
The second cause may be a slowing of regional or global demand, as might be suggested by the drop in automotive imports. This could suggest that there is a bigger picture to the sluggishness of trade in the region.
However, the data does not support this interpretation. The Mena region imports over US$75bn in automotives each year and exports just US$13bn. Exports are forecast to increase both in 2020 and for the next few years (Figure 4). This suggests that the region is potentially becoming more important as a hub, and that it will be re-exporting more in the coming years. The slowdown in imports therefore looks as if it can be attributed to the region’s economic fortunes. Indeed, the fact that iron and steel product imports are also declining indicates that there is less construction work going on.
Even so, the projected growth in exports is encouraging. The region has a trade deficit in all of its largest sectors except mineral fuels and some of the import sectors where growth is slower, such as infrastructure products like iron and steel, may simply be a function of the fact that a lot of resource has been put into catching up over the past couple of decades and that this development is now slowing. Growth in exports of other infrastructure sectors such as machinery and components, aluminium and electrical products, alongside growth in automotives, suggests that the region’s role is changing – and this will mean that its long-term resilience is somewhat more assured.
GTR: How is intra-regional trade developing in Mena?
Harding: Mena will see an increase in intra-regional trade from 2019 to 2023, and this is noticeable in comparison to the pick-up in intra-regional trade in other net oil exporting regions such as South America and Sub-Saharan Africa (Figure 5). The only other region with faster intra-regional trade growth is Asia Pacific (APAC).
While oil remains the dominant traded sector in Mena, this greater intra-regional trade indicates either that the region’s oil dependency is declining or simply that there is a greater amount of cross-border trade within the region.
Could this therefore mean that more export diversity across the region is behind the growth in regional trade? A first glance suggests not. The top five countries for intra-regional exports are the UAE, Saudi Arabia, Iran, Iraq and Oman. In terms of export growth, the UAE, Iran and Saudi Arabia are growing quickly, but Iraq and Oman are falling back. Similarly, the top five countries for intra-regional imports are the UAE, Saudi Arabia, Egypt, Iran and Oman. All of these countries are likely to see growth in intra-regional import values between 2019 and 2020 (Figure 6).
A couple of points stand out from this chart: first, the impact on Qatar’s trade because of the blockade, which began in June 2017, is evident. Intra-regional trade values fell back between 2013 and 2018 at an annualised rate of over 20%. While this initially aligned with the collapse in oil prices, an annualised decline of 16.1% in imports between 2016 and 2019 covered the pick-up in oil prices and the onset of the blockade, while intra-regional exports over the same three-year period fell annually at over 22%. The data suggests that this will continue into 2020.
Furthermore, Morocco’s trade with the region looks set to decline at the same time it increases with the EU27 and Spain and France in particular. The country’s trade with Mena spiked during the financial crisis, largely because of an uptick in gold prices, with a three-year growth in imports of over 300%, albeit from a low base. Other imports, such as automotives, clothing and accessories, and milk and dairy products have remained on a consistent downward trend since 2014.
Morocco exports hard commodities and plastics to the rest of Mena, and these have also been on a downward trend since 2014 because of weak commodity prices. In other words, the structure of Morocco’s trade with the rest of the region is very different to its trade outside of the region, which is focused on intermediate manufactured goods.
This leads to the conclusion that, in fact, growth in intra-regional trade has been driven by a rise in oil prices, rather than any diversification efforts. Indeed, between 2017 and 2020, intra-regional trade in oil and gas grew by nearly 6% annually. The UAE, Egypt, Jordan and Bahrain have been major beneficiaries of this pattern, which looks set to continue.
GTR: Geopolitical tensions between the US and Iran have added a layer of uncertainty into the 2020 outlook. How will this play out during the course of the year?
Harding: On January 3, US forces carried out a drone strike near Baghdad International Airport killing Qasem Soleimani, commander of Iran’s Quds Force and right-hand man to Ayatollah Ali Khamenei, Iran’s supreme leader. Khamenei vowed “severe revenge”. Five days later, on January 8, 16 short and medium-range ballistic missiles were launched at two US airbases in Iraq (Ain al-Asad and Erbil). No fatalities were reported, which US officials attributed to an effective satellite early warning system known as the Space Based Infrared System. It is likely that Iran’s response was an example of ‘escalation for de-escalation’; by providing the US with a degree of early warning, casualties could be minimised and direct conflict with the US avoided, while still demonstrating to Iran’s domestic base that action had been taken. From the US perspective, President Trump was equally unlikely to be willing to become embroiled in a costly war during an election year.
Although tensions between Iran and the US are unlikely to lead to direct conflict, there are two real risks to the region. The first is that of miscalculation – in other words, the danger that either Iran or the US misinterprets the actions of the other and acts accordingly. For example, had the US had any fatalities from the Iranian response, there may have been a more severe, escalatory response. This risk is always there but the fact that neither side appears to have much appetite for conflict means that it is unlikely to be the major issue affecting trade during the course of the year.
Of more consequence is the second risk that is apparent in the region at present, which is that it is increasingly caught in the power struggle between Russia, China and the US. As Coriolis Technologies has been observing for some time now, Russia is increasing its influence in the region. Our data suggests that the average annualised growth in imports from Russia for the period 2016-2020 will be around 14%. While much of this is oil and gas, the period 2015-2018 saw a worrying exponential growth in so-called commodities not elsewhere specified – trade in which closely correlates with conflict around the world. This reflects Russia’s role in Yemen and Syria in particular.
The consequence for trade of this type of uncertainty is obvious. It holds back investment as businesses outside of the region tread cautiously to avoid conflict. However, while Russia’s engagement in the region provides a backdrop to traditional “hard” power, the US is now using its financial power rather than military means to support its regional objectives.
The tightening of sanctions on Iran since the US withdrew its support for the Iranian nuclear treaty (JCPOA) has affected the way in which banks can operate in the region. The risk of secondary sanctions, for example inadvertently using the US dollar for a transaction, as well as the direct risk of trading with a sanctioned entity or person is the core way in which trade with the region will be affected.
Mena continues to be dominated by trade with areas not elsewhere specified (Areas NES), which is an agglomeration of countries which are either too small or report too irregularly, potentially indicating hidden trade. Exports to this partner were worth US$519bn in 2018; US$97.1bn of these exports were in commodities not elsewhere specified. The region’s exports to Asia NIE were worth US$19bn in 2018.
What this says is that trade in the region remains opaque. While this continues to be the case, it is very difficult for dollar-denominated trade finance to work with banks in the region. Swift has shut down its messaging services to Iran; and although European government officials announced in April that Instex, a trade vehicle set up to bypass US sanctions on Iran, has successfully completed its first transaction, there remain doubts over the viability of the mechanism. China, Russia, Iran and Turkey have been building an alternative to the Swift network, but as this would be subject to the same sanctions constraints as other regions, unless and until US strategy changes, the opacity and political nature of trade will be a core challenge for the region as a whole.
GTR: The largest ports like Dubai are increasingly focusing on their role as trading hubs for re-exports. How will this expand in the coming year?
Harding: The best way of approaching this question is to look at trade with free trade zones (FTZs). These are the economic areas around ports or airports which are specific to a sector and which enable re-export activity by providing tax and customs duty incentives to overseas investors and trading businesses. Dubai alone has more than 30 of these zones; the UAE has the greatest number of FTZs of any country in the region.
Because countries report exports to FTZs, but FTZs do not report imports as a country in their own right, the data depends on the reliability of the partner country and, as a tax and duty payment mechanism rather than as a trading partner, the numbers tend to be small. The Mena countries are amongst the least reliable reporters globally, so the data is somewhat erratic but nevertheless tells an interesting story:
Mena as a region exported some US$981mn to freeports in 2018. The dominant products that the region exported were electrical products and equipment, precious metals and stones (gold and diamonds), commodities not elsewhere specified, machinery and components and mineral fuels (oil and gas).
Mena imported some US$220mn of goods from freeports in 2018. The dominant sectors were commodities not elsewhere specified, mineral fuels, electrical products, machinery and components and coffee and tea.
Exports to FTZs declined between 2013 and 2018. However, Coriolis Technologies is expecting growth in exports to be nearly 150% between 2018 and 2019, and to fall back to around 2% between 2019 and 2020.
The trade with FTZs is not necessarily attributable to hidden trade as such. By way of comparison, the region trades over US$519bn with areas not elsewhere specified and US$27.5bn with Asia not elsewhere specified. Since these have been shown to be highly correlated with sanctions avoidance and conflict as discussed, the distinction is an important one to be made.
These patterns tell an interesting story about how FTZs may be utilised at present. Oil and gas, precious metals and stones and commodities not elsewhere specified are sectors which hide other patterns in trade. However, trade in electrical products, automotives, machinery and components and coffee and tea suggest that something else is happening given the expected overall growth in trade with FTZs.
Because trade looks to have grown so quickly between 2018 and 2019, FTZs clearly play an important role in the region’s trade. The data is naturally opaque, so any conclusion is to some extent speculative. However, tighter sanctions and the risk of secondary sanctions against Iran from the US means that trade with one of its main trading partners became very difficult for Mena during that year. Alternative mechanisms, such as FTZs, mean that trade technically does not touch either Iran or its financial institutions. As a result, FTZs may become a route to continued legal trade with sanctioned countries.
GTR: China is playing an increasingly active role in Mena. What are the key developments and are there any particular sectors of interest?
Harding: One cannot overstate the importance of China to the Mena region. Imports from China were worth US$146bn and exports worth US$169bn in 2018.
Mena’s exports to China are dominated by oil and gas, which makes up nearly 76% of the total at US$128bn.
Imports from China are far less concentrated. The top five imports from China are electrical products and equipment (US$38.1bn), machinery and components (US$22bn), knitted clothing and accessories (US$4.6bn), iron and steel (US$6.2bn) and automotives (US$6.2bn).
China is strategically focused on its electronics exports and, in 2019, Mena is estimated to have imported US$9.2bn of specialised electronic equipment from China. This represents an annualised growth of 27% since 2016, when President Trump came to power in the US and China became more explicit about its global aspirations. While China’s imports from Mena may well be focused on energy security, it is extending its reach into the region through technology.
Yet trade growth overall has been sluggish. Over the period between 2013 and 2018, imports from China grew at an annualised rate of 1%, while exports increased by just 0.6%. This is largely because of oil price related economic weakness in Mena, which has affected both domestic demand as well as the value of exports to China.
Even so, Mena’s trade with China is twice the size of trade with its second largest country-level export partner, the US. China overtook the US as the region’s largest country partner (excluding blocs like the EU27) in 2009. The growth in the trading relationship was particularly evident between 2002 and 2014, likely driven by Chinese investment into the energy sector, given that post-2014 growth has trailed off amid lower oil prices (Figure 7).
Despite China’s expansionary policy through the Belt and Road Initiative (BRI) to develop infrastructure more generally, it is energy security that seems to underpin its trade with the region. Investment has supported that with the majority going into the energy sector. This highlights the fact that China invests for its strategic purposes, although real estate (construction) and transport have featured strongly. In effect, then, the BRI has just given a name to an investment trend that has been growing gradually since before the financial crisis (Figure 8).
Up to 2013, all investments by China into Mena were classified as non-BRI, but since 2014, all investments have been classified as BRI – this is again a reflection of how China is now categorising its investments. The pattern is clear, though: the general trend is for more investment in the region, both in terms of consistency and in terms of value. The fact that investments appeared to drop in 2019 may reflect two things: first, the general uncertainties during the course of the year that arose from the US-China trade war which held back investments globally. Second, and as a result of the dispute, China was relatively quiet about the BRI during the course of the year having been very public about its intentions the previous year – perhaps as a signal to the US that it was growing its economic power.
Whatever may be the case, what is important is that the investments appear to support China’s trade aspirations in the region.
GTR: What are the key upside and downside risks to growth in the region in 2020 and what are the consequences for trade finance?
Harding: Trade within the region is substantial and the value of bank-intermediated trade finance from intra-regional trade alone is as much as US$122bn per year. Electronics trade between countries in the region has grown by 36.7% since 2016, machinery and components by nearly 19% and, against the odds perhaps, Iran’s intra-regional trade is growing by an annualised figure of 47%.
Much of the growth in trade finance will depend on the risk appetite of the region’s financial institutions. There is plenty to invest in, as is clear from this report, but the region itself has a number of challenges which banks will need to overcome: Coriolis Technologies risk indicators for the region, particularly around the risk of terrorism, the risk of repression and threats from regimes, are among the highest in the world. While businesses on the ground are trying to reduce the region’s dependency on oil, particularly in technology and digitalisation, this reputational risk cannot be ignored.
The region is particularly prone to commodity price fluctuations. The collapse of oil prices since the beginning of 2020 presents a serious threat to Mena’s economic wellbeing. Saudi Arabia is unlikely to be able to thrive economically at an oil price below US$70 a barrel. With 82% of its export revenues coming from oil and gas (approximately US$455bn in 2019) and its next largest export products like plastics also being heavily oil dependent, its overall trade is 96% correlated with the price of oil.
Russian influence in the region is growing as a result of the US strategy to withdraw militarily and, in reality, economically as well. Since the global financial crisis, imports from Russia have grown from US$11.8bn in 2009 to US$27.8bn in 2018. Similarly, exports have grown over the same period from US$1.9bn to US$4.2bn. Increased trade with Russia and China is likely, not least because of the sanctions that are now associated with any trade in US dollars that might touch Iran. This will have the effect of limiting trade and investment – and the role of global banks – in the region if there is any compliance risk from supporting intra-regional trade in particular. Meanwhile, greater Russian involvement in Mena will add to the complexity of already fraught relations between countries in the region, with the potential of an escalation into broader conflict.
The Covid-19 pandemic has caused widespread economic disruption around the world. This is a key risk which could impact events in the region, travel and tourism and, of course, oil trade. These are risks that are the same for everywhere in the world at present, but the potential for a global recession is obvious. The extent to which the region’s reforms over the past few years have created economic resilience are likely to be tested during the course of this yea
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