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Corruption and Predation in Exercising Power

Corruption and Predation in Exercising Power

Corruption and Predation in Exercising Power: Algeria and Iraq as Case Studies by Nahla Chahal, Professor and researcher of political Sociology, Editor in Chief, Assafir Al Arabi.


All throughout 2020, Assafir al Arabi conducted a study on corruption as one of the pillars of power, just as important as repression, impoverishment, and despair.
For such exercise, we chose Algeria and Iraq as case studies, hoping to extend our research to include other countries.
This work will appear in the Books of Assafir al Arabi in three languages, Arabic, French, and English, and their online versions.


Ahmed Al Soudani – Iraq

The following studies seek to examine corruption in Algeria and Iraq. They do not tackle its manifestation as bribes or looted public funds, but rather as a major governance mechanism, an essential part of its structure and operations.

Corruption is no self-treatable symptom; it cannot cure itself nor can its tailored arrangements; rather, it is channelled to empower a ruler(s), to sustain and perpetuate their power and hegemony. It could be more effective than oppression; takes on various shapes and forms; attacks society by taming it into submission, talks people out of pursuing change, and impoverishes them.

Corruption infests everything and partners with many people to various extents. Alternately, it asks for their complicity, or their acceptance thereof, at the very least, to simplify their lives. It remunerates certain social strata in particular, which happen to be fused with the ruling powers, for matching ideological considerations at times, and tribal-sectarian affiliations at others.

Numerous studies tackle corruption as a question indicative of imprudent governance, lack of transparency, collapsed mechanisms of oversight and accountability, or faded rule of law. The question of corruption has been widely contextualised in theory and through international standards outlined by organisations like the World Bank, the International Monetary Fund, and Transparency International. Those focused on nepotism, theft, and lining influential people’s pockets; they proposed measures to protect whistle blowers, enhanced access to information, made way for civil society, and instilled social accountability; all of which have contributed to the creation of an extensive useful database.

But to focus on those alone would be limiting, as they capture neither dynamics nor functions of corruption. Certainly, all such aspects of corruption must be interconnected somehow, given meaning and rendered a real “configuration”. The studies presented here precisely seek to examine such hypothesis and identify the circumstances that make corruption flourish.

There is, of course, a direct relationship between rampant corruption and failed national liberation –or its defeat– for getting rid of older colonialism is no complete realisation of that end – liberation. Massive privatisations also accompanied such failure and opened up new doors for corruption.
Furthermore, real decision-making mechanisms may be seen hiding behind decision-making formalities, whether in ministerial cabinets or parliamentary buildings. Interchangeably, it hides behind decrees. Namely, corrupt practices take legal cover.

In his paper on Algeria, “Corruption as a Configuration of Power,” Daho Djerbal (1)  argues that corruption is deemed institutionalised not only when widespread, but also when organised on the basis of socio-economic clientelist networks entrenched within the State apparatus, then disseminated into society through alternating intermediaries. It emerged fiercest, he says, when the State monopolised economy – in both capitalist and socialist paradigms.

Corruption is a configuration of economic rent which began as a system of economic and political regulation, whereby relations between State and its institutions, enterprises and their partners, civil society and its organisations, are all subject, by hook or crook, to rent-seeking logic instated to allocate all national resources (human, natural, financial, technical, and organisational), develop them, and distribute their generated revenues. Corruption thus became a “rite of passage” to accessing numerous public services.

As for decrees, Djerbal considers them as means for elected assemblies and democratically appointed authorities to avoid discussing major topics at hand. Those are tools invented to ensure wider reproduction of this system of new profits, to render the executive branch as sole party in charge of economic evaluation, and to arbitrage between conflicted interests for the sake of increasing revenues and systematise their redistribution. He also considers corruption and democracy as interlinked. As such, the emergence of “pragmatic practices” assumed by the authorities rely on a system of “remunerations, gift exchange, the fragmentation of spheres, places, and actors who determine what is legal and illegal, moral and immoral, legitimate and illegitimate…”

To illustrate his reflections, he gives a number of real-life examples from Algeria and analyses exposed “scandals”, the logic behind their trials, and the verdicts reached against their protagonists.

In investigating corruption in Algeria, Rachid Sidi Boumedine (2)  wonders about what could be defined as corruption. He notes that one culturally distinguishes between corruption and bribes, commonly called “tchippa” or “qahwa,” that is, money ordinary citizens pay to buy access to services (mundane, occasionally) or any other goods, though already granted by virtue of law.
One feature of a clientelist system is embodied in excessive authorised violations, starting from the highest ranks of the hierarchy, which simultaneously places the lower ranks at the mercy of executive circles, who could, in turn, punish the former for violation of the written law, if there need be.

Boumedine also notes how rentier networks function “internally”, like a clan (a family, village, affiliated community). As such, familiar arrangements of gift-exchange and mutual donations -characterised by their binding and impactful nature- create a favoured system of rights and obligations in society. Such principles consolidate a clientelist system by creating, nourishing, and sustaining reciprocal obligations among its members. He also claims that the system in Algeria has become neo-patrimonial.

This configuration of looting and corruption thus draws upon social acceptance for sustenance. As such, at least in part, it is not considered as theft carried out at the expense of the larger public.
Such ideological design –which legitimises looting, whereby the latter is an act directed against an anonymous, undefined, long-hated state after all– thus becomes a gateway to a new social paradigm. He illustrates the question through describing those recurring handouts to the “poor”, or housing opportunities delivered in accordance with ever-contested lists – fashioned along surreptitious criteria. These operations further plunge their beneficiaries into that recognised mire of a clearly unjust system. It is a system that benefits whoever knows their way around maintaining good relations with network agents, ensuring access to those lists.

In their cowritten article reviewed by writer Omar Aljaffal (3), researchers Mohsin Ahmad Ali (4) and Abdul Rahman Al-Mashhadani (5)  consider how the 2003 US occupation of Iraq –which toppled the political regime, dismantled the foundations of the state, reformulating them in accordance with US visions and under the administration of the “American civil governor of Iraq”, Paul Bremer– resulted in the transformation of corruption from a manageable and resistible phenomenon into a system protected by laws and legislations. It was thus turned into a daily practice protected by force of weapons, media, platforms, and religious fatwas.

The writers see the destruction of the public sector in the monopolisation of secure jobs by the ruling power and its parties. Those jobs are thus used as a card to purchase voter power in parliamentarian elections, whereby parties promise their supporters and clans jobs in return for their electoral vote. Subsequently, the number of government employees would reach 4.5 million, as opposed to 880 thousand employees in 2003. The two researchers claim that corruption developed and transformed into an “acceptable” social phenomenon after 2003, accompanied by a political shift towards a market economy led by political parties that landed with the occupier and/or emerged after 2003. Those parties have sectarian and racist agendas. Those parties ratified regulations and laws that furthered their interests, such as the “Jihad military service” – for people who had established organisations of armed resistance against Saddam Hussein’s regime and for “political prisoners”. As such, we do not stand before one type of corruption only (which manifests in bribery, among other illegal activity), but also before corruption protected by a legal framework that includes a larger range of different economic activities, subsequently rendering the country’s riches into material up for grabs to those in power and control, inside and outside Iraq. Between 2003 and 2018, financial crimes hit unprecedented records while financial waste surpassed $350 billion. The two researchers also affirm a close connection between intensified and aggravated corruption and external factors that instigate and encourage it. Many cases of corruption are thus entwined with external objectives abroad. Their article tackles manifestations of corruption throughout Iraq and its sectors, as well as those tools used by the ruling power to perpetuate its rule and those it uses to appease society.

Overall, research on corruption faces various challenges, some of which are obstructive indeed. Those include lack of published data, prohibited access to documents, lack of documentation in the first place, mistrust in researchers, and the potential harm that threatens the latter should their research be published. Additionally, research faces challenges that pertain to researchers themselves, from sticking to one familiar methodology they are prone to reproduce, to the scarcity of institutions capable of embracing and supporting them, or lack thereof, to competing over whatever little is available, all the way to declining intellectual standards and knowledge in general, and so on.

Ultimately, the endeavour we undertake here goes with an unexhausted obsession with searching and trying. It questions the way existing powers rule our countries. Along with the contributing researchers, Assafir Al-Arabi thus hopes to have tackled some of the aspects that could answer such a fundamental question.

****

Translated from Arabic by Yasmine el Haj

______________

1- Daho Djerbal is a historian. He teaches contemporary history at the University of Algiers 2. Besides his extensive research on economic and social history, he studies the relationship between history and memory. He has been the director of Naqd publication, a review of social studies and critique, since 1993.
2- Rachid Sidi Boumediene is both scientist and sociologist. He published a number of books and articles throughout his career as academic and consultant in both Algeria and abroad.
3- Iraqi poet and writer. He recently worked on a project that analysed Basrah’s local government in Iraq, as part of a “conflict resolution studies program” at the London School of Economics and Political Science (LSE). He received the Mostafa Husseini Prize for young journalists in 2017.
4- Professor of political economy at the University of Basrah.
5- Senior lecturer at Al Iraqia University, specialised

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Bloated public salaries at heart of Iraq’s economic woes

Bloated public salaries at heart of Iraq’s economic woes

Bloated public salaries at heart of Iraq’s economic woes

Until recently, labour markets in the MENA’s oil-exporting countries were characterized by a large public sector, a small, weak private sector, and depending on the country, a sizable agricultural industry, and a sizable informal sector. But in the case of Iraq like elsewhere in the region, the volatility of oil prices and the pandemic impacted the economy, resulting in a critical situation where bloated public salaries at the heart of Iraq’s economic woes result in increasingly unstoppable youth unemployment.
The currently general upheaval in the region, rural to urban and cross-border migration has not helped, leading to an even greater informal market.

Bloated public salaries at heart of Iraq’s economic woes by Samya Kullab is a vivid picture or a series of pictures on life in Iraq as perceived by a locally based journalist.

People shop for clothing at the used-clothes market in Baghdad, Iraq, Tuesday, Oct. 20, 2020. Iraq is in the throes of an unprecedented liquidity crisis, as the cash-strapped state wrestles to pay public sector salaries and import essential goods while oil prices remain dangerously low. (AP Photo/Khalid Mohammed)

BAGHDAD (AP) — Long-time Iraqi civil servant Qusay Abdul-Amma panicked when his monthly salary was delayed. Days of waiting turned to weeks. He defaulted on rent and other bills.

A graphic designer for the Health Ministry, he uses about half his salary to pay his rent of nearly 450,000 Iraqi dinars a month, roughly $400. If he fails to pay twice in a row his landlord will evict him and his family, he fears.

“These delays affect my ability to survive,” Abdul-Amma said.

Iraq’s government is struggling to pay the salaries of the ever-swelling ranks of public sector employees amid an unprecedented liquidity crisis caused by low oil prices. September’s salaries were delayed for weeks, and October’s still haven’t been paid as the government tries to borrow once again from Iraq’s currency reserves. The crisis has fueled fears of instability ahead of mass demonstrations this week.

The government has outlined a vision for a drastic overhaul of Iraq’s economy in a “white paper” presented last week to lawmakers and political factions. But with early elections on the horizon, the prime minister’s advisers fear there is little political will to execute it fully.

“We are asking the same people we are protesting against and criticizing to reform the system,” said Sajad Jiyad, an Iraq researcher.

The white paper’s calls for cutting public sector payrolls and reforming state finances would undermine the patronage systems that the political elite have used to entrench their power.

A major part of that patronage is handing out state jobs in return for support. The result has been a threefold increase in public workers since 2004. The government pays 400% more in salaries than it did 15 years ago. Around three-quarters of the state’s expenditures in 2020 go to paying for the public sector — a massive drain on dwindling finances.

“Now the situation is very dangerous,” said Mohammed al-Daraji, a lawmaker on parliament’s Finance Committee.

One government official said political factions are in denial that change is needed, believing oil prices will rise and “we will be fine.”

“We won’t be fine. The system is unsustainable and sooner or later it will implode,” the official said, speaking on condition of anonymity to discuss internal politics.

Iraq’s activists have called for a march on Oct. 25, expected to draw large crowds, a year since massive anti-government protests first brought tens of thousands to the streets demanded reforms and an end to the corrupt political class.

“As far as meeting our demands, there have been no changes,” said Kamal Jabar, member of the Tishreen Democratic Movement, founded during the protests last year. “To us, the white paper is a joke.”

Abu Ali, a merchant in Baghdad’s commercial district of Shorjah, fears what the following months have in store. The state is the primary source of employment for Iraqis, and civil servants are the lifeblood of his business.

“The delays in salary payments have affected the market directly,” he said. “If these delays continue our business and the economy will collapse.”

Abdul-Amma’s September pay was 45 days late, and he still hasn’t received the October pay that was supposed to come on the first of the month. He worries about the coming months as well.

“I have a history of chronic heart disease, and one of my daughters is also sick,” said the father of four. He pays $100 in medical fees per month.

But to the architects of the reform paper, he is part of the problem: Public sector bloat is first in line for reform.

“We hope the civil service and bureaucracy will recognize a need for change,” Finance Minister Ali Allawi told The Associated Press in a recent interview.

Iraq relies on oil exports to fund 90% of state revenues. Those revenues have plunged to an average $3.5 billion a month since oil prices crashed earlier this year.

That’s half the $7 billion a month needed to pay urgent expenses. Of that, $5 billion is for public sector salaries and pensions, according to Finance Ministry figures. Iraq also imports nearly all of its food and medicine; with foreign currency reserves at $53 billion, the World Bank estimates the country can sustain these imports for another nine months. Foreign debts account for another $316 million.

Poor productivity of public workers is the heart of the issue, Allawi said.

“We’ve ended up with a low productivity, high-cost public sector that doesn’t really earn its keep,” he said. “In one way or another this issue has to be tackled by either reducing numbers, which is politically difficult, reducing salaries … or increasing productivity.”

The white paper calls for public sector payments to be reduced from 25% of GDP to 12% but doesn’t detail how. Officials said one step may be to restore taxes on civil servants’ benefits that previous administrations had lifted.

To meet month-to-month commitments now, the government has had to borrow internally from its foreign currency reserves. A request of a second loan of $35 billion was sent to parliament, drawing criticism from lawmakers.

Haitham al-Jibouri, head of parliament’s Finance Committee, said in televised remarks that if borrowing was the government’s only plan he would fetch a shopkeeper from Bab al-Sharqi, a commercial area in the capital, to do the finance minister’s job.

Parliament’s endorsement of the loan and the reform paper is crucial for the government to avoid a full-scale economic crisis.

But this will prove difficult with elections slated for next June, since factions want to hand out jobs to maintain their constituencies.

“Whoever decides to push ahead and support reforms first will lose out, they will also need to convince other political players who will also lose out,” said Jiyad. “That is a tough sell.”

Al-Kadhimi’s advisers privately acknowledge the challenges of having the system that produced such mismanagement and corruption be its own savior.

One official recalled a remark made by the finance minister at a meeting of a high-level committee tasked with managing the crisis.

He looked at the room of officials charged with halting the country’s fast spiral toward insolvency and said, “I can’t believe this was done for 10 years and none of you did anything to stop it.” There was silence.

Balancing freedom of expression with social responsibility

Balancing freedom of expression with social responsibility

 William Becker writing this article titled ‘Balancing freedom of expression with social responsibility’ could be taken as a pertinent illustrator of the sort of times related to dilemmas and traumas.  Democracy at best of times associates with higher human capital accumulation, lower political instability, and higher economic freedom that are quasi-impossible to go for nowadays and before the advent of that smart techno hard and software. In any case, Can democracies survive social media?


Balancing freedom of expression with social responsibility

Abraham Lincoln is credited with one of the most enduring statements in American history: “You can fool all of the people some of the time and some of the people all of the time, but you cannot fool all of the people all of the time.” Unfortunately, nearly all Americans have been fooled by this. The first person to utter the statement was actually the showman P.T. Barnum.

Barnum didn’t know about the Internet or social media, of course. He’d be amazed at computers, and even more amazed that anyone could use it to send virtually any statement anywhere in the world, unfiltered and instantly. This extraordinary power allows us to fool millions of people in real time, but it also allows them to fool us. Unfortunately, there are individuals, organizations, and even nations that use social media for precisely that purpose.

The misuse of social media to spread disinformation, misinformation, propaganda, and outright lies is raising questions in democracies about how free freedom of expression should be. Social media are caught constantly between freedom of speech and social responsibility in democracies around the world. “There is an ongoing debate about where to draw the line between freedom of speech and offensive comments,” the authors of the 2020 World Population Review report. “Especially in the age of social media, concerns have arisen over whether freedom of speech is causing more harm than it is good.”

Every country that guarantees freedom of expression already puts boundaries on it. In 2015, the Pew Research Center ranked the tolerance of free speech in 38 countries, scoring them between zero and eight, with eight being the most tolerant. No country earned a score higher than 5.73. That score was awarded to the United States. Pew reported that “Americans are more tolerant of free speech than other nationalities. They also are the most supportive of freedom of the press and the right to use the Internet without government censorship.”

But the world’s most tolerant nation is struggling with an epidemic of misinformation, outright falsehoods, hate speech, conspiracy theories, and deliberate attempts by foreign and domestic groups to undermine democracy. Social media providers such as Facebook and Twitter are being challenged by Congress to find that balance between freedom of expression on the one hand, and serving as conduits of hate and harm on the other.

The U.S. Constitution says, “Congress shall make no law…abridging freedom of speech.” Yet, federal statutes prohibit speech that incites harm to others or distributes obscene materials, for example. The constraints other countries have put on free expression include libel, slander, perjury, obscenity, sedition, incitement, the disclosure of classified information, the unauthorized use of copyrighted information, trade secrets, and speech that violates privacy, dignity, and public security. People in the European Union and Argentina are guaranteed the “right to be forgotten.”

In 1948, the United Nations General Assembly adopted the Universal Declaration of Human Rights, which states that “everyone shall have the right to hold opinions without interference” and “the right to freedom of expression.” But it also sets boundaries against speech that damages the rights and reputations of others, jeopardizes national security, or threatens public order, health, or morals.

The Internet’s value

Another of America’s historic leaders, Thomas Jefferson, has been quoted, “If we are to guard against ignorance and remain free, every American is responsible to be informed.” Ensuring that citizens are well informed is one of the Internet’s most important potentials. How close is it to fulfilling its potential?

The Pew Center for Research asked that question last July in the United States. It studied where Americans get their information and how their sources enhance their knowledge. Pew found that about one in five adults relies on social media for news and information, but 57% of them scored low when asked nine “knowledge questions.” Other researchers found a similar result for television news, probably because some of the most prominent news sources are biased in the United States.

Here is how it happened. Before cable television arrived, there were three dominant TV networks in the U.S. — ABC, CBS, and NBC. Because they used public airways to broadcast content, the federal government felt they had an obligation to public service. Each network had to obtain a broadcast license. In 1949, the federal agency in charge of licensing instituted the “Fairness Doctrine.” It required the networks to present both sides of controversial issues of public importance. Broadcasts had to be “honest, equitable, and balanced.”

Things changed when cable television came along. Cable stations didn’t use public airways. As their numbers grew, viewers could find both sides of controversial issues by channel surfing, if they took the trouble. The Fairness Doctrine fell into disuse and eventually was discontinued. Cable stations are subject to federal rules and local requirements, but their rules pertain mostly to the quality of cable services, rate structures, franchise fees, and so on. The few regulations about programming are much less strict than the standards applied to the major broadcast networks.

As a result, several cable networks began specializing in news slanted to support a political or ideological agenda. One network, Fox News, presents information in ways that appeal to and reinforce the beliefs of conservative viewers. It has proved to be a very successful formula. Fox is now the most widely watched news station in the U.S.

The Pew Research Center found that 60% of Republicans and Republican-leaning voters rely heavily on Fox News, while 53% of Democrats and Democrat-leaning voters tune into CNN, a network that tilts slightly left. In 2012, researchers determined that people who relied on Fox for news knew less about current events than people who watched no news at all. Last July, a new study showed that the same is true for people who frequent the Fox News website.

News outlets like Fox (and conservatives would say CNN) contribute to the ideological rigidity and highly emotional polarization that plagues politics in the United States today. Outlets like these do less for “the responsibility of every American to be informed” than they do for each group’s conviction than it knows better than the other. The fortification of pre-existing biases and beliefs also happens on social media, which uses algorithms to diagnose a user’s beliefs and feeds back like-minded content. We come to the question again whether social coherence and goodwill require that the relationship between free speech and social responsibility should tilt toward responsibility.

It is a delicate and even dangerous question that begs more questions. How do we make sure that whoever sets and enforces the standards of free expression is not cultivating authoritarianism?

Foreign subterfuge

Even more worrisome, perhaps, is how we keep a democracy’s information channels open but safe from nefarious state and non-state interference? Cyber espionage, warfare, and crime are pressing issues worldwide beyond the scope of this article. More relevant are the activities by some nations to interfere with and manipulate the democratic processes of others.

Russia, China, Iran, and North Korea are regarded as the nations that conduct most information warfare over the Internet. U.S. intelligence agencies confirm Russia’s manipulation of public opinion during the 2016 presidential and congressional elections. The same agencies report that Russia, China, and Iran are attempting to “hack” the 2020 election, too, in ways that favor either Trump or his opponent, Joe Biden. Experts say that other, smaller nations are working to acquire the same capabilities.

Russian leaders use social media to undermine the American people’s confidence in democracy overall. This isn’t new. “Cyber is facilitating more advanced and more effective psychological warfare, information operations, coercion and intimidation attacks,” NATO’s security expert Jamie Shea warned in 2017. “We used to worry about [hackers targeting] banks or credit cards or inconvenience to customers, now we worry about the future of democracy, the stability and health of our institutions.”

Russia’s use of fake organizations and inflammatory ads on social media is challenging Twitter and Facebook to make concessions to social responsibility. Both were criticized for failing to police Russia’s use of their networks in 2016. This year, Facebook says it will block all new political advertising a week before the November 3 election to prevent misinformation.

Facebook’s chief executive officer, Mark Zuckerberg, says that his company disabled 1.7 billion fake accounts between January and March. Twitter has begun labeling tweets that violate its policies against fake accounts and identities. Two years ago, it created a public archive of 200 million tweets to study them for attempted manipulation. Congress has called on Facebook, Twitter, and Google to explain what they are doing to prevent foreign interference in the 2020 election.

America’s lawmakers are also concerned about foreign and domestic sources misusing Instagram, YouTube, and other social media to spread disinformation about the coronavirus pandemic, possibly inciting the demonstrations, fights, and even violence the country has experienced because of government mandates to wear masks, observe social distancing, and close businesses where crowds congregate.

The Internal threats

Facebook and Twitter are taking steps to identify and/or eliminate “false facts” from inside the United States, too. The most frequent and blatant source is Donald Trump, the “Tweeter-in-Chief.” He pecks out messages on Twitter night and day to dominate the news, insult opponents, praise his own performance, and take advantage of unfiltered contact with the American people.

He set a personal record of 142 tweets during his impeachment trial in January and February, then broke it in June with 200 tweets and retweets on a single day. When Twitter began labeling Trump’s provably inaccurate tweets, the president retaliated with an executive order to regulate social media companies.

The problem is not only Trump and not only social media. “Whether it’s newspapers, television, Facebook, YouTube, or Google searches, someone is pulling strings (and) lobbying their own agendas because there are no consequences,” social media consultant Lon Safko points out. “You can say anything you want, and there are no consequences.”

Social media also is an important propaganda tool for dictators and unscrupulous leaders around the world. In 2019, researchers at the University of Oxford found evidence of organized social media manipulation campaigns in 70 countries. Twenty-six countries were using social media to “suppress fundamental human rights, discredit political opponents, and drown out dissenting opinions.” Government or political party “cyber troops” are using political bots to amplify hate speech, illegally harvest data, and mobilize “trolls” to harass political dissidents and journalists, the University reported.

“Despite the majority of adults surveyed in each country reporting that they used social networks to keep up to date with news and current affairs, a 2018 study showed that social media is the least trusted news source in the world,” says researcher Amy Watson of Statista, a statistics service. “Less than 35% of adults in Europe considered social networks to be trustworthy in this respect, yet more than 50% of adults in Portugal, Poland, Romania, Hungary, Bulgaria, Slovakia, and Croatia said that they got their news on social media.”

“Concerns about fake news and propaganda on social media have not stopped billions of users accessing their favorite networks on a daily basis,” she says.

So, can freedom of speech survive social media? Can Democracies? Can we find ways to balance freedom of expression with social responsibility? If the proper formula requires restrictions on speech, what should they be? If the government’s job is to protect democracy from cyber-subterfuge, how will it keep up technologies that emerge much faster than governments act?

I think about this a lot. My answers are the same as those we often hear from the world’s top experts and policymakers:

Only time will tell.

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William Becker is an author and blogger in the United States. He writes about climate change and many other issues that strike his fancy.

MENA billionaires’ wealth increased

MENA billionaires’ wealth increased

On 27 August 2020, OXFAM found that all MENA billionaires’ wealth increased by $10 billion, enough to pay Beirut blast repair bill.


The 21 billionaires in the Middle East and North Africa (MENA), all of them men, saw their wealth increase by nearly $10 billion since the start of the COVID-19 crisis, almost double the estimated amount required to rebuild Lebanon’s shattered capital, while 45 million more people in the region could be pushed to poverty as a result of the pandemic, a new Oxfam report revealed today.

For a Decade of Hope Not Austerity in The Middle East and North Africa’ shows that since March, the region’s richest have amassed more than double the regional emergency funds provided by the International Monetary Fund (IMF) to respond to the pandemic, and almost five times the United Nation’s COVID-19 humanitarian appeal for MENA. 

“The pandemic has exposed the deep inequalities and massive failures in our economic systems, leaving millions in the region without jobs, healthcare, or any kind of social security, while allowing billionaires to add more than $63 million to their fortunes each and every day since the beginning of the pandemic,” said Nabil Abdo, Oxfam in MENA’s senior policy advisor.

“Unless governments immediately prioritize people over profits and the rich pay their fair share, millions more will be pushed to the brink of poverty and denied their basic rights. For too long profit has been prioritized at the expense of the public good and safety. The result of this could not be starker in the aftermath of the catastrophic explosion in Beirut, which has further exposed the fragility of the economy and will only exacerbate existing inequalities.”

Governments in the region need to act quickly and raise revenues to protect the most vulnerable in society. In Lebanon, if a 5 percent solidarity net wealth tax had been introduced last year, $3.7 billion in tax revenues would have been generated to help rebuild the electricity and water infrastructure and provide services to keep people safe in the aftermath of the blast

Before the virus hit, the MENA region was already one of the most unequal in the world; and COVID-19 has further deepened the gap between the rich and the poor. 76 percent of the region’s income goes to just 10 percent of the population, with 37 billionaires owning as much wealth as the poorest half of the adult population.

If Jordan, Lebanon, Egypt and Morocco had implemented a two percent wealth tax from 2010, these countries could have raised $38 billion in tax revenues, which could have been invested in improving public healthcare and rebuilding social protection systems.

At the same time, measures to protect the poor have fallen short. It is estimated that only 11 percent of stimulus packages in the region focused on social protection and health measures. Against this backdrop, an estimated 89 percent of the region’s 16 million informal workers have been severely affected by pandemic measures. Foreign investment is also projected to drop by 45 percent and 1.7 million people are expected to lose their jobs, 700,000 of them women, costing $42 billion in lost wages.

“The crushing austerity in recent years could have been avoided if the wealthiest in the region had paid more tax, a cost they can easily afford. This alternative could have given countries more flexibility on their spending policies and crucially, seen the region enter the coronavirus crisis with less inequality and debt”, added Abdo.

To avoid millions more being pushed to the brink of poverty, the region’s governments must urgently adopt deliberate inequality-busting policies like healthcare and education for all, and must raise the minimum wage and taxing wealth fairly to build better, more equal economies and societies.
 

Notes to editors

Download ‘For a Decade of Hope Not Austerity in The Middle East and North Africa’.

Oxfam’s calculations are based on the most up-to-date and comprehensive data sources available. Figures on the very richest in society come from Forbes’ Billionaires List and Forbes‘ Real-Time Billionaires ranking. We compared the net wealth of MENA billionaires on March 18, 2020, to their net wealth on August 16, 2020.

PWC has estimated the cost of damage to 30-40 destroyed buildings, 3,400 uninhabitable buildings and a total of 40,000 buildings affected by the blast to be $5 billion. 
 

Contact information:

Roslyn Boatman in Tunis, Tunisia | roslyn.boatman@oxfam.org | +216 21359002 

For updates, please follow:

@Oxfam 

Learn more:
The Levant and North Africa: on the verge of . . . .

The Levant and North Africa: on the verge of . . . .

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 ]

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