Iraq’s recent wave of protests against poverty, a lack of basic services, unemployment, and the interference of Iran in the country’s domestic affairs showed a country at the end of its tether. Official figures put the number killed in the violent crackdown of protesters at 157.
The problems for Iraq are deep-rooted and institutional, and if not addressed may yet escalate into a full-scale revolution. What’s needed is reform of the country’s 2005 constitution, which was written during a period of political instability after a war and occupation ridden by conflict. The only way for Iraq to have a chance at prosperity and peace is by addressing its flawed foundations which were heavily influenced by the occupiers.
Iraq’s 2005 constitution, which was influenced by the US, failed to create a unified, representative government. Ambiguities within the document have been abused by those in power and it has exacerbated sectarian divisions within Iraq’s politics. The constitution created a system in which public sector and government roles are allocated based on sect and ethnicity.
Iraq has become a nation that is for the few and not the many, as unrepresentative Iraqi political elites bid to share out its resources. Millions of Iraqis are left unrepresented and without prospects.
While the majority of citizens are discontented and struggling, Iraq’s elites remain fortified and continue to govern through a system known as “wasta”, which involves serving those you favour and hold close, such as friends and family. Divides along ethnic and sectarian lines remain a key theme when identifying the causes of disagreement between competing sects who unite to form political blocs in Iraq’s government.
The lengthy government formation process that takes place after elections is dependent on the division of key state institutions based on ethnic and sectarian identities. To achieve this, political parties form blocs with and against each other to achieve their goals, with the biggest becoming the governing bloc. Although Iraqi elites are divided based on ethnicity, sect and religion, this race for power – and with it the ability to distribute and share the country’s resources – creates a unity between elites.
For example, in three separate parliamentary elections since 2003, the winning candidate has not become prime minister. In the 2014 elections, Nouri al-Maliki, as the head of the State of Law coalition, won the largest number of seats in parliament, yet due to disagreements over government formation and the fight against Islamic State, he was replaced by Haider al-Abadi. In the 2018 elections, Muqtada al-Sadr’s Saairun coalition won a majority, but it was eventually Adil Abdul-Mahdi, an independent, who was chosen as prime minister.
Ministerial fiefdoms where political parties are given ministries in exchange for support to form governing blocs have created a dysfunctional government. It means there is no clear governmental strategy, which in turn severely impedes development.
The mechanics of this power-sharing system are illustrated by coalitions of oligarchs who use public institutions to distribute favours to clients. Political parties control government procurement and reconstruction contracts, who either auction them off or set up shell companies to award contracts to themselves. These contracts are then sub-contracted, or simply never fulfilled, with funds ending up being drained in the process, ultimately benefiting a narrow Iraqi elite. Iraq was ranked 168 out of 180 countries in Transparency International’s 2018 corruption perception index.
In order for Iraq to ever be able to meet the growing demands of its people and the challenges of prospering on the global stage, immediate political reform is needed. The reform process must directly address the rushed and divisive constitution. This needs to be followed by the democratisation of Iraq’s institutions and the re-creation of Iraq’s national identity so the country can escape the worst of its sectarianism and become more unified as a nation.
Without all of these issues addressed with equal importance, the cycle of adversity will continue as Iraq will remain a reactive as opposed to proactive nation.
Lebanon pushed to the brink, faces reckoning over graft after allies, investors, protesters press for change in the country as per Jonathan Spicer, Tom Perry and Samia Nakhoul, Reuters News in this ECONOMY‘s article dated 21 October 2019.
BEIRUT – Lebanon is closer to a financial crisis than at any time since at least the war-torn 1980s as allies, investors and this week nationwide protests pile pressure on the government to tackle a corrupt system and enact long-promised reforms.
Prime Minister Saad al-Hariri‘s government on Thursday hastily reversed a plan, announced hours earlier, to tax WhatsApp voice calls in the face of the biggest public protests in years, with people burning tyres and blocking roads.
The country – among the world’s most indebted and quickly running out of dollar reserves – urgently needs to convince regional allies and Western donors it is finally serious about tackling entrenched problems such as its unreliable and wasteful electricity sector.
Without a foreign funding boost, Lebanon risks a currency devaluation or even defaulting on debts within months, according to interviews with nearly 20 government officials, politicians, bankers and investors.
Foreign Minister Gebran Bassil said in a televised speech on Friday that he gave a paper at an economic crisis meeting in September saying Lebanon needed “an electric shock”.
“I also said that what little remains of the financial balance might not last us longer than the end of the year if we do not adopt the necessary policies,” he said, without describing what he meant by financial balance.
Beirut has repeatedly vowed to maintain the value of the dollar-pegged Lebanese pound and honour its debts on time.
But countries that in the past reliably financed bailouts have run out of patience with its mismanagement and graft, and they are using the deepening economic and social crisis to press for change, the sources told Reuters.
These include Arab Gulf states whose enthusiasm to help Lebanon has been undermined by the growing clout in Beirut of Tehran-backed Hezbollah, and what they see as a need to check Iran’s growing influence across the Middle East.
Western countries have also provided funds that allowed Lebanon to defy gravity for years. But for the first time, they have said no new money would flow until the government takes clear steps toward reforms it has long only promised.
Their hope is to see it move towards fixing a system that sectarian politicians have used to deploy state resources to their own advantage through patronage networks instead of building a functional state.
A crisis could stoke further unrest in a country hosting some 1 million refugees from neighbouring Syria, where a Turkish incursion in the northeast this month has opened a new front in an eight-year war.
“If the situation remains, and there are no radical reforms, a devaluation of the currency is inevitable,” said Toufic Gaspard, a former adviser to Lebanon’s finance ministry and former economist at its central bank and the International Monetary Fund.
“Since September a new era has begun,” he added. “The red flags are large and everywhere, especially with the central bank paying up to 13% to borrow dollars.”
The first reform on Beirut’s agenda is one of the most intractable: fixing chronic power outages that make private generators a costly necessity, a problem many see as the main symbol of corruption that has left services unreliable and infrastructure crumbling.
Hariri, in a televised speech to the nation, said he had been struggling to reform the electricity sector ever since taking office. After “meeting after meeting, committee after committee, proposal after proposal, I got at last to the final step and someone came and said ‘it doesn’t work’,” he said.
Presenting the difficulties of implementing reform more widely, Hariri said every committee required a minimum of nine ministers to keep everyone happy.
“A national unity government OK, we understand that. But committees of national unity The result is that nothing works.”
Underscoring the pressure from abroad, Pierre Duquesne, a French ambassador handling so-called CEDRE funding, is traveling to Lebanon next week to press the government on the use of offshore power barges, a banker familiar with the plan said.
Duquesne wants the barges included in the electricity overhaul plan, the person said, requesting anonymity.
Duquesne could not immediately be reached for comment.
The contents of the 2020 budget will be key to helping unlock some $11 billion conditionally pledged by international donors under last year’s CEDRE conference. But a cabinet meeting on the budget set for Friday was cancelled amid the protests.
Hariri’s government, which includes nearly all of Lebanon’s main parties, had proposed a tax of 20 cents per day on calls via voice-over-internet protocol (VoIP) used by applications including WhatsApp, Facebook FB.O and FaceTime.
In a country fractured along sectarian lines, the protests’ unusually wide geographic reach may be a sign of deepening anger with politicians who have jointly led Lebanon into crisis.
Fires were smoldering in central Beirut, where streets were scattered with glass of several smashed shop-fronts. Tear gas was fired on some demonstrators.
The newspaper an-Nahar described it as “a tax intifada”, or uprising. Another daily, al-Akhbar, declared it “the WhatsApp revolution”.
“With this corrupt authority, our kids have no future,” said protestor Fadi Issa, 51. “We don’t just want a resignation, we want accountability. They should return all the money they stole. We want change.”
As confidence has faded and dollars have grown scarce, new cracks have emerged between Lebanon’s government and its private lenders, according to several of the bankers, investors and officials who spoke to Reuters.
After years of funding the government with the promise of ever higher rates of return, the banks – sensing the country is approaching collapse – are pressing for it to finally deliver reforms to win over donors.
Most said Lebanon would likely feel more economic and financial strain in the months ahead but avoid haircuts on deposits or a worst-case sovereign default.
Yet Beirut’s years of failure to deliver reforms and the new determination among its traditional donors to press for them has left even top officials, bankers and investors divided over whether a devaluation is in store for the Lebanese pound.
“You need a positive shock. But unfortunately the government thinks reforms can happen without touching the structure that benefits them,” said Nassib Ghobril, head of economic research and analysis at Byblos Bank.
Lebanon must promote reforms to increase capital inflows, he said.
“We can’t keep going to the Emirates and Saudis. We need to help ourselves in order for others to help us.”
This month, Moody’s put Lebanon’s Caa1 credit rating under review for a downgrade and estimated the central bank, which has stepped in to cover government debt payments, had only $6 billion-$10 billion in useable dollars left to maintain stability.
That compares with some $6.5 billion in debt maturing by the end of next year.
The central bank says its foreign assets stood at $38.1 billion as of Oct. 15.
An official told Reuters Lebanon has only $10 billion in real reserves. “It is a very dire situation that has five months to correct itself or there will be a collapse, around February,” he said.
Hariri’s government may have only a few months to deliver fiscal reforms to convince France, the World Bank and other parties to the CEDRE agreement to unlock $11 billion in conditional funding.
The head of regional investments for a large U.S. asset manager said Lebanese officials are privately saying a plan that addresses short- and long-term electricity shortages will be announced before year-end, after which the government will raise tariffs.
But critics say no concrete steps have been taken despite energy ministry statements that the plan is on track.
Hariri left Paris last month with no immediate cash commitment after visiting French President Emmanuel Macron. Likewise this month he left Abu Dhabi empty-handed after meeting Crown Prince Sheikh Mohammed bin Zayed al-Nahyan.
Lawmakers in Beirut struggled to explain what happened in Abu Dhabi after Hariri claimed the United Arab Emirates had promised investments following “positive” talks.
EYES ON HEZBOLLAH
Investors, bankers and economists say at least $10 billion is needed to renew confidence among the Lebanese diaspora whom for decades have underpinned the economy by maintaining accounts back home.
But so far this year, deposits have shrunk by about 0.4%.
The government has sought a smaller cushion from Sunni Muslim allies to buy some time. But to secure funding from the UAE or Saudi Arabia, Beirut would likely have to meet conditions meant to weaken Shi’ite Hezbollah’s hand in Lebanon’s government, said several sources.
Hezbollah, which faces U.S. sanctions, is seen to be gaining more control over state resources by naming the health minister in January after last year’s elections brought more of its allies into the legislature.
Some say Saudi Arabia, UAE and the United States are motivated to hold out on Beirut as part of their wider policy seeking to weaken Iran and its allies which have been fighting proxy wars with Gulf Arab states on several fronts.
“Their tolerance of Iran and Hezbollah has lowered significantly. The ‘Lebanese exception’ is gone,” said Sami Nader, Beirut-based director of the Levant Institute for Strategic Affairs.
“The balance has tilted and we are now at odds with our former friends because Hezbollah now has the upper hand politically.”
The former regional head at a major Western bank put it bluntly: “People have lost patience with the corruption in which a frozen Parliament with no authority is simply divvying up the pie among politicians.”
“But at the end of the day the Lebanese political class usually succeeds in convincing allies that they should not let the system collapse and bring civil war again,” he added.
Lebanon, straddling the Middle East’s main sectarian lines, was historically the region’s foreign-exchange hub into which deposits flowed, especially since 1997 when its currency was pegged to the dollar at 1,507.5 pounds.
But after a reckoning in August and September in which the cost of insuring Lebanon’s sovereign debt surged https://tmsnrt.rs/2MORZfM to a record high, things have changed.
Depositors, including the diaspora drawn by rates much higher than in Europe or the United States, are pulling funds in the face of Lebanon’s swelling twin deficits, inability to secure foreign funding, and unorthodox central bank efforts to attract dollar inflows.
Among Lebanon’s 6 million citizens, trust has worn thin.
Depositors can no longer easily withdraw dollars, and most ATMs no longer provide them, forcing people to turn to so-called parallel FX markets where $1 is worth more than the official peg.
“I am with the protesters,” said Walid al-Badawi, 43. “I have three children, I am a taxi driver, I work all day to get food for my kids and I can’t get it.”
Gaspard, the central bank’s former research head, said foreign exchange was easy even through Lebanon’s 15-year civil war. There was also always a balance of payments surplus – until 2011 when deficits began to grow, reaching $12 billion last year.
LOST RESOLVE AT BANKS
Three events precipitated the crisis of confidence that for years seemed inevitable: a series of central bank efforts since 2016 to keep growing deposits with rates of more than 11% on large deposits; a public sector pay hike last year that raised the budget deficit to more than 11% of GDP; low oil prices in recent years that have weakened Gulf allies.
In a report on Thursday, the IMF described Lebanon’s position as “very difficult,” adding “substantial new measures” are needed to protect it and reduce large deficits.
As dollars have dried up, banks have effectively stopped lending and can no longer make basic foreign-exchange transactions for clients, one banker said.
“The whole role of banks is to pour money into the central bank to finance the government and protect the currency,” he said. “Nothing is being done on the fiscal deficit because doing something will disrupt the systems of corruption.”
The resistance from banks has been subtle but telling given their central role in financing the government.
When Beirut proposed a $660 million reduction in debt service costs in its 2019 budget, banks never signed up to the idea. They have also been less enthusiastic about subscribing to Eurobonds including a planned $2-billion issuance later this month, officials said.
Without reform, “banks agree we can no longer support the public sector,” said Byblos Bank’s Ghobril.
(Reporting by Jonathan Spicer, Tom Perry and Samia Nakhoul; Additional reporting by Yara Abi Nader and Ellen Francis in Beirut and John Irish in Paris; Editing by Hugh Lawson) ((email@example.com; Reuters Messaging: firstname.lastname@example.org @jonathanspicer))
The political impasse in which Algeria has been mired for more than seven months would result in a sharp economic slowdown in the short term. This Algeria’s Political deadlock and economic breakdown that the World Bank forecasters have reached is by any means comprehensive but could be read as some sort of alert.
The institution expects non-hydrocarbon sectors, as well as all oil and gas-related activity, to run through an air hole this year; which should have some unavoidable consequences on the country’s GDP growth. In effect, in similar way to other developing countries, it is expected to come down to 1.3% in 2019 from 1.5% the previous year.
“Uncertainty policy is expected to lead to a slowdown in the non-hydrocarbon sector in 2019,” reads a World Bank report released last Thursday. The Bretton Woods institution has not failed to highlight the impact of the arrests of business leaders on investment morality grounds or lack of these, and more generally, on the economy. “Business leaders from various sectors were arrested in connection with corruption investigations, which has disrupted the economy due to sudden changes in the direction and supervision of these companies, as well as uncertainty over investment,” the same report said. Since the beginning of the crisis, a wave of arrests affected the business community, public institutions, banks and social bodies alike. This blocking situation had worsened over the weeks; appropriation sets did not meet, officials at the level of economic administration were careful not to take the slightest risk. That is to say how violent the shock wave was. The impact on the economy could be disastrous as the situation continues to worsen by the day. As such, the World Bank (WB) estimates that “the pre-election period also risks further delaying the fiscal consolidation process scheduled for 2019, increasing the budget deficit to 12.1% of GDP and increasing the risk of a more abrupt adjustment in the future.” For the WB, widening budget and current account deficits is almost inevitable. While the fiscal deficit would be unlikely to be reduced internally, “on the external front, the current account deficit is expected to widen to 8.1% of GDP, mainly due to a significantly larger trade deficit.”
Investment is being impacted
“As the course of political events is expected to have an impact on economic activity, it is also expected that more resources will be allocated to social measures, to the detriment of public investment spending,” the Bank predicts. The report, stating that “private sector activity and investment will be affected by political disruptions and an unfavourable business climate, as well as disruptions caused by delays in payment of workers in several industries.” This is the case, since the draft Finance Bill 2020 foresees a sharp decline in capital expenditure, to the tune of 20.1%, while operating expenses and social transfers are maintained as they are. WB experts are merely saying out loud what Algerian economists and operators are thinking, warning of a situation that could go along if solutions to the political impasse run out. “The delays at the end of the political impasse and political uncertainty could further damage the country’s economy, leading to increased imports and further dwindling foreign exchange reserves,” concludes the WB report. Moreover, macroeconomic indicators are unlikely to improve at any time under current political conditions.
Economic growth to only 1.9% in 2020
Moreover, against a background of falling capital spending and low morale among investors, the growth of the Algerian economy would be only 1.9% in the year 2020. A stagnation is due in particular to the “slow” growth of the hydrocarbons sector, combined with the contraction in economic activity, which has limited growth in non-hydrocarbon sectors, according to the WB’s economic monitoring report released on Thursday. “Growth in the hydrocarbon sector has been slow, with economic activity contracting by 6.5% and 7.7% in 2018 and the first quarter of 2019, respectively, partially off-sparing the effects of the slight increase in non-core growth 3.4% and 3.9% in 2018 and the first quarter of 2019, respectively,” the WB noted. The tiny increase in investment in the first half of the year (4.9%) was driven by public investment in construction, public works and hydraulics, as a result of the expansion of social housing programmes, the WB said. Furthermore, the institution believes that “the recent discovery of a new gas field suggests a rebound in gas production and exports, but only in the medium term, and if and only if the framework for investment in hydrocarbons lends it to it.” The World Bank is merely bringing water to the government’s mill, which has called the enactment of the new hydrocarbon law urgent.
Streets demonstrations in the vast and populous countries of the MENA region’s Algiers, Khartoum, Cairo and finally, Bagdad chasing some long-time running democratic awakening appear to be stalling. However, these capital cities of the so-called republics’ populations seem to be going through a quasi-general disenchantment with their respective establishments because of all the prospects for future development in political and security terms have become uncertain given this sudden but not surprising worsening regional situation. Like throughout all these countries, Iraq protests expose the fallacy of the country’s democracy. Technological advances in the world and their penetration in the MENA region could definitely be behind all these upheavals.
Whether these media as social or just digital distribution of news, they did help to connect citizens and build linkage to an unprecedented level. Government organisations always in desperate need of credibility fell short to keep up with how fast the region’s peoples demands of more democracy, etc. This article elaborates on the specifics of Iraq’s.
Violent crackdown against Iraq protests expose fallacy of the country’s democracy
When Muhanad Habib, a 22-year-old Iraqi from the Sadr City district of Baghdad, posted on Facebook in late September, he probably didn’t imagine that his demands for a better life and basic rights would be met with bullets.
It will be a huge and angry public revolution in Baghdad … We will take to the streets protesting … Enough silence about what’s going on in Iraq. We cannot just watch Iraq being destroyed when we have armies of jobless and poor.
This was how it all started. Angry youth from Baghdad took to the streets. Unaffiliated with any political party or with well-known activists, the protesters – the majority of whom were born in the late 1990s or early 2000s – despaired about any prospect for change in Iraq.
Yet, Salih’s statement raised questions about who is actually running the Iraqi state. And despite his and international condemnation, the crackdown continues on the ground.
Calls for a homeland
Endemic corruption, unemployment, flawed institutions and poor public services linger in Iraq and have prompted protests since 2011, including notably in Basra in 2018. The recapture of Iraqi lands from the grip of Islamic State (IS) gave many Iraqis hope that lessons would be learnt about the repeated failures which gave rise to IS, and that those in power would take sincere steps to reform. But that hope has been diminishing every day.
The most recent protests came in the wake of multiple smaller demonstrations by different groups, including PhD graduates, doctors and engineers in September 2019.
They followed government actions that caused widespread anger. Impoverished people were outraged at a recent state campaign to destroy unlicensed properties and market stalls across Iraq, leaving many homeless and jobless.
It also followed the removal of a key general, Abdul Wahab Al Saadi, from his position as commander of the Counter-Terrorism Service, followed by his demotion to a lower post at the Ministry of Defence. The marginalisation of a figure admired for his role in the military campaign against IS enraged many Iraqis.
The new generation want a homeland. “We want a respected homeland,” and “I am taking to the streets to get my right,” were among the slogans on display during the protests. “The issue is not about water or electricity, but about a homeland,” shouted another protester.
The immediate crackdown of the protests has surprised, shocked, and shaken Iraqis. The suppression turned a protest about anti-corruption and unemployment into an uprising against the status quo and what participants see as foreign interference, particularly from Iran.
Tear gas, live ammunition, and snipers were used to quell the protesters. As one protestor put it: “They did things to us they never did to IS. They beat and insulted us. They used live fire and grenades. What have we done? All what we are asking for are our rights and all people’s rights.” The protestor’s words were used as the opening of a new rap song titled “Iran’s tails” released in the wake of the crackdown by an Iraqi expat in solidarity with the demonstrators.
The violent oppression and state’s authoritarian measures to cover up the carnage are reminiscent of the days of Baathist rule and former president Saddam Hussein’s oppression of a 1991 uprising. In 2019, such measures included an internet blackout across Iraq except in the Kurdistan region, curfews in Baghdad and other provinces in the south, and blocked roads leading to Tahrir square in Baghdad where demonstrators gathered. Comparisons were also made with IS, who also cut off the internet in Mosul when Iraqi troops were advancing to retake the city in 2016.
Offices of media agencies covering the protests were attacked and reports emerged of protesters, activists and journalists being threatened and arrested.
By disconnecting Iraqis from the outside world, the authorities in Iraq tried to control the circulation of videos that showed civilians killed in broad daylight. But they also pushed the narrative of Iran-backed political parties and officials: that “intruders” – an implicit reference to Baathists or actors backed by an external agenda – were responsible for riots. A similar narrative was echoed by Iranian media outlets to undermine the legitimacy of the protests, accusing foreign powers of being behind them, an indirect reference to the US, Israel and Saudi Arabia.
Despite the internet blackout, which remains partially in place, footage of the live shooting at the protestors and ambulances carrying the wounded were shared on social media as some Iraqi protesters resorted to innovative methods with the help of Iraqi expats to reveal the scale of the violence.
The heartbreaking scenes caused uproar among the Iraqi diaspora who protested in several countries around the world in solidarity. But for people inside Iraq, many still don’t know the scale of the atrocities as they haven’t been able to access social media sites.
The fallacy of democracy
Since the fall of Hussein’s regime in 2003, successive governments have failed to put an end to Iraqis’ grievances. Time and again, only empty promises were made, and superficial measures taken. The electoral system has helped to produce and perpetuate a hybrid form of kleptocracy, authoritarianism and kakistocracy – a government run by the worst, or most unscrupulous people. Armed groups, tribes, foreign powers and religious clergy have all maintained this system.
The latest protests may have been suppressed but they revealed that democracy in Iraq is nothing but a facade. What sort of democratic government kills its own people, taking away their hopes and dreams? And can it still be called legitimate? Reacting indifferently to the deadly crackdown of innocent people in Iraq, the world needs to at least recognise that the root causes of Iraq’s ills are in the post-2003 system itself.
Romain Duval and Davide Furceri, authors of this article that obviously elaborates on the currently so-called developing countries. It does not ignore that there is some differentiation between oil and/or other scarce natural resources and the non-exporters of the same. It might as well be talking about these two categories of countries but perhaps along with the character traits described in the image below. Why you might wonder. Simply because How To Reignite Growth in Emerging Market and Developing Economies as developed here, could well apply to all countries in the MENA region, perhaps worldwide not for the same reasons.
Let us, in the meantime, read what they say.
Emerging markets and developing economies have enjoyed good growth over the past two decades. But many countries are still not catching up with the living standards of advanced economies.
At current growth rates, it would take more than 50 years for a typical emerging market economy to close half of its current income gap in living standards, and 90 years for a typical developing economy.
Our research in Chapter 3 of the October 2019 World Economic Outlook finds that implementing major reforms in six key areas at the same time—domestic finance, external finance, trade, labor markets, product markets, and governance—can double the speed of income convergence of the average emerging market and developing economy to the living standards of advanced economies. This could raise output levels by more than 7 percent over a six-year period.
Structural reforms can yield sizable payoffs.
More room for reforms
Policies that change the way governments work—known as structural reforms—are difficult to measure. They often involve policies or issues that are not easy to quantify, such as job protection legislation or the quality of supervision of the domestic banking system.
To address this, the IMF recently developed a comprehensive dataset covering structural regulations in domestic and external finance, trade, and labor and product markets. The data cover a large sample of 90 advanced and developing economies during the past four decades. To the five indicators, we added the quality of governance (for example, how countries control corruption) from the World Governance Indicators.
The new indicators show that, after the major wave of reforms in the late 1980s and—most importantly—the 1990s, the pace slowed in emerging market and developing economies during the 2000s, especially in low-income developing countries.
While this slowdown reflects the prior generation of reforms, as in advanced economies, there remains ample room for a renewed reform push, particularly in developing economies—notably, across sub-Saharan Africa and, to a lesser extent, in the Middle East and North Africa and the Asia-Pacific region.
Reforms can boost growth and living standards
Based on our empirical research of reforms in 48 current and former emerging markets and 20 developing economies, we find that reforms can yield sizable payoffs. But these gains take time to materialize and vary across different types of regulations. For example, a domestic finance reform of the size that took place in Egypt in 1992 leads to an increase in output of about 2 percent, on average, six years after implementation. We get a similar result for anti-corruption measures, whose effects are sizable in the short run and stabilize at around 2 percent in the medium term. In the other four reforms areas—external finance, trade, product markets, and labor markets—the gains are about 1 percent six years after the reform.
For the average emerging market and developing economy, the results imply that major simultaneous reforms across all six areas considered in this chapter can raise output by more than 7 percent over a six-year period. This would increase annual per capita GDP growth by about 1 percentage point, doubling the average speed of income convergence to advanced-country levels. Model-based analysis—which captures the longer-term effect of reforms and provides insights on the channels through which they affect economic activity—points to output gains about twice as large as the empirical model over the longer term (beyond 6 years).
One channel through which reforms increase output is by reducing informality. For example, lowering barriers to businesses’ entry in the formal sector encourages some informal companies to become formal. In turn, formalization boosts output by increasing companies’ productivity and capital investment. For this reason, the payoff from reforms tends to be larger where informality is pervasive.
Getting the timing, packaging and sequencing right
Some reforms work best when the economy is strong. In good times, reducing layoff costs makes employers more willing to hire new workers, while in bad times it makes them more willing to dismiss existing ones, magnifying the effects of a downturn. Similarly, increasing competition in the financial sector at a time of weak credit demand may push certain financial intermediaries out of business, further weakening the economy.
In countries where the economy is weak, governments may prioritize reforms—such as strengthening product market competition—that pay off regardless of economic conditions, design others to alleviate any short-term costs—such as enacting job protection reforms now with a provision that they will take effect later. These reforms can also be accompanied with monetary or fiscal policy support where possible.
Reforms also work best if properly packaged and sequenced. Importantly, they typically deliver larger gains in countries where governance is stronger. This means that strengthening governance can support economic growth and income convergence not just directly by incentivizing more productive formal enterprises to invest and recruit, but also indirectly by magnifying the payoff from reforms in other areas.
Finally, to fulfill their promise of improving living standards, reforms must be supported by redistributive policies that spread the gains widely across the population—such as strong social safety nets and programs that help workers move across jobs. For reforms to be sustainable and therefore effective, they need to benefit not just some, but all.
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Gulf wealth: all that glitters is not gold. Little suggests that fabulously wealthy Gulf states and their Middle Eastern and North African beneficiaries have recognized what is perhaps the most important lesson of this year’s popular uprisings in Algeria and Sudan and the 2011 Arab revolts: All that glitters is not gold.
Saudi Arabia, the United Arab Emirates and to a lesser extent Kuwait have in the last decade invested billions of dollars in either reversing or hollowing out the revolts’ achievements in a bid to ensure that political change elsewhere in the region does not come to haunt them.
Qatar, in a counterintuitive strategy that has earned it the ire of the rulers of Saudi Arabia and the UAE, has sought to achieve the same goal by attempting to be on the right side of the region’s forces of change.
The irony is that both approaches, despite also involving huge investments at home in economic diversification, education, and healthcare, could produce the very result Gulf states seek to avoid: a region that has many of the trappings of 21st century knowledge states but that is incapable of catering to the aspirations of a youth bulge expected to annually increase the work force by a million people over the next 12 years.
UNICEF, the United Nations Children’s Fund, concluded earlier this year, that the region’s youth bulge was a double-edged sword. It could either pose a threat to regional stability or be an asset for development.
Turning the youth bulge into an asset “requires urgent and significant investment to create opportunities for meaningful learning, social engagement and work, all of which are currently limited, particularly for young women and the most vulnerable,” the UN agency said in a report entitled MENA (Middle East and North Africa) Generation 2030.
UNICEF arrived at its conclusion even though Gulf states have adopted grandiose plans that envision them becoming within a matter of a decade or two diversified, knowledge-driven economies that enact the social reforms needed to create opportunity for all segments of society.
The group’s conclusion applies as much to the wealthy Gulf states as it does to the Arab beneficiaries of their politically motivated financial largesse.
The problems with the flexing of the Gulf states’ financial muscle as well as the implementation of reform plans are multi-fold.
They relate as much to quality of the upgrading of services such as education as they are about how political intent shapes development efforts and how high domestic debt in countries like Egypt, where 27 percent of government expenditure goes to interest payments, and Lebanon, which spends 38 percent of its budget on debt servicing, benefits Gulf banks and stymies social and economic development.
Credit rating agency Fitch recently downgraded Lebanon’s credit rating to CCC from B- because of “intensifying pressure on Lebanon’s financing model and increasing risks to the government’s debt servicing capacity.”
“In Lebanon, just over 50 percent of the country’s bank assets are held by GCC-related banks, in Palestine this figure is 63 per cent, and in Jordan it is as high as 86 percent,” Mr. Advani wrote in a review of political economist Adam Hanieh’s study of Gulf finance, Money, Markets, and Monarchies.
Mr Hanieh argues that the bulk of the debt payments are to financial establishments whose major shareholders include Gulf institutions in a process in which “the Arab state…increasingly mediates the transfer of national wealth to large Gulf-related banks.”
Mr Advani warned that “indebted governments are compelled to intensify a politics of austerity, further trapping these societies in cycles of debt. Investments in social programs or infrastructural developments are often stalled. Popular movements are unable to realize their demands at the state level due to the requirements of foreign creditors and domestic capitalists. The ensuing scenario is one where alternative politics are asphyxiated and increasingly circumscribed by an atrophied status quo.”
That may well be the purpose of the exercise with economic diversification efforts in the Gulf being driven more by the need of autocracies to upgrade their autocratic style and create opportunity for a restive youth in a bid to ensure regime survival rather than by the acknowledgement of a government’s responsibility to serve the people.
The result is a flawed approach to all aspects of reform.
In Saudi Arabia, Crown Prince Mohammed bin Salman’s Vision 2030 economic and social reform plan that calls for greater private sector involvement has turned into a top down effort that emphasizes state control with the government’s Public Investment Fund (PIF) as the key player.
A combination of depressed oil prices and the recent replacement of energy minister Khalid al-Falih as chairman of the board of Aramco by PIF head Yasir al-Rumayyan, a close associate of Prince Mohammed, raises questions about the state oil company’s positioning in advance of a much-touted initial public offering.
Ellen Wald, an energy analyst and author of a history of Aramco, the kingdom’s main source of revenue, noted that at PIF Mr. Al-Rumayyan had overseen investments more geared towards speculative gains than the sustainable growth of Saudi wealth.
Nonetheless, Ms Wald cautions that Mr Al-Rumayyan’s appointment “doesn’t necessarily bode well for Aramco, which is a different kind of company. It has to make stable decisions for the long term,” she said.
By the same token, UNICEF warned that poverty, violent conflict, restrictive social norms, patriarchy, rights violations and lack of safe spaces for expression and recreation were limiting opportunities as well as civic adolescent and youth engagement.
Gulf emphasis on geopolitical dominance, regime survival and return on financial investment produces short term solutions that often exacerbate conflict, produce little trickle-down effect and few prospects for long-term stability.
“As a result, adolescents and youth in MENA (the Middle East and North Africa) feel disillusioned, with girls and young women, refugees, those with disabilities and the poor being particularly marginalised and underrepresented,” the UNICEF report said.
“Youth unemployment in the region is currently the highest in the world. Education systems are failing to prepare adolescents and youth for the workplace, and markets are not generating urgently needed jobs,” the report warned.
Gulf wealth glitters but if the UNICEF report is anything to go by, it has yet to demonstrate that it can produce the gold of a development that is sustainable and benefits not only all segments of Gulf societies but also of those across the region that have become dependent on it.
Dr James M. Dorsey is a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, an adjunct senior research fellow at the National University of Singapore’s Middle East Institute and co-director of the University of Wuerzburg’s Institute of Fan Culture.
The six Gulf Co-operation Council (GCC) states have used their oil exports revenues of the past years not only to spend lavishly but to plan for a peaceful and serene future. So English football: a proxy battleground for feuding Gulf states?
Decades earlier, low oil prices meant economic disaster for a region that once controlled the world’s leading energy supplies impacting their sovereign wealth fund holdings. The ‘rentier’ states had to cope, some for the first time, with rising budget deficits. They had to conjure up policies to make good use of the classic rentier state economy involving a reduction in their dependence on oil revenues. A historical shift was handled quite artfully with notable policies of diversification of the respective economies and eventually getting hold of some ‘Soft Power’. Education, Sports and TV Entertainment or News channels amongst many other sectors of human activities were not precisely only bad earners in terms of Dollars. While there seems to be no question about the proceeds from the sector as mentioned earlier’s sales, these might have been central to the development of the Gulf States rivalries, eventually leading to the enduring present day blockade of Qatar.
So: English football: a proxy battleground for feuding Gulf states?
There’s nothing like a Saturday night scoop to get social media buzzing. Revelations that a Qatari investor wants to acquire a stake in Leeds United certainly did. If the story is correct, then it seems Qatar Sports Investments (QSI), which already owns French club Paris Saint-Germain (PSG), is interested in buying shares in the Yorkshire based English Championship football club.
That a Qatari group is showing interest should be no surprise either; after all, the Yorkshire outfit already has a partnership with the small Gulf nation’s Aspire Academy. Over the last two years, rumours have been recurrent that big money from Doha will, sooner or later, be invested.
Hence, it was the timing of the latest rumour’s emergence that was actually more revealing than the rumour itself. It came after a tumultuous week in football (and sport more generally) which was stitched together by a narrative stretching from Manchester, through Paris, to Doha and Abu Dhabi.
A big week for Qatar
The previous weekend, Abu Dhabi-owned Manchester City won the English FA Cup, which ensured the club secured an unprecedented domestic treble of trophies (alongside the club’s Premier League title and Carabao Cup win). City’s success, however, was very quickly tempered by stories that UEFA may ban the club from the Champions League for what are alleged to be serious breaches of the European football governing body’s Financial Fair Play regulations.
Later in the week, news came through that two PSG board members – Nasser Al-Khelaifi and Yousef Al-Obaidly – are being investigated on suspicion of corruption in connection with Qatar’s bid to host the 2019 IAAF World Athletics Championship in Doha. Significantly, Al-Khelaifi is president of PSG but also chairman of QSI (the Qatari investment group behind the alleged Leeds bid) and a member of UEFA’s executive committee. Al-Obaidly is chief executive of the Qatari media group beIN.
It was quite a week for the Qataris, as news also broke that FIFA will concede during its forthcoming council meeting that the 2022 World Cup will be contested by 32 teams. FIFA had been pressing for an increase in tournament size to 48 teams, though this would have necessitated Qatar sharing the tournament with at least one other country. Qatar, though, is currently engaged in an acrimonious feud with its near neighbours, notably the United Arab Emirates (UAE), Saudi Arabia and Bahrain, so FIFA’s capitulation was effectively a victory for Qatar over its rivals.
The Gulf feud is ongoing, having broken out two years ago following a visit to Riyadh by a bellicose Donald Trump. Since then, all manner of tactics have been used by the countries involved, ranging from heavy political lobbying in Washington DC through to an online war in which misinformation has been spread.
Qatar hasn’t stood idly by in the face of such provocation, often spending lavishly both to demonstrate its oil and gas fuelled economic strength and to project its soft power. The world record breaking transfer of Brazilian international Neymar, from FC Barcelona to PSG, is the most potent symbol of this, as the government in Doha set out to shift attention away from its rivals while simultaneously making a statement about the aspirations of Qatar.
As such, the news that QSI may be circling Leeds United doesn’t seem to be about a Qatari penchant for Yorkshire puddings, nor is it merely a nice opportunity to generate some Saturday night clickbait. Rather, it suggests the opening of another front in a feud which, instead of resolving itself, appears to be intensifying. Rather than being the dawn of a new era for Leeds United, the club may consequently be on the cusp of being drawn into a bitter battle of competing geopolitical interests.
The dense network of connections and conflicts between the likes of Qatar Sports Investments, Saudi Arabia, UEFA and Abu Dhabi may therefore be about to span the English Pennines, sparking a new War of the Roses between Yorkshire and Lancashire. Given the on-off speculation about Saudi Arabia’s purchase of Manchester United, and Abu Dhabi’s continued lavishing of its wealth upon Manchester City (as well as its rumoured acquisition of Newcaste United), these Gulf states are strengthening their hold over Lancashire, the western side of the Pennines, and possibly further north too.
In buying Leeds United, their rival, Qatar, would be shoring up its own defences in neighbouring Yorkshire, meaning that the Gulf region’s proxy war could spill over into English football. Thus, as fans on both sides of a historic English divide anticipate the prospect of their clubs’ battle for supremacy, they should remain mindful that Elland Road and the Etihad Stadium could become modern day proxy battlefields in a new stand-off between the houses of York and Lancaster.
The IMFBlog on May 28, 2019, is about a world phenomenon that seems to still be present in all walk of life throughout the world. The Costs of Corruption running deep in the MENA, have been amplified by the hydrocarbon-related rentier economies to a point where only a defossilisation of the respective economies could somehow reduce their extent. In the meantime, costs of corruption running deep in the MENA seem to go unattended to. Anyway here is this IMFBlog article.
The costs of corruption run deep. Your
taxpayer dollars are lost in different ways, siphoned off from schools, roads,
and hospitals to line the pockets of people up to no good.
Equally damaging is the way it corrodes the
government’s ability to help grow the economy in a way that benefits all
And no country is immune to corruption. Our
Chart of the Week from the Fiscal Monitor
analyzes more than 180 countries and finds that more corrupt countries collect
fewer taxes, as people pay bribes to avoid them, including through tax
loopholes designed in exchange for kickbacks. Also, when taxpayers believe
their governments are corrupt, they are more likely to evade paying taxes.
The chart shows that overall, the least corrupt governments collect 4 percent of GDP more in tax revenues than countries at the same level of economic development with the highest levels of corruption.
A few countries’ reforms generated even higher
revenues. Georgia, for example, reduced corruption significantly and tax
revenues more than doubled, rising by 13 percentage points of GDP between 2003
and 2008. Rwanda’s reforms to fight corruption since the mid-1990s bore fruit,
and tax revenues increased by 6 percentage points of GDP.
These are just two examples that demonstrate that
political will to build strong and transparent institutions can turn the tide
against corruption. The Fiscal Monitor
shines a light on fiscal institutions and policies, like tax administration or
procurement practices, and show how they can fight corruption.
costs of corruption run deep.
Where there is political will, there is a way
Fighting corruption requires political will to
create strong fiscal institutions that promote integrity and accountability
throughout the public sector.
Based on the research, here are some lessons for
countries to help them build effective institutions that curb vulnerabilities
Invest in high levels of transparency and
independent external scrutiny.
This allows audit agencies and the public at large to provide effective
oversight. For example, Colombia, Costa Rica, and Paraguay are using an online
platform that allows citizens to monitor the physical and financial progress of
investment projects. Norway has developed a high standard of transparency to
manage its natural resources. Our analysis also shows that a free press enhances
the benefits of fiscal transparency. In Brazil, the results of audits impacted
the reelection prospects of officials suspected of misuse of public money, but
the impact was greater in areas with local radio stations.
Reform institutions. The chances for success are greater when
countries design reforms to tackle corruption from all angles. For example,
reforms to tax administration will have a greater payoff if tax laws are
simpler and they reduce officials’ scope for discretion. To help countries, the
IMF has built comprehensive diagnostics on the quality of fiscal institutions,
investment management, revenue administration, and fiscal transparency.
Build a professional civil service. Transparent, merit-based hiring and pay reduce
the opportunities for corruption. The heads of agencies, ministries, and public
enterprises must promote ethical behavior by setting a clear tone at the top.
Keep pace with new challenges as technology and
opportunities for wrongdoing evolve.
Focus on areas of higher risk—such as procurement, revenue administration, and
management of natural resources—as well as effective internal controls. In
Chile and Korea, for example, electronic procurement systems have been powerful
tools to curtail corruption by promoting transparency and improving
More cooperation to fight corruption. Countries can also join efforts to make it harder
for corruption to cross borders. For example, more than 40 countries have
already made it a crime for their companies to pay bribes to gain business
abroad under the OECD
anti-corruption convention. Countries can also aggressively pursue
anti–money laundering activities and reduce transnational opportunities to hide
corrupt money in opaque financial centers.
Curbing corruption is a challenge that requires persevering on many fronts, but one that pays huge dividends. It starts with political will, continuously strengthening institutions to promote integrity and accountability, and global cooperation.
Hunger continues to rise in the Near East and North Africa region where over 52 million people are undernourished.
Conflicts and widening rural-urban gaps hamper the region’s efforts to end hunger by 2030.
8 May 2019, Cairo/Rome – Hunger in the Near East and North Africa region (NENA) continues to rise as conflicts and protracted crises have spread and worsened since 2011, threatening the region’s efforts to achieve the 2030 Agenda for Sustainable Development, including Zero Hunger.
Conflict continues to be the main driver of hunger across the region. More than two-thirds of hungry people in NENA, approximately 34 million people, live in conflict-affected countries, compared to 18 million hungry people in countries that are not impacted directly by conflict.
Stunting, wasting, and undernutrition are also far worse in conflict countries than in the other countries.
“Conflicts and civil instability have long-lasting impacts on the food and nutrition security of both affected and surrounding countries in the regions” said Abdessalam Ould Ahmed, FAO Assistant Director-General and Regional Representative for the Near East and North Africa.
“The impact of the conflict has been disrupting food and livestock production in some countries and consequently affecting the availability of food across the region,” he added.
“Rising hunger is also compounded by rapid population growth, scarce and fragile natural resources, the growing threat of climate change, increasing unemployment rates, and diminished rural infrastructure and services” Ould Ahmed underscored. The report highlights that the region is not facing just a hunger crisis as some of the highest rates of obesity are also found in countries within the region, putting pressure on people’s health, lifestyles and national health systems and economies. Addressing obesity requires food systems that ensure that people have access to healthy nutritious food and also increased public awareness and information on the risks associated with overweight and obesity.
Inadequate rural transformation hampers efforts to eradicate hunger and malnutrition by 2030
The report shows that not only do conflicts undermine the region’s Zero Hunger efforts, but also the degree of rural transformation.
“Countries that are not in conflict and have gone furthest in transforming rural areas in a sustainable way including through better management of water resources, have achieved better food security and nutrition outcomes than those in conflict or with lower levels of rural transformation,” Ould Ahmed said, noting how the report stresses that more efforts are needed to boost rural employment, stimulate economic growth in rural areas, reduce urban-rural gaps, and improve agricultural productivity and rural infrastructure and services.
The report highlights how unemployment, particularly for young people and women across all age groups is a significant challenge in the NENA region and is often higher than in other regions of the world. This is aggravated by rural-urban gaps – with significant disparities in living standards and poverty rates between rural and urban areas – and differences in labour productivity between traditional agriculture and industry and services. This gap is deepened by differences in access to education, health as well as other public services and housing.
At the same time, rural areas accommodate around 40 percent of the population, where the majority of poor are living. The report shows that the average wages for those employed in agriculture are likely to be far below those of workers outside the sector. Partially as a result of lower wages in agriculture, rural areas in the NENA region generally have higher income poverty rates than urban areas. On average, rural poverty is about twice as high as poverty in urban areas.
Transforming agriculture to achieve Zero Hunger
At a regional level, there are significant opportunities for transforming agriculture in a sustainable way, starting with the provision of improved access to markets for farmers, promoting investments in agriculture, transfer of technology and other innovations, more efficient and effective management of water resources, as well as key policy changes that support the shift from subsistence farming to commercial and diversified production systems.
“There is a great need to encourage our region’s farmers to produce according to the comparative advantage of the region,” Ould Ahmed said, highlighting that the NENA region has a great potential in the production of crops and livestock products that are least intensive in arable land and water and more intensive in use of labour.
The report highlights that greater efforts and actions are needed to support the development and implementation of policies and programmes to abolish rural-urban differences.
Key facts and figures
Number of hungry people in the Near East and North Africa: 52 million, 33.9 million are in conflict countries directly and 18.1 million in non-conflict countries.
Children under five affected by stunting (low height-for-age): 21.1 percent.
Children under five affected by wasting (low weight-for-height): 8.7 percent.
Children under five who are overweight (high weight-for-height): 9.1 percent
Note to editors: NENA countries include Algeria, Bahrain, Egypt, Iran (Islamic Republic of), Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, the Syrian Arab Republic, Tunisia, the United Arab Emirates and Yemen.
‘Get them all out!’: Algeria three years on after Panama Papers – and to mark World Press Freedom Day, Lyas Hallas, Algerian journalist – a member of ICIJ elaborates on the current situation of Algeria.
To celebrate the third anniversary of the Panama Papers – and to mark World Press Freedom Day – we’re speaking with reporters from around the world about the investigation each week.
Like many of our partners, Lyas’ work is still having an impact. Most recently, authorities arrested some wealthy Algerians named in the Panama Papers and street protesters calling for the president’s resignation and an end to corruption waved banners that featured the businessmen’s faces.
What was the biggest impact in Algeria after the Panama Papers’ revelations?
There was an immediate debate about assets held by Algerians overseas. The reaction shook the leaders of our country who had planned their retirements abroad. The Panama Papers also hit hard the businessmen who consort with politicians and who enjoy tax and banking advantages at home and yet who hide their money offshore. The revelations politically weakened ministers who were at the height of their power and others who were on the cusp of bouncing back.
One example was the then Industry Minister Abdesselam Bouchouareb, who was tipped to be the next prime minister before that became awkward due to the global firestorm in the wake of the investigation
Maybe my work contributed to bringing attention to the pillage of the country’s resources. – Lyas Hallas
What was your favorite moment of the Panama Papers investigation? What surprised you the most?
Favorite moment? A huge ‘catch’ when just one minute after I opened the Panama Papers database for the first time, I found Rym Sellal, the daughter of the then prime minister, Abdelmalek Sellal. It was very motivating.
I also didn’t expect to find the owner of an offshore company linked to the entourage of former energy minister Chakib Khelil who is at the heart of the SONATRACH corruption scandal, our state-owned oil and gas company.
Italy and Algeria had opened court cases and Italian judges had identified this offshore company as one of 17 used to launder $216.92 million (€194 million) in bribes. Yet neither Italy nor Algeria had called on Khelil as a witness. Ditto for the son of the former SONATRACH CEO who received six years in prison for corruption.
What also stuck with me about the Panama Papers is the interest of Algerians in this kind of story. In two years, I published a dozen stories and there was a buzz every time. During the recent protests in Algeria, citizens took to the streets waving images of some of the people featured in his Panama Papers reporting. Lyas Hallas
What were the most significant reactions to your investigations?
The general public reacted well, which was satisfying… In Switzerland, a criminal court dismissed a case brought by an Algerian businessman based, in part, on my Panama Papers reporting.
I had to resign from the newspaper where I worked in order to get my investigation published. I had a story on the Minister of Industry at the time, Abdeslam Bouchouareb.
Bouchouareb put a bit of pressure on the editor – I don’t know what they said. Five days before the agreed publication date with ICIJ, I had to find another newspaper to publish my story… I found one easily, which was good.
I was harassed online by various digital players in the pay of government officials.
Some people said I was dancing to the tune of foreigners and others accused me of faking documents. Khelil wrote on Facebook, without naming me directly, that I was a “Zionist agent.” Obviously, I didn’t react to this kind of nonsense, which was mostly anonymous.
Some people even called me an “agent of Rebrab” [editor’s note: Issad Rebrab, Algeria’s richest man]. I had worked for 11 months in a newspaper where he is the majority shareholder and from which I resigned to publish my Panama Papers story. Yet Rebrab tried to sue me in France because of the Panama Papers.
For someone who has not followed anything, what has happened in Algeria now?
President Abdelaziz Bouteflika’s desire to seek a fifth term sparked massive demonstrations on February 22 that forced him to resign. Algerians have long lived through his power grab as a great collective humiliation. Bouteflika did leave, but the system that he built — even if it’s weakened — is still in place.
Every Friday during the protests, millions of people rallied in unity around the theme “Get them all out!” The term “all” referred to those widely-despised figures from the Bouteflika era who, in the eyes of the demonstrators, embodied mediocrity, injustice and corruption.
What’s the connection between your Panama Papers investigations and recent events?
It’s not my job to spark protests. Maybe my work contributed to bringing attention to the pillage of the country’s resources and to the lack of some people’s “tax patriotism.” Or maybe it accentuated the feeling of injustice among many Algerians given the impunity of some people I wrote about.
During the recent protests, one of the main slogans was “You have devoured the country, band of looters!” Some protest banners included photos of politicians and businessmen I exposed.
In response to the demonstrations, authorities jailed some of these businessmen, including Issab Rebrab, in order to calm protestors and temper the country’s anger. A few days ago, the Supreme Court reopened a case involving Khelil. They are not being investigated for what I wrote about, but for similar practices to the things I uncovered.
Can you give us a summary of your investigations around these recently arrested men?
Businessman Ali Haddad, and as I mentioned earlier Issad Rebrab, have been arrested.
My investigation of Haddad revealed the illicit transfer of foreign currency through a complex arrangement involving foreign partners in the group of companies that carries out infrastructure projects in Algeria. Anti-corruption investigations against Haddad have not yet been concluded, but he was arrested at the borders with Tunisia while trying to flee.
As for Issad Rebrab, he was detained on charges of “misrepresentation of illicit transfers of capital from and to foreign countries, overcharging of imported equipment and importation of second-hand equipment while he had benefited from customs, tax and banking benefits”. My investigation questioned his background and the origin of his fortune. Policy makers have always made it easy for businessmen close to them to access credit, import licenses and government contracts, while guaranteeing them impunity since for business in Algeria, political support is needed.
The Supreme Court has reopened the case of Chakib Khelil, who has fled the country. Khelil is accused of bribery in a case involving contracts awarded by the state-owned oil company. My investigation revealed that his wife and his son were beneficiaries of offshore companies linked to a money laundering machine worth $220 million (€197 million) in commissions.
You are a veteran of journalism in Algeria. In what state was investigative journalism in Algeria before these demonstrations?
Investigative journalism in Algeria is fragile. It’s difficult to access information and Algerian media remains fundamentally based on opinion.
Even if Algerian media has some freedom in what it says, it doesn’t invest enough in going after real information. It’s subject to the government’s agenda and corporations’ marketing strategies. I would even say that it’s in a pretty sick state because it hasn’t evolved independently of the political forces now being protested against.
Algerian media didn’t develop an economic model based on its relationship with the audience that would have allowed financial independence. Advertising revenue has made the media dependent on advertisers and policymakers.
In short, much of the press is completely discredited. Especially given that the media itself was not untouched by corruption.
Algerians today are demanding a new kind of information and the current media are having a hard time satisfying this demand. Of course, there are small islands of resistance that try to offer quality information. But, it’s necessary to completely rebuild the system.
What is your hope for Algerian journalism after these protests and regime change?
I remain optimistic. The entire community of Algerian journalists is aware of the stakes. I hope that we will have the collective intelligence to set new rules of the game; rules that will establish healthy competition and favor new editorial practices to properly inform Algerians.
I don’t dismiss the value of Algeria’s press in the past, which emerged from struggles that saw journalists sacrifice their lives from generation to generation to be able to freely exercise their profession, especially in the 1990s, a decade in which terrorism had wreaked havoc on Algeria. We lost a hundred journalists and others who were murdered because they were journalists.
But the media system as a whole requires a re-foundation to clarify the ground rules. The opacity that Algeria’s media has evolved into exposes it to arbitrariness.