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Arab Spring losses

The Arab Spring has led to tragic loss of life, cost at least three dictators their jobs, and nearly $56-billion in economic losses in the worst affected countries, according to a new study
The Arab Spring not only cost at least three dictators their jobs but also $56-billlion in lost GDP for the worst affected countries, according to a statistical study by a consulting firm.

This figure excludes the tragic loss of life, infrastructure damage and business and foreign direct investment.

Syria, which has seen more than 2,700 people killed, also paid the highest price in economic terms. The total cost of around $27.30 billion to the economy, according to estimates by Geopolicity - and the troubles are far from over for Bashar Al-Assad's regime.

The costing exercise undertaken by the consulting firm, based on data from the International Monetary Fund, shows that productivity losses as a result of conflict/uprising in countries experiencing the most profound destabilization, amounts to US$20.56 billion and costs to public finance adds up to US$35.28 billion from the beginning of the uprising until September 2011. The total loss of incomes and productivity totals US$55.84 billion for the worst hit countries.

Libya, which has seen a major civil war with Nato involvement, also bore a heavy price for the conflict, losing nearly $14.2 billion in economic losses since the conflict.

The uprising also led to a staggering 84% reduction in revenues in Libya - mainly due to the inability of the troubled state to export 1.5 million barrels of oil every day to the global markets.

Not surprisingly, a Maplecroft Conflict Intensity Index ranks Libya as the country with the highest risk in the world.

Libya rose from 120^th in last year's index to joint first this year (alongside Afghanistan), as the country's Transitional National Council (TNC) asserted that approximately 50,000 people have died in the conflict, notes Maplecroft, which studies and consults on global risks.

"Although the number of deaths has not yet been established beyond doubt, it is likely that, as a protracted armed struggle that is still ongoing, the death toll will run into the tens of thousands, making Libya's civil war the deadliest conflict of 2011."

Meanwhile, in Syria, ranked 51^st and 'medium risk' in last year's index, the death toll continues to rise in ongoing violent clashes between anti-government, pro-democracy protestors and security forces loyal to President Bashar al-Assad.

The extreme brutality used by the Syrian security forces means that almost all fatalities are civilian. In September, the UN Office for the High Commissioner for Human Rights (OHCHR) estimated that approximately 2,700 people have been killed since major protests began in March.

"Conflict exponentially increases the risk of doing business within a country, as operations are disrupted and employees and assets are endangered," states Maplecroft Analyst Jordan Perry. "This threat was all too apparent to the oil majors operating in Libya, as they evacuated employees in response to the violence."

Other countries involved in the Arab Spring include Yemen (8), Tunisia (13) and Bahrain (29). Yemen kept its 'extreme risk' status from last year and has slid ever closer towards civil war, with approximately 1,000 people thought to have died during Maplecroft's reporting period.

In Tunisia, which rose 107 places in the rankings into the 'high risk' category, over 200 people have been killed in the revolution that ousted former president Zine El Abidine Ben Ali, according to estimates from the UNOHCHR. Popular protests in Bahrain, upgraded by Maplecroft from 'medium' to 'high risk,' have seen almost 30 people killed since February.

The link betweeen violence & economic costs

Geopolicity estimates that Egypt's costs have been a lot less at nearly $10-billion, even though it is a far bigger economy than Libya and Syria. This is primarily due to the fact that there has not been a complete breakdown in infrastructure and government affair, and the conflict was, for the most part, peaceful.

The report argues that the recent attacks on the Israeli embassy in Cairo and sectarian unrest could see a further deterioration in political conditions.

"Unless the drivers of change in each country are strategically engaged, and a region-wide support program conceived and led by Arab states, the outcome of the uprising will remain unknown and could be potentially regressive," says Geopolicity.


The beneficiaries

The biggest Gulf states saw their public revenues rise as governments unveiled robust spending programmes and capital, tourists and businesses fled from the troubled parts of the region to the more stable.

"For the UAE, Kuwait and Saudi Arabia, public revenues increased by 31.86%, 27.7% and 25.13% respectively," Geopolicity estimates, adding that overall Arab economies added nearly $39-billion due to incentives and social spending plans as a direct response to the Arab Spring.

Gulf states have spent $150-billion as response to the regional unrest, according to Bank of America Merrill Lynch (BAML) estimates. The figure makes up nearly 5% of the six countries' GDP for the year and constitutes around 57% of this year's combined spending.

"This has averted potential disquiet over governance in most countries, though, over a longer-term horizon, economic reforms will be needed to buoy private sector growth and job creation," says BAML in a note.

Read the Full Story Here: Cost of Arab Spring

The solutions

Geopolicity argues that the support pledged by G8 at the Deauville Summit of neatly $100-billion has failed to materialize and will, at best, trickle down into the regional economy.

In addition, there is tremendous uncertainty surrounding Syria and Bahrain, conflicts in Libya and Yemen are not yet over, and tensions continue to flare in Egypt and Tunisia.

"The slow pace of broad-based European financial support for the range of Arab countries in turmoil is largely explained by the 'entente cordial' between France and the UK over Libya, which has tied up resources and strained strategic focus; an unprecedented fiscal crisis sweeping Europe on the back of a decade of expensive military campaigns in Afghanistan and Iraq; and, the absence of a clear road map to facilitate EU and U.S. engagement," notes the firm.

The answer then is an 'Arab Renaissance' and charting a regional transitional road map, with the financial help of G20/G7. Geopolitics recommends greater regional integration, more resilient accountability structures and open socio-political frameworks that would ultimately lead to democracy. Anyone who is familiar with Middle East politics knows that's bordering on the improbable.

But the firm argues: "Revolutions may easily default to recidivism in the Arab governing psyche. Yet, the opportunity for ma more positive outcome has never been greater. The Arab World... has now reached a crossroads: adopt a regressive stance which sacrifices reforms for special interests, or embrace greater transparency, social equity and global integration. The former route is a clear dead-end street. The latter may be long and arduous towards, as yet, unknown ends; but millions of Arabs have already set off and deserve appropriate help along the way."

© alifarabia.com 2011