September 8th, 2011
02:23 PM GMT
In the opulence of probably the world’s most luxurious hotel, finance ministers from more than 20 Arab countries have gathered to examine the state of the global economy. They are also calculating the impact the debt crisis in Europe and the slowdown in the United States could have at the crossroads of East and West, the Middle East.
But nearly nine months into the Arab Spring, the finance ministers who are in charge of regional economies without the benefit of huge oil and gas reserves have expressed deep concerns about funding transitions in Egypt and Tunisia and potentially in Syria and Yemen.
The Chairman of the Arab Monetary Fund Jassim Al Mannai painted a picture of a prolonged period of economic uncertainty: "The fear is that economies of countries whether those that witnessed political shifts or those that are still witnessing political unrest today, will take a long time before they recover and go back to normal.”
At the end of May in Deauville, France, G8 leaders declared that there would be a $40 billion package of support for countries facing major political and economic upheaval – half of which would come from institutions such as the World Bank and International Monetary Fund, and the other half split between Gulf States of the Middle East and other countries, still not clearly defined.
The problem is that what has been pledged to date and what has been released on even the most generous of spreadsheets doesn’t add up. The former Citigroup banker and now interim finance minister of Tunisia Jaloul Ayed said the wait has been a painful one.
Ayed said the World Bank and the African Development Bank had provided funding, but that money is earmarked for medium term development projects.
"We have not yet received any specific commitments from other parties. We were hoping already in Deauville that there are some more clear commitments to be made and maybe even specific pledges. We understood afterwards that we were not to expect that to happen".
Updated figures from his government point to slumping revenues and frustration amongst the youth who took to the streets in the first of the uprisings. Youth unemployment remains high at 30%; tourism revenues have plummeted 40% in 2011.
Lebanon has seen a record influx of capital after the 2008 global banking crisis, but its finance minister Mohammad Safadi described the lag in funding as dangerous – since the youth who yearned for freedom and jobs will struggle to obtain the latter.
“Freedom they might get but jobs – if they are not supported through this transition period, we will find more and more without jobs.”
Egypt’s interim finance minister Hazem El-Beblawi said he had secured fresh commitments from host country the United Arab Emirates, and that the $7 billion pledged from the region will be delivered. So far, his aides noted that a half billion dollars has been paid from the Gulf States. El-Beblawi, a former Arab Monetary Fund advisor, said that donor countries and others have linked funding to specific political and economic reform milestones.
He will sit down in Marseilles, France, for a G8 meeting of finance ministers with Arab participation this weekend, where he is hoping for some daylight on the next tranche of money.
The interim governments in Egypt and Tunisia have a difficult task at hand ahead of elections next month. As Tunisia’s minister Ayed said during our interview, the government needs to convey a strong message that “help is on the way.”
When it comes to the cash, the reality may be, not just yet.
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