Challenges 2019 will bring for the Arab world
It has only been a few days since the New Year fireworks lit up the skies of many of the world’s cities. For a brief moment, it was possible to forget the tumult and flurry of activity that marked the end of 2018, and focus on the festivities.
Unfortunately, not even the arrival of a new year is likely to aid any efforts to temper rising volatility, fractious diplomacy, political headwinds, tepid markets and, generally speaking, a world on the brink. Regardless of the causes of the alarming developments across the planet, 2019 is shaping up to be a watershed moment for the global economy and international relations.
In the Middle East and North Africa, reforms and economic transformation will keep fueling changes in political, social and economic dynamics. While some progress has been made in Egypt and Saudi Arabia, other countries have not been so fortunate. Even worse, new developments on the global stage will affect the pace and depth of much-needed reforms.
Nonetheless, the Arab world must persist in its plans to sustainably grow economies, reduce unemployment, especially among youths, and rein in public spending during 2019.
However, there are going to be a series of difficult challenges in the coming year that the Arab world must face before appreciable gains can be made toward maintaining stability and securing prosperity.
The beginning of 2019 is the halfway point of the first term of the Trump presidency, which has upended just about every “norm” established in decades of US global leadership. From the end of the Second World War until the collapse of the Soviet Union, the US has always played an outsize role in global affairs. More Americans, regardless of political leanings, now favor the US reducing its global footprint in favor of shoring up domestic needs.
Unfortunately, with America in retreat the state of the world is beginning to resemble that of the 1930s, given the rise of demagoguery, populism and nationalism.
In Europe, Russia has walled off the Crimea and continues to amass military hardware at Ukraine’s border. Turkey engineered Trump’s retreat from Syria, as Bashar Assad continues to expand the territories under his control, buoyed by Russian and Iranian support.
The reintroduction of sanctions against Iran is not going to help any of Washington’s plans for Middle East peace, security and stability, given Tehran’s support of insurgency groups across the region.
The Taliban, a sworn enemy in the disastrous and costly War on Terror, has also gained clout and recognition, attending high-level meetings to craft a peace plan as the US looks to withdraw from Afghanistan.
While some progress has been made in Egypt and Saudi Arabia, other countries have not been so fortunate.
The most troubling aspect of the US retreat from the Middle East is the burden it places on regional allies that are ill-equipped to step in. This is made worse by the crises in Libya, Syria and Yemen, and the continuing mess in Iraq — all countries that have become breeding grounds for Daesh, Al-Qaeda and other nefarious groups.
Once the US retreats from the Middle East, the region will be left to its own devices and must seek new partnerships from the EU, Russia, China or regional influencers such as Turkey, Saudi Arabia and Iran.
There is also the real possibility that Trump will spend the last two years of his term as a lame-duck president besieged by scandal and legal troubles, increasing his urge to act globally in dangerous ways.
Another aspect of America First is likely to upend global markets in 2019. Trade and multilateralism have taken a back seat to tariffs, sanctions and retaliatory measures. Trade spats with Europe, Canada, Mexico, China and other nations have threatened global trade and commerce.
Unfortunately for Trump, tariffs on $200 billion in imports have not translated to growth, and 2019 is likely to deliver a reckoning that will continue into 2020. Experts predict that should current trends persist, the world will face another recession. In fact, some indicators are already showing signs that a slowdown is looming. It is now only a matter of when, and not if, that will happen.
Crude oil prices had a rocky 2018, at one point attaining a four-year high and then tumbling more than $30 due to oversupply and demand concerns. Market stakeholders warn that in 2019, oil markets will continue to be volatile due to numerous developments that are a cause for concern. According to the Institute of Economic Affairs, uncertainties in 2019 might lead to a repeat of the previous year.
The chief concern is persistent fears of a global slowdown that will significantly reduce oil demand and further compound oversupply issues.
Pan-Arab economic integration, reform and transformation
As governments in the Arab world seek to rein in public spending, spur economic growth and deliver better fortunes for their weary citizens, opportunities for regional integration will take a back seat. It is unclear whether this year will include significant developments in closer integration in this part of the world, outside of present alliances. The Gulf Cooperation Council remains the most integrated bloc and the wealthiest, making it a target for developing economies hoping to attract investment.
For the rest of the Arab world, closer integration and economic cooperation will continue to be the most challenging feat to achieve. Members of the Arab Cooperation Council, the Arab Maghreb Union, the Council of Arab Economic Unity and the Arab Union must first transform entire societies to achieve better governance. Reforming public institutions and laws and stamping out corruption are just a first step. Other reforms will have to raise competitiveness, increase privatization, liberalize trade and invest heavily in infrastructure, linking countries and markets across the region.
Currently, intra-Middle East trade represents only about 9 percent of total exports, compared with the EU’s regional trade which comprises nearly two-thirds of all exports. The Maghreb Union, for instance, could establish a $70 billion solar-energy industry if member states pursued a region-wide investment and development plan to produce and eventually export electricity.
Whatever happens, one thing is for sure: 2019 will surely be a very interesting year to watch as it unfolds.
- Hafed Al-Ghwell is a non-resident senior fellow with the Foreign Policy Institute at the John Hopkins University School of Advanced International Studies. He is also senior adviser at the international economic consultancy Maxwell Stamp and at the geopolitical risk-advisory firm Oxford Analytica, a member of the Strategic Advisory Solutions International Group in Washington DC and a former adviser to the board of the World Bank Group. Twitter: @HafedAlGhwell