Will coronavirus shock make Arab region ready for universal basic income?

Will coronavirus shock make Arab region ready for universal basic income?
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Foreign workers stand in line as they wait to be checked for the novel coronavirus at a testing centre in the Naif area of Dubai, on April 15, 2020. (AFP)
Will coronavirus shock make Arab region ready for universal basic income?
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A young boy drives a small vehicle loaded with recyclable items gathered at a landfill, to be sold for extra income, in the Iraqi holy city of Najaf on June 9, 2019. (AFP/File Photo)
Will coronavirus shock make Arab region ready for universal basic income?
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Palestinians sit by a fire at the Khan Yunis regugee camp in the southern Gaza Strip on January 28, 2020. (AFP/File Photo)
Will coronavirus shock make Arab region ready for universal basic income?
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An Iraqi street vendor sells worry beads after measures of social distancing were eased by the authorities, ahead of the fasting month of Ramadan, in central Baghdad on April 22, 2020. (AFP/File Photo)
Will coronavirus shock make Arab region ready for universal basic income?
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Emirati men, wearing protective masks to combat the spread coronavirus, walk in the Mall of Dubai on April 28, 2020, after the mall was reopened. (AFP)
Will coronavirus shock make Arab region ready for universal basic income?
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A vendor, wearing a mask for protection against the coronavirus, stands next to ladies handbags displayed for sale at a shop in the Mall of Dubai on April 28, 2020, after the shopping centre was reopened. (AFP)
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Updated 01 August 2020

Will coronavirus shock make Arab region ready for universal basic income?

Will coronavirus shock make Arab region ready for universal basic income?
  • How people will make basic ends meet under lockdown is a big question facing policymakers worldwide
  • Implementing universal basic income in the MENA region would cost 17.9% GDP, says an ILO study

DUBAI: Denmark’s government has guaranteed workers affected by the country’s lockdown a minimum of 75 percent of their salaries.

In Italy, populist politician Beppe Grillo is calling for regular payments to “Italians [who] won’t have a secure income in the next few months.”

In the US, House Speaker Nancy Pelosi is willing to look into instituting a universal basic income (UBI) for Americans, which was at the heart of former Democratic hopeful Andrew Yang's presidential campaign.

As people across the world are ordered to shelter in place to contain the spread of the coronavirus disease (COVID-19), how they will make basic ends meet has become one of the biggest questions facing policymakers.

Liberal activists are hoping that governments adopting cash transfers as a temporary emergency measure will be compelled to retain it once citizens have seen its benefits.

As in the rest of the world, however, the idea of guaranteeing everyone an income both tantalizes and terrifies the Arab region.

“No country in this world is ready for UBI, an unconditional payment to all residents without any conditions,” said Dr. Osman Gulseven, associate professor at Skyline University College in Sharjah.




A young boy drives a small vehicle loaded with recyclable items gathered at a landfill, to be sold for extra income, in the Iraqi holy city of Najaf on June 9, 2019. (AFP/File Photo)

“This is not only economically infeasible but also financially impossible for most Arab countries. Those payments will come from taxes, which will again be collected from society — specifically the working middle class.

“It is quite illogical to transfer money from the working people to everyone else.”

Although some countries have initiated UBI-like schemes to shore up their COVID-19-battered economies, he does not view it as a potential long-term solution.

“This is an unprecedented crisis period,” Gulseven told Arab News. “Typically, any money paid by the government has to be financed from somewhere. Printing money will cause inflation, which has devastating effects on the economy.”

Taxing more from sales and income will further crimp economic activity, in his view.

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“It is also impossible to pay back everything without financial resources,” Gulseven said. “Arab countries do not have the financial means for UBI. Only a few Gulf countries with substantial currency reserves can afford UBI, that too only for their citizens.”

Gulseven’s view is seconded by George Politis, visiting lecturer at the Costas Grammenos Centre for Shipping, Trade and Finance, who says UBI will not work in periods of financial distress.

“We need normality, functioning economies, growth and prosperity,” he said. “Once normality is achieved, the key indicators to study will be GDP per capita, public spending-to-GDP ratio, and poverty levels in order to calculate how much is needed for a given population and whether the state can afford the cost.”




Palestinians sit by a fire at the Khan Yunis regugee camp in the southern Gaza Strip on January 28, 2020. (AFP/File Photo)

Politis said UBI in emerging markets could only work through an international or regional body since states cannot self-finance such a policy.

“The lesson from the EU is that there is little appetite among larger and smaller economies for mutual financial collaboration towards surviving the current crisis,” he said.

The International Labor Organization (ILO) estimated in 2018 that UBI’s impact on poverty and inequality depends on such factors as the level of benefits, their capacity to meet people’s needs, and sources of funding.

FASTFACT

17.9%

GDP cost of UBI if adopted in MENA. (Source: ILO)

The study found that the cost would range from 17.9 percent of GDP in the Middle East and North Africa (MENA) region to about 25 percent of GDP in Asia, Europe and Latin America.

“Some UBI proposals have the potential to advance equity and social justice, and others do not,” the ILO report said.

“Governments that consider implementing a UBI should carefully examine all options, including the progressive or regressive aspects of the proposed measures, the winners and losers, and the potential risks and trade-offs.”




An Iraqi street vendor sells worry beads after measures of social distancing were eased by the authorities, ahead of the fasting month of Ramadan, in central Baghdad on April 22, 2020. (AFP/File Photo)

According to Dr. Albadr Al-Shateri, former politics professor at the National Defense College in Abu Dhabi, UBI would be an excellent idea for the Arab world, but the groundwork has yet to be laid.

“The development of citizenship in the Western context passed through three phases: first civil liberties, then political participation and finally economic rights,” he told Arab News.

“The Arab world, or any other region for that matter, cannot skip stages.”

He said most Arab countries will be hard-pressed to implement UBI as such a scheme requires sustainable economic structures, something most of them lack.

“Many Arab countries rely on one or two products to maintain their income, which are subject to the vagaries of the international market,” Al-Shateri said.

“Even if states in the Levant can maintain a sustainable economy, UBI would be hard to sustain. And if a good segment of the population expects regular income from the government, failure to meet that expectation would have dire political consequences.”

Al-Shateri says the dual shock of wars and the COVID-19 pandemic does not bode well for the future of the MENA region.

“Gulf Cooperation Council (GCC) countries are not in position to extend a helping hand because of the fall of oil prices, the economic slowdown and the war in Yemen,” he said.

Even before the COVID-19 storm hit, economic conditions in many Arab countries were precarious at best.

Lebanon was already on the verge of collapse, and Syria was reeling from the aftermath of the civil war, which had also damaged the Jordanian economy.

The Palestinian economy remains heavily dependent on the generosity of foreign donors.




A vendor, wearing a mask for protection against the coronavirus, stands next to ladies handbags displayed for sale at a shop in the Mall of Dubai on April 28, 2020, after the shopping centre was reopened. (AFP)

“The Levant region might experience more political conflict as a result of the economic woes,” Al-Shateri said.

Cyril Widdershoven, director at Verocy, a Dutch consultancy advising on investments, energy and infrastructure risks and opportunities in the Arab region, concurs with Al-Shateri’s gloomy prognosis.

“Jordan is struggling owing to a lack of reserves, desert agriculture and high unemployment,” he told Arab News.

If the GCC countries are hit by an economic crisis, foreign workers from Egypt, Jordan and Lebanon would face unemployment, which in turn would affect the budgets of their home countries because of the dependence on Gulf remittances, Widdershoven explained.

“Priority should be given in the post-coronavirus era to diversification of economy, population control and sustainable GDP growth. Demand for migration will increase as fewer opportunities at home will force young people to look towards the US, EU and Australia.”

The potential and most obvious solution for many is International Monetary Fund (IMF) assistance, although it already has applications for support from more than 90 countries, says Politis, who is also a part of the Faculty of Finance at Cass Business School at the University of London.

“The terms for funding will probably be more relaxed than before. After all, this is a global humanitarian problem,” he told Arab News.

“Additionally, a number of local foundations and ultra-wealthy individuals could support people in need, such as refugees and immigrants.”

Some experts expect Levant countries to seek IMF support and use Arab Monetary Fund help for the financing of essential activities.

“There is a very sharp decline from remittances to Levant countries. I expect a devaluation in the Jordanian dinar as there are just not enough reserves to keep the exchange rate pegged to the US dollar,” Gulseven said.




Emirati men, wearing protective masks to combat the spread coronavirus, walk in the Mall of Dubai on April 28, 2020, after the mall was reopened. (AFP)

“Poverty and income inequality have always been a significant problem in the region. While I think poverty will increase, I do not see any mass hunger situation.

“The Levantine area has fertile soil suitable for many kinds of agricultural activities and the region is a major exporter of grain, fruit and vegetable.”

Gulseven says the crisis is likely to give a boost to agricultural activities in the Arab region, adding that it is essential that enough of this food supply stays within the region.

“As long as we stay in peace together, we can withstand these difficult times,” he told Arab News. “However, standing together means a fair sharing of income and reduced inequality.

“People in the Levant are already questioning the role of the government in society, and the hungry and desperate will start taking action because they will think they have nothing to lose.

“Now is not the right time for any kind of internal or regional conflicts, so decision-makers should treat the ensuring of food and social safety for all as a matter of utmost importance.”


Egypt authorities hand documents on student murder to Italian envoy

Egypt authorities hand documents on student murder to Italian envoy
Updated 16 June 2021

Egypt authorities hand documents on student murder to Italian envoy

Egypt authorities hand documents on student murder to Italian envoy
  • Regeni was carrying out research on independent trade unions in Egypt when he disappeared in 2016
  • Regeni’s mutilated body was found on a roadside and bore signs of torture.

CAIRO: Egypt’s Public Prosecutor, Hamada El-Sawy, on Wednesday handed two official copies of the public prosecution’s report — in Arabic and Italian — on the murder of Italian student Giulio Regeni to the Italian envoy in Cairo, Giampaolo Cantini.
The report said there was currently no basis for filing a criminal case because the perpetrator of the crime is unknown, but search authorities have been told to step up their investigation.
Regeni, 28, a Ph.D. student from Cambridge, was carrying out research on independent trade unions in Egypt when he disappeared on Jan. 24, 2016 in central Cairo.
At the time large numbers of police were in the area because of expected protests.
Regeni’s mutilated body was found on a roadside on Feb. 6, 2016. It bore signs of torture.
Police initially said that the student had died in a road accident. But an Italian autopsy showed that his body had cuts, broken bones and other injuries indicating he had been severely beaten.  
Egyptian authorities have denied that police were involved in Regeni’s torture or death.
The case has strained relations between the two countries, with Italy recalling its ambassador in protest. Diplomatic ties were restored in August 2017 after the Italian government said that it would return its envoy and continue the search for the killers.
Also present at the meeting on Wednesday were Giulia Mantini, first secretary at the Italian Embassy, and Badr Abdel Atti, Egyptian assistant foreign minister for European affairs.
The Italian ambassador also received the Kenyan judicial authorities’ response to a request for legal assistance sent by the Egyptian public prosecution.
The request was in response to a Kenyan police officer’s claim that during a security meeting in Nairobi an Egyptian police officer had admitted taking part in Regeni’s abduction. 


Lebanese army in crisis mode ahead of donor conference

Lebanese army in crisis mode ahead of donor conference
Updated 16 June 2021

Lebanese army in crisis mode ahead of donor conference

Lebanese army in crisis mode ahead of donor conference
BEIRUT: The Lebanese army is in desperate need of donor assistance to survive one of the world’s worst financial crashes, it said Wednesday ahead of a UN-backed fundraising conference.
Unlike previous donor conferences designed to provide training, weapons or equipment, the virtual meeting France hosts Thursday aims to offer the kind of humanitarian assistance usually reserved for countries grappling with conflict or natural disaster.
“We are in need of food parcels, health care assistance, and support with soldiers’ pay,” a military source told AFP on condition of anonymity.
“The devaluation of the Lebanese pound is affecting soldiers and they are in need of support. Their salaries are not enough any more.”
Lebanon’s economic crisis, which the World Bank has labelled as one of the world’s worst since the 1850s, has eaten away at soldiers’ pay and slashed the military’s budget for maintenance and equipment, further threatening the country’s stability.
Already in July 2020, the army said it scrapped meat from the meals it gives for soldiers on duty, due to rising food prices.
“We are doing the impossible to ease the suffering and the economic woes of our soldiers,” army chief Joseph Aoun said in a speech on Tuesday.
“We are forced to turn to allied states to secure aid, and I am ready to go to the end of the world to procure assistance so that the army can stay on its feet.”
Thursday’s conference will see participation from Lebanon’s International Support Group, which includes Gulf states, European countries, the US, Russia and China.
It follows a visit by Aoun last month to Paris,where he warned that the army could face even darker days without emergency support.
“The Lebanese army is going through a major crisis, which could get worse due to the deteriorating economic and social situation in Lebanon, which may worsen when subsidies are lifted,” he said.
He was referring to a government plan to scrap subsidies on essential goods such as fuel, food and flour to shore up dwindling foreign currency reserves.
The army has been relying heavily on food donations from allied states since last summer’s monster port explosion in Beirut that killed more than 200 people and damaged swathes of the capital.
France, Egypt, the United Arab Emirates and Turkey are among the army’s main food donors.
Iraq and Spain have offered medical assistance.
The United States remains the biggest financial backer of the Lebanese military.
It has bumped up funding for the army by $15 million for this year to $120 million.

Palestinian woman shot dead by Israelis in West Bank after attempted attack

Palestinian woman shot dead by Israelis in West Bank after attempted attack
Updated 16 June 2021

Palestinian woman shot dead by Israelis in West Bank after attempted attack

Palestinian woman shot dead by Israelis in West Bank after attempted attack
  • Palestinian health ministry said the soldiers responded with fire toward the assailant and neutralized her

RAMALLAH: A Palestinian woman was shot dead in the West Bank on Wednesday after attempting to ram Israeli soldiers with her car and attack them with a knife, the army and Palestinian health ministry said.
The Israeli army said “an assailant arrived in her car and attempted to ram into a number of IDF soldiers” near Hizma, south of Ramallah, before she “exited her vehicle with a knife drawn.”
“The soldiers responded with fire toward the assailant and neutralized her,” it said, with the Palestinian health ministry pronouncing her dead.


US envoy for Yemen heading to Saudi Arabia for ceasefire talks

 US envoy for Yemen heading to Saudi Arabia for ceasefire talks
Updated 16 June 2021

US envoy for Yemen heading to Saudi Arabia for ceasefire talks

 US envoy for Yemen heading to Saudi Arabia for ceasefire talks
  • Tim Lenderking will aim to reach a “comprehensive, nationwide ceasefire” in Yemen
  • He has visited the region six times since being appointed by Biden

DUBAI: US President Joe Biden’s special envoy for Yemen will meet with Saudi officials this week in the latest round of diplomatic talks to resolve the years-long war, the State Department said Tuesday.

Tim Lenderking, who has visited the region six times since being appointed by Biden, will aim to reach a “comprehensive, nationwide ceasefire” in Yemen.

In a statement, the State Department said that “Lenderking will travel to Saudi Arabia on June 15-17 where he will meet with senior officials from the Governments of the Republic of Yemen and Saudi Arabia, as well as UN Special Envoy Martin Griffiths. Throughout the trip, Special Envoy Lenderking will discuss the latest efforts to achieve a comprehensive, nationwide ceasefire, which is the only way to bring Yemenis the relief they so urgently need,” the statement added.

Since Biden took office, the US administration has increased mediation efforts between both countries while easing sanctions on the Iran-backed Houthis. Despite his efforts, the Houthis have maintained their attacks on Saudi Arabia, undermining peace talks.

On Sunday, a Houthi explosive drone destroyed part of a school in the kingdom’s southwestern region of Asir.

“The United States also recognizes Saudi Arabia’s efforts to advance implementation of the Riyadh Agreement, which is essential to stability, security, and prosperity in the south of Yemen,” Washington said.
“Additionally, Special Envoy Lenderking will continue to press for the free flow of essential commodities and humanitarian aid into and throughout Yemen.”


Reformist drops out of Iran election on last day of campaign

Reformist drops out of Iran election on last day of campaign
Updated 16 June 2021

Reformist drops out of Iran election on last day of campaign

Reformist drops out of Iran election on last day of campaign
  • Mohsen Mehralizadeh resigned in a letter to Iran’s Interior Ministry
  • Mehralizadeh’s departure likely will boost former Central Bank chief Abdolnasser Hemmati
TEHRAN: The only reformist candidate in Iran’s upcoming presidential election dropped out of the race Wednesday on the last day of campaigning, state media reported, likely trying to boost the chances of a moderate candidate.
Mohsen Mehralizadeh, 64, resigned in a letter to Iran’s Interior Ministry, which runs elections in the Islamic Republic, the state-run IRNA news agency reported. Such dropouts are common in Iranian presidential elections in order to boost the chances of similar candidates.
Mehralizadeh’s departure likely will boost former Central Bank chief Abdolnasser Hemmati, who has been running as a moderate and as a stand-in for President Hassan Rouhani, who is term limited from running again.
Hemmati on Wednesday said that he would select Foreign Minister Mohammad Javad Zarif to join his administration as either his vice president or foreign minister, embracing the top diplomat who was an architect of Tehran’s now-tattered 2015 nuclear deal with world powers.
“The economic development of Iran is not possible without strong diplomatic engagement abroad,” Hemmati wrote on Twitter to explain his choice of Zarif. “My administration is after the removal of sanctions and use of foreign policy to achieve political development.”
The move appeared aimed at consolidating the pro-reform vote just ahead of the poll. Zarif, among the best-known political figures in the Rouhani administration, has come under fire from the political establishment in recent weeks after the leak of a contentious audiotape in which he offered a blunt appraisal of power struggles in the Islamic Republic.
There was no immediate word from Zarif on Hemmati’s announcement, but the minister has previously indicated a willingness to join the incoming administration.
Mehralizadeh’s withdrawal Wednesday leaves six candidates in the race. Polling and analysts indicate Hemmati lags behind the country’s hard-line judiciary chief, Ebrahim Raisi, the campaign’s front-runner long cultivated by Iran’s Supreme Leader Ayatollah Ali Khamenei. Other hard-line candidates may drop out Wednesday to lend their support to Raisi.
Mehralizadeh served as governor in two Iranian provinces, as the vice president in charge of physical education under reformist President Mohammad Khatami and as a deputy in the Atomic Energy Organization of Iran, which runs the country’s civilian nuclear program. He came in last place in Iran’s 2005 election, but found himself barred from running in 2015.
Within Iran, candidates exist on a political spectrum that broadly includes hard-liners who want to expand Iran’s nuclear program and confront the world, moderates who hold onto the status quo and reformists who want to change the theocracy from within.
Although a range of prominent reformists and key Rouhani allies registered to run for president, Iran’s clerical vetting body allowed just several low-profile candidates, mostly hard-liners, to run against Raisi. Owing in part to the disqualifications as well as the raging coronavirus pandemic, voter apathy runs deep. The state-linked Iranian Student Polling Agency has most recently projected a 42 percent turnout from the country’s 59 million eligible voters, which would be a historic low amid mounting calls for a boycott.
In his weekly Cabinet meeting on Wednesday, Rouhani urged the public to vote, state TV reported.
“It does not do us any good if the election is cold, lacks people, and its ballots are sparsely populated,” said Rouhani.