Cost of living crisis cuts a cruel swathe through Arab political economies

Special Cost of living crisis cuts a cruel swathe through Arab political economies
1 / 7
The Lebanese pound has lost around 95 percent of its value since 2019, while the Egyptian pound lost half its value against the US dollar since March 2022. (LTA photo)
Special Cost of living crisis cuts a cruel swathe through Arab political economies
2 / 7
People demonstrate outside Lebanon's Central Bank in Beirut in October 2021 to demand the release of their deposits blocked in Lebanese banks. (AFP)
Special Cost of living crisis cuts a cruel swathe through Arab political economies
3 / 7
Special Cost of living crisis cuts a cruel swathe through Arab political economies
4 / 7
A volunteer from the Lebanese NGO Beit al-Braka gives food to a hungry woman in Beirut on Feb. 24, 2021, amid Lebanon's worst economic. (AFP)
Special Cost of living crisis cuts a cruel swathe through Arab political economies
5 / 7
Pupils line up at Mahaba school in Ezbet al-Nakhl, a shanty town in Cairo where the poorest of Egypt's poor eke out a living scavenging through garbage. (AFP)
Special Cost of living crisis cuts a cruel swathe through Arab political economies
6 / 7
Protests over rising food prices have led to clashes in cities across Tunisia. (AFP)
Special Cost of living crisis cuts a cruel swathe through Arab political economies
7 / 7
Poor Yemeni families receive flour rations and other basic food supplies on March 29, 2022, as world food prices skyrocketed amid the war in Ukraine. (AFP)
Short Url
Updated 31 January 2023

Cost of living crisis cuts a cruel swathe through Arab political economies

Cost of living crisis cuts a cruel swathe through Arab political economies
  • The middle classes of Middle East and North African countries are now feeling the impact of soaring costs
  • They have suffered triple blow of pandemic, rising food and fuel prices, and Russia’s invasion of Ukraine

DUBAI: With economies in crisis, currencies under pressure and inflation sapping purchasing power, it has long been clear that the poor of the Arab region are suffering. But as even the middle classes in some countries begin to feel the pinch as well, more families are struggling just to put food on the table.

“It’s like we were hit by an earthquake; suddenly you have to let go of everything,” Manar, a 38-year-old Egyptian mother of two, told the news agency Agence France-Presse.

“Now, whatever semi-human life people had has been reduced to thinking about how much bread and eggs cost.”




Bread prices have shot up in some Arab countries as a result of the war in Ukraine. (AFP)

The Egyptian pound has lost half its value against the dollar since March last year, following a devaluation that was demanded as part of a $3 billion International Monetary Fund loan agreement. Official annual headline inflation in the country hit 21.9 percent in December and food prices have soared by 37.9 percent.

The Egyptian economy had been struggling to recover in the wake of the COVID-19 pandemic. But it was Russia’s invasion of Ukraine that sparked the latest crisis, as both of those countries are key exporters of wheat to Egypt and sources of mass tourism.

According to the World Bank, nearly a third of Egypt’s population of 104 million people currently live below the poverty line, and almost as many are “vulnerable to falling into poverty.”

Meanwhile, gloomy economic forecasts are already casting a pall over 2023, with economists predicting a deepening global recession that will bring with it further depreciation of currencies, skyrocketing prices, and rising rates of unemployment and poverty.

In the past year there have been multiple setbacks for the world economy. Nations and businesses that were just beginning to recover from the lockdowns, restrictions and other effects of the COVID-19 pandemic suffered a fresh blow with the start of the war in Ukraine almost a year ago.

The conflict has disrupted global supply chains, causing the price of food and fuel to rise sharply, contributing to inflationary pressures. This has placed additional strain on national currencies and business confidence, endangering jobs and hobbling growth.

The depreciation of Arab currencies against the dollar is a particular concern for the most vulnerable nations because households that had built up savings prior to the economic downturn have seen the value of their financial reserves plummet and safety nets cut from beneath them.




A Lebanese activist displays mock banknotes called “Lollars” during a stunt to denounce the high-level corruption that wrecked the country in Beirut on May 13, 2022. (AFP)

The Lebanese pound recently hit another all-time low and has now lost about 95 percent of its value since the start of the financial crisis in the country in late 2019.

Jordan, Syria and Iraq are likewise experiencing massive rises in the costs of food, fuel and other essentials items while public purchasing power continues to fall, leading to protests and occasional waves of violent unrest.

The lives of about 130 million people in the region are now blighted by poverty, according to the Survey of Economic and Social Developments in the Arab Region, which was published in December by the UN Economic and Social Commission for Western Asia.

INNUMBERS

130 million - People in the Arab region affected by poverty.

12% - Unemployment rate in Arab region (highest in the world).

36% - Proportion of the Arab population in poverty by 2024. *

* excluding Libya and GCC countries

(Source: UN ESCWA)

It found that, excluding Libya and the Gulf Cooperation Council countries, more than a third of the region’s population, 35.3 percent, is now living in poverty. This rate is expected to increase over the next two years, reaching 36 percent by 2024.

The survey also revealed that the Arab region had the highest unemployment rate in the world in 2022, 12 percent, reflecting widespread economic stagnation, pressures on businesses, and the effects of government austerity measures.

The effects of inflation have not been uniformly felt across the region, however. According to Ahmed Moummi, the lead author of the survey report, it is likely that GCC countries and other oil-exporting nations will continue to benefit from higher energy prices, while oil-importing countries will experience several socioeconomic challenges.

“The current situation presents an opportunity for oil-exporting Arab countries to diversify their economies away from the energy sector by accumulating reserves and investing in projects that generate inclusive growth and sustainable development,” Moummi said.

Saudi Arabia is expected to be the fastest-growing economy in the G20 group of developed nations this year. Meanwhile, Lebanon’s economy contracted last year amid political paralysis and delays in implementing a recovery plan.




Tunisians take to the streets on January 14, 2019 to complain about the high cost of living. (AFP)

Economists said the recent effects of inflation have had disproportionately harsh effects on Arab countries that are dependent on imports of food and other essential commodities. The Arab world was already among the world’s most food-insecure regions, and in the past year the number of hungry households has increased.

Before the war in Ukraine began, Russia was the world’s biggest exporter of wheat and Ukraine the fifth-biggest, accounting for about 20 percent and 10 percent of global exports respectively, according to the Organization for Economic Cooperation and Development. Between them they were also key exporters of other important products.

The blockade of Ukraine’s Black Sea ports last year therefore resulted in massive spikes in the market prices of grain, cooking oil and fertilizers. This caused the price of staple goods such as bread to soar throughout the Arab region.




Russia's invasion of Ukraine last year disrupted the country's grain exports, jacking up food prices worldwide. (AFP)

Although a UN-brokered deal last summer summer allowed Black Sea grain shipments to resume, easing fears of a supply-side shortage, Western sanctions on Russian goods, including hydrocarbon products, raised the price of fuel and, in turn, the cost of importing and exporting.

“Food security has been jeopardized in several countries, especially those witnessing conflicts and unrest (whether political or economic), as the food basket is becoming more and more unaffordable,” Majed Skaini, regional manager of the International Comparison Program at UN ESCWA, told Arab News.

Meanwhile, because of the added pressures on governments and businesses, wages have failed to keep pace with the rising cost of living, leading to a decline in living standards in many countries and mounting levels of public anger.

People in the Arab region are “probably more adversely affected by the rising cost of living for two reasons,” An Hodgson, the global head of consumer research at Euromonitor, told Arab News.

“Firstly, consumers in the region have a relatively low savings ratio, which means that they don’t have much of a financial cushion to help them weather the cost-of-living crisis.

“In 2022, the savings ratio in the Middle East and North Africa stood at 10 percent of disposable income, below the global average of 17.6 percent. In comparison, the savings ratio in Asia Pacific was 26.7 percent of disposable income during the same year.”

The second reason is the high reliance in the region on food imports.

“In 2021 (the latest year for which Euromonitor has data), imports of foodstuffs in the Middle East and North Africa averaged $105 per capita, compared with $44 per capita in Asia Pacific and $67 per capita in Latin America,” said Hodgson.

“This means that consumers in the region are more vulnerable to soaring food prices as a result of global supply-chain and food-production disruptions.”

The mounting cost of living is putting particular pressure on the middle classes, who tend to make up the biggest and most economically active group in societies.

“We see middle classes all over the world struggling to maintain their socioeconomic status, as well as their standard of living, in the context of weak income growth, soaring inflation and the cost-of-living crisis,” said Hodgson.

“As a matter of fact, the middle class in developed countries, especially in Western Europe, have never recovered from the financial squeeze they experienced during the 2008-2009 global financial crisis.”

This squeeze has resulted in a widespread shift in consumer habits, including a fall in conspicuous consumption, more cautious spending and general belt-tightening.




Lebanese shop at a fresh-produce market in Tripoli, north of Beirut, as grinding poverty pushes many back onto the streets to eke out a living. (AFP)

According to Euromonitor’s latest findings on global consumer trends, the vast majority of households will focus on saving over the course of the coming year. Its research found that about 75 percent of consumers did not plan to increase overall spending, and 43 percent had reduced their energy consumption.

A recent survey by the World Economic Forum found 92 percent of respondents said people in their countries are “adjusting their budgets to pay for food, some even going without.”

The report added: “When asked how rising prices had impacted consumers, 68 percent said household debt had increased and 59 percent that access to healthcare had been affected.”

Many believe 2023 will be another tough year for parts of the Arab region, which will experience a further widening of the gap between the wealthier oil economies and the more unstable, import-intensive nations of the Levant and North Africa.

In Egypt, the new reality is driving families that were once considered part of the middle class to seek help. Ahmed Hesham of the Abwab El-Kheir charity said a growing number of middle-class Egyptians have been seeking assistance.

“A lot of people had life savings they were keeping aside … Now they’re using them for healthcare or daily costs,” he told AFP.

“They used to make a good living. Now they can’t make ends meet. They’ve never been in this position before and they’re mortified to come to us.

“One man told us he can either feed his kids or put them through school but not both.”

 


UAE slams Israeli decision to permit new settlements in Occupied Territories

UAE slams Israeli decision to permit new settlements in Occupied Territories
Updated 26 March 2023

UAE slams Israeli decision to permit new settlements in Occupied Territories

UAE slams Israeli decision to permit new settlements in Occupied Territories
  • Gulf state reaffirms rejection of violations of international law, threats to regional stability

DUBAI: The UAE has strongly condemned Israel’s decision to allow resettlement in northern West Bank areas, and to permit new settlement units in the Occupied Territories, the Emirates News Agency reported on Sunday.

The Ministry of Foreign Affairs and International Cooperation reaffirmed the UAE’s rejection of all practices that violate international law and threaten to aggravate regional escalation and instability. 

The ministry also emphasized the importance of supporting all regional and international efforts to advance the Middle East peace process, as well as ending illegal practices that jeopardize the two-state solution, and establishing an independent Palestinian state on the 1967 borders with East Jerusalem as its capital.

 


Iraq’s Kurdistan region to hold elections on Nov. 18 — spokesman

Iraq’s Kurdistan region to hold elections on Nov. 18 — spokesman
Updated 26 March 2023

Iraq’s Kurdistan region to hold elections on Nov. 18 — spokesman

Iraq’s Kurdistan region to hold elections on Nov. 18 — spokesman
  • The vote should elect both a parliament and a president for Kurdish regions

SULAIMANIYA: Elections will be held in the semi-autonomous Kurdistan region of northern Iraq on Nov. 18, the regional government spokesman said on Sunday.
Iraqi Kurdistan President Nechirvan Barzani issued a decree on Sunday and approved the date, KRG spokesman Dilshad Shahab told a news conference.
The vote should elect both a parliament and a president for Kurdish regions which have gained self-rule in 1991.


GCC appeals to US over Israeli minister’s Palestinian comments

GCC appeals to US over Israeli minister’s Palestinian comments
Updated 26 March 2023

GCC appeals to US over Israeli minister’s Palestinian comments

GCC appeals to US over Israeli minister’s Palestinian comments
  • The US State Department said they had found Smotrich’s comments “innacurate, dangerous”

LONDON: The Gulf Cooperation Council said on Sunday it had written to US Secretary of State Antony Blinken condemning controversial comments made by Israel’s finance minister in which he denied the existence of a Palestinian people.

Secretary General Jassem Mohamed Albudaiwi said that the foreign ministers of the GCC had sent the joint letter, which embodied the position of the leaders of the GCC countries regarding the Palestinian cause, Saudi Press Agency reported.

In the letter, the GCC called on Washington “to assume its responsibilities in responding to all measures and statements that target the Palestinian people,” and also called on the US “to play its role in reaching a just, comprehensive and lasting solution” to the Israeli-Palestinian conflict.

He added that the letter praised the American position which rejected the statements made by Israel’s far-right Finance Minister Bezalel Smotrich.

Albudaiwi said the 155th session of the GCC Ministerial Council, which was held on March 22 and met in Riyadh, stressed the GCC's support for the sovereignty of the Palestinian people over all Palestinian lands occupied since June 1967, the establishment of an independent Palestinian state with East Jerusalem as its capital, that guarantees all the legitimate rights of the brotherly Palestinian people, and rejects settlements in the occupied Palestinian lands.

The US State Department said they had found Smotrich’s comments “to not only be inaccurate but also deeply concerning and dangerous.”

Smotrich is part of veteran Israeli leader Benjamin Netanyahu’s hard-right government that took office in December.

* With AFP


Tunisia recovers 29 bodies after migrant vessels capsize

Tunisia recovers 29 bodies after migrant vessels capsize
Updated 26 March 2023

Tunisia recovers 29 bodies after migrant vessels capsize

Tunisia recovers 29 bodies after migrant vessels capsize
  • Rome has pressured Tunisian authorities to rein in the flow of people

TUNIS: Tunisia’s coast guard said Sunday the bodies of 29 migrants from sub-Saharan African countries had been recovered after three vessels capsized, the latest in a string of such tragedies.
A series of shipwrecks has left dozens of migrants dead and others missing in the country that serves as a key conduit for migrants seeking to reach nearby European shores.
It comes after President Kais Saied made an incendiary speech last month, accusing sub-Saharan Africans of representing a demographic threat and causing a crime wave in Tunisia.
The coast guard said in a statement Sunday that it had “rescued 11 illegal migrants of various African nationalities after their boats sank” off the central eastern coast, citing three separate sinkings.
In one, a Tunisian fishing trawler recovered 19 bodies 58 kilometers (36 miles) off the coast after their boat capsized.
A coast guard patrol off the coastal city of Mahdiya also recovered eight bodies and “rescued” 11 other migrants after their boat sank as it headed toward Italy.
Fishing trawlers in Sfax meanwhile recovered two other bodies.
Black migrants in the country have faced a spike in violence since Saied’s speech and hundreds have been living in the streets for weeks in increasingly desperate conditions.
People fleeing poverty and violence in Sudan’s Darfur region, West Africa and other parts of the continent have for years used Tunisia as a springboard for often perilous attempts to reach safety and better lives in Europe.


The Italian island of Lampedusa is just 150 kilometers (90 miles) off the Tunisian coast, part of the Central Mediterranean route described by the United Nations as the most deadly in the world.
Rome has pressured Tunisian authorities to rein in the flow of people, and has helped beef up the coast guard, which rights groups accuse of violence.
Italy’s hard-right Prime Minister Giorgia Meloni warned Friday that Tunisia’s “serious financial problems” risked sparking a “migratory wave” toward Europe.
She also confirmed plans for a mission to the North African country involving the Italian and French foreign ministers.
Meloni echoed comments earlier in the week by Josep Borrell, the European Union’s foreign policy chief, who warned Tunisia risks economic collapse that could trigger a new flow of migrants to Europe — fears Tunis has since dismissed.
Since Saied’s speech, hundreds of migrants have been repatriated in flights organized by their embassies, but many say they fear going home and have called on the UN to organize evacuation flights to safe third countries.
Tunisia is in the throes of a long-running socio-economic crisis, with spiralling inflation and persistently high joblessness, and Tunisians themselves make up a large proportion of the migrants traveling to Italian shores.
The heavily indebted North African country is in negotiations with the International Monetary Fund for a $2-billion bailout package, but the talks have been stalled for months and there is no sign a deal is any closer.
US Secretary of State Antony Blinken warned on Wednesday that unless they reach an agreement, “the economy risks falling off the deep end.”


Israeli group asks court to punish Netanyahu over legal plan

Israeli group asks court to punish Netanyahu over legal plan
Updated 26 March 2023

Israeli group asks court to punish Netanyahu over legal plan

Israeli group asks court to punish Netanyahu over legal plan

TEL AVIV: An Israeli good governance group on Sunday asked the country’s Supreme Court to punish Prime Minister Benjamin Netanyahu for allegedly violating a conflict of interest agreement meant to prevent him from dealing with the country’s judiciary while he is on trial for corruption.
The request by the Movement for Quality Government in Israel intensifies a brewing showdown between Netanyahu’s government and the judiciary, which it is trying to overhaul in a contentious plan that has sparked widespread opposition.
The Movement for Quality Government in Israel, a fierce opponent of the overhaul, asked the court to force Netanyahu to obey the law and sanction him either with a fine or prison time for not doing so, saying he was not above the law.
“A prime minister who doesn’t obey the court and the provisions of the law is privileged and an anarchist,” said Eliad Shraga, the head of the group, echoing language used by Netanyahu and his allies against protesting opponents of the overhaul. “The prime minister will be forced to bow his head before the law and comply with the provisions of the law.”
Netanyahu is barred by the country’s attorney general from dealing with his government’s plan to overhaul the judiciary, based on a conflict of interest agreement he is bound to, and which the Supreme Court acknowledged in a ruling over Netanyahu’s fitness to serve while on trial for corruption.
But on Thursday, after parliament passed a law making it harder to remove a sitting prime minister, Netanyahu said he was unshackled by the attorney general’s decision and vowed to wade into the crisis and “mend the rift” in the nation. That declaration prompted the attorney general, Gali Baharav-Miara, to warn that Netanyahu was breaking his conflict of interest agreement by entering the fray.
The fast-paced legal and political developments have catapulted Israel into uncharted territory and to a burgeoning constitutional crisis, said Guy Lurie, a research fellow at the Israel Democracy Institute, a Jerusalem think tank.
“We are at the start of a constitutional crisis in the sense that there is a disagreement over the source of authority and legitimacy of different governing bodies,” he said.
If Netanyahu continues to intervene in the overhaul as he promised, Baharav-Miara could launch an investigation into whether he violated the conflict of interest agreement, which could lead to additional charges against him, Lurie said. He added that the uncertainty of the events made him unsure of how they were likely to unfold.
It is also unclear how the court, which is at the center of the divide surrounding the overhaul, will treat the request to sanction Netanyahu.
Netanyahu is on trial for charges of fraud, breach of trust and accepting bribes in three separate affairs involving wealthy associates and powerful media moguls. He denies wrongdoing and dismisses critics who say he will try to seek an escape route from the charges through the legal overhaul.
The overhaul will give the government control over who becomes a judge and limit judicial review over government decisions and legislation. Netanyahu and his allies say the plan will restore a balance between the judicial and executive branches and rein in what they see as an interventionist court with liberal sympathies.
Critics say the plan upends Israel’s fragile system of checks and balances and pushes Israel down a path toward autocracy.
The government has pledged to pass a key part of the overhaul this week before parliament takes a month recess, but pressure has been building on Netanyahu to suspend the plan.