20 - 26 September 2001
Issue No.552
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Al-Ahram Weekly Online 20 - 26 September 2001 Issue No.552 |
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Aftermath of horror
What will happen to the economies of the Middle East should the US decide to wage its new war? As Americans demand retribution for the savage attacks on the World Trade Center and Pentagon the indications are that the US administration intends to focus its onslaught on Afghanistan, with the express aim of destroying the network of camps run by Osama Bin Laden, the suspected perpetrator of the attacks.
For the Middle East the development could not come at a more inopportune time. The region's economies are already struggling to engineer an increase in rates of growth and development, an endeavour that has been consistently undermined by the chronic tensions of the Arab- Israeli conflict.
In the latest cataclysm many of the names of suspects published in the media are Arab. And notwithstanding any attempts which might be exerted to contain the "new war" or to focus it on a specific location, should military force be resorted to it is the Middle East that will suffer the inevitable consequences in the aftermath of the assault.
One sector that has already been hit is tourism. The US issued a new advisory this week warning against tourist travel in the Middle East for the next three months. In its wake came a flurry of cancellations from all parts of the world, the beginning of a spiral that, should it continue, will inevitably spell bankruptcy for a great many travel agencies.
Tourism in the Middle East has already suffered over the past year, largely as a result of the continuing confrontation within the occupied Palestinian territories and the eruption of a prolonged Intifada in the wake of repeated Israeli incursions into those territories. The situation was not helped this week by statements attributed to Israeli prime minister Ariel Sharon suggesting US events will further delay the peace process. The immediate impact on the Israeli economy was a slide in the shekel amid fears by traders that any escalation in the violence will destroy Israel's positive macroeconomic performance.
The region's trade with the outside world will also be negatively impacted, since the needed interactions, from business delegations which habitually travel to Europe or the US, will also be curtailed. Most telling of the recessive atmosphere that has set in is the World Bank and IMF's recent postponement of annual meetings scheduled to take place in Washington at an unspecified date, and the cancellation by the World Bank's office in Cairo of a meeting scheduled for this week to brief reporters of the organisation's plans and operations in Egypt.
Given, as well, that three major oil producers -- Iraq, Libya and Iran -- are potentially on the US's 'suspect list' there will be continued tension in the oil market, leading to higher oil prices at a time when overall oil stocks have already fallen. The general climate, in short, is far from conducive to growth.
Everyone awaits, with bated breath, the response from the US. Where, exactly, are the "targetted areas" which the US, in concert with its allies, will hit. The economic impacts will vary, from one Arab country to the other, depending on the degree of openness to the global economy, and involvement with international financial markets. Those with limited interactions, exemplified best, perhaps, in a limited number of shares listed on international stock exchanges, will probably not face the full force of the ensuing destabilisation, and in this regard Egypt -- if one can talk of luck in such a situation -- has at least some on its side. But Egypt is, too, a major importer of US products and this is bound to be affected.
The urgent question is what can Egypt, and the rest of the countries in the region, do to counter these developments? It is time, now, for crises management, for putting in place the necessary mechanisms that will minimise the inevitable destabilisation that any military intervention in the region will undoubtedly bring.
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