No sooner than one estimate is made of the economic damage the coronavirus epidemic is wreaking on the Middle East, a more dire forecast supercedes it. The Arab Tourism Organization, for example, is predicting losses of $40 billion in the tourism sector by the end of April if there is no change in the epidemic’s current direction, and that doesn’t include losses of more than $14 billion that airlines could suffer.
These estimates are based on the losses up to this point, but they don’t include indirect damage caused, for example, by the layoff of thousands of employees, compensation and assistance grants to the newly unemployed and to the airlines. In some countries in the region, including Egypt, Iran and Turkey, tourism is a strategic part of the economy, accounting for a significant portion of their GDPs. It could take between a year and a half to two years to rehabilitate them.
At the moment, these countries are split between those that are wealthy and hold huge foreign currency reserves that can help fund impressive economic assistance plans, and those that are poor and are now seeking to figure out how they will finance ongoing essential needs at a time when international financial institutions are concerned about making risky loans. In each of the countries in the region – both rich and poor – there are two simultaneous wars of survival being fought: One on the part of governments trying to protect their countries’ economies, and the other on the part of private citizens, who are looking for alternatives in the face of their governments’ powerlessness.
The United Arab Emirates and Saudi Arabia have established special funds with tens of billions of dollars in financing, and through which they are funneling grants and loans at negligible interest rates to business owners and private citizens. At the same time, in Syria, Jordan and Morocco, the assistance is measly at precisely a time when citizens are being disgracefully exploited by major companies and by the suppliers of food and other essential products. That’s in addition to the transportation problems that the people are encountering trying to get to the jobs that still remain.
In a video posted on a Syrian website, a group of young people explained how they decided to set up a production line at home to make disinfectants. With large tanks of liquid and a hand mixer as a backdrop, they are seen filling plastic bottles with sanitizing liquid through a cloth funnel, as they explain that in their town, the besieged city of Idlib, no disinfectants remained.
Other reports from Syria recount how merchants have hoarded huge quantities of disinfectants in recent months and are now selling them at prices ten times the going rate prior to the coronavirus pandemic. In Saudi Arabia, the authorities also discovered a giant warehouse with about a million face masks. In Morocco, packages of 50 face masks are being sold for about $50. Before the outbreak, they were going for $3.50.
Lodging a complaint with the region’s health ministries over price gouging is generally futile in the absence of sufficient manpower to provide oversight. In an expose, the Al-Araby Al-Jadeed website reported that a cadre of merchants and smugglers in much of the Arab world is currently reaping huge profits on the sale of masks and gloves, most of which don’t meet international standards and may even endanger the users’ health.
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In Jordan, for example, thousands of masks were uncovered that had no notations to indicate where and when they were manufactured. Most of them were masks that would not provide protection against the coronavirus.
In the three months since the outbreak of the virus, the hunt for masks, gloves and disinfectants demonstrate failures in planning not only on the part of heath authorities but also by the governments themselves. Now, citizens are concerned that administrative failures will also affect the government assistance effort.
Most of the plans are rather vague, the criteria to qualify for the aid are not well-defined, and the sums that private citizens can expect to receive and how they will receive them sometimes remain a mystery.
Pressure groups and protests
Pressure groups and professional associations have already begun strong-arming the region’s finance and trade ministries, as each group looks to serve the interests of its own constituency.
So, for example, in Lebanon, drivers who work in public transportation and trucking staged a protest demanding compensation for a government decision that reduced transportation services. The protesters claimed that the move affected more than 50,000 families. In Iraq medical staff are demanding compensation for the long hours they are working and that’s in addition to their complaints regarding the acute shortage of medicine and ventilators in the country.
Assistance packages have generally included deferrals or exemptions from tax and social security payments and the suspension or deferral of debt repayment to banks, but at the moment, those who have lost their jobs or whose income has been drastically cut due to the slowdown in the region’s economies have nowhere to turn.
Another threat is facing the poorer countries of the region, millions of whose citizens work in the Persian Gulf states. Last week Kuwait announced its intention to repatriate about 17,000 Egyptian teachers who had been working in the country’s education system. Kuwait has declared schools closed until August and has no need for the teachers until school resumes.
In Kuwait, there are about 800,000 Egyptian workers and about a million Indians among the country’s 3.5 million foreign workers. With the oil industry contracting and international trade in Kuwait and other Gulf countries evaporating, one can imagine that the coming weeks could see millions of other foreign workers returning home, where they will become a burden on those countries’ governments.
The prospect that they could return to their former jobs will depend on the scope of the epidemic and the capacity of the economies of the Gulf and the rest of the world to recover. Under normal circumstances, the governments of the poorer countries could expect assistance from the wealthier ones in the region, as part of the tradition of Arab solidarity that has proven itself over and over. This time, however, the rich countries can no longer promise them even food parcels.