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Dardari: Lebanon risks recession over Syria war

Moussa at the conference The Daily Star/Mohammed Azakir

BEIRUT: The economic devastation of Syria’s war could drive the economies of neighboring Lebanon and Jordan into reverse, Syria’s former deputy prime minister said Thursday.

Pointing to the sharp slowdown in Lebanon’s economic growth since the start of Syria’s conflict in 2011, from 7 percent to barely 2 percent, Abdullah Dardari said there was a direct link to the ever-deepening economic collapse in Syria.

Jordan’s economic growth has remained steadier, between 2 and 3 percent, but was still affected by the Syrian turmoil and was below the level needed to provide enough jobs for its fast-growing population, he said.

The Syrian conflict “has a very destabilizing effect,” said Dardari, now chief economist for ESCWA. “It is in the interest of the whole region for Syria to regain peace and quiet, and start rebuilding.”

Dardari said Syria’s economy had already shrunk between 35 to 40 percent and would fall 60 percent from its level at the start of the uprising if the fighting continued.

Every one percentage point of economic slowdown in Syria produced a 0.2 percentage point slowdown in Lebanon, he said.

With Syria’s economy still collapsing “we can speak about negative growth in Lebanon and Jordan if the situation in Syria continues as it is today for the next two years,” he told Reuters in an interview at the U.N.’s central Beirut offices.

Dardari joined a range of speakers speaking Thursday about the economic effect of regional revolutions at the 21st Arab Economic Forum in Beirut organized by Al-Iktissad WalAamal.

Speakers at the forum stressed the need for the transitional governments that have risen in the wake of the Arab Spring to focus on economic issues in order to prevent further unrest.

The Egyptian government, according to former Secretary-General of the Arab League Amr Moussa, should completely focus on saving Egypt from the economic difficulties, and the presidential and parliamentary elections should be postponed until the economy escapes imminent dangers.

“The Egyptian economy is in its most difficult condition. Not only is there a heavy inheritance from the previous regime but throughout the transitional period the economic file was mismanaged,” Moussa told The Daily Star on the sidelines of the forum.

“The excuses valid 10 months ago are no longer acceptable after a year of failure to reach the deal with the International Monetary Fund, to provide an alternative [to the IMF loan], or to shore up the situation of the most impoverished,” he said.

Slim Besbes, adviser to the prime minister of Tunisia, defended the transitional government in his country, saying their reform effort should be judged on the medium and long terms.

He also said transitions in the Arab world were happening against a backdrop of immense international economic crises and rising fuel prices.

Much higher fuel prices, he said, pushed fuel subsidies from 500 billion Tunisian dinars ($302 billion) to more than 3 trillion dinars after the revolution.

But Mohammad al-Hage, director of the Technical Assistance Center at the IMF, criticized the fact that fuel still constituted the overwhelming majority of subsidies in MENA countries.

“Fuel subsidies in the Middle East are at 22 percent of state expenditures. Food subsidies, on the other hand, make 0.7 percent,” he said, adding that upper classes were by far the ones benefiting from fuel subsidies.

Jihad Azour, a former Lebanese finance minister, blamed the new regime’s failure to address socioeconomic issues as the foremost reason behind unrest in the region.

“The new regimes are steering the economy using the ways of the old regimes. They are politically legitimate from elections but they do not involve stakeholders in economic decision-making,” he said.

 
A version of this article appeared in the print edition of The Daily Star on May 10, 2013, on page 5.

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