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Iraq crisis poses economic threat to Lebanon and Jordan: ESCWA

Syrian economist Abdullah Dardari speaks during an interview with The Daily Star in Beirut, Monday, July 7, 2014. (The Daily Star/Hasan Shaaban)

BEIRUT: Conflicts throughout the Middle East have hampered development, according to a new report to be issued by the United Nations. Moreover, the current crisis unfolding in Iraq poses a serious threat to regional economies, including that of Lebanon.

Over the past 20 years, Arab countries have made substantial progress in fields like maternal health and child mortality, but conflict has caused several countries in the region to backslide on development metrics, says Abdallah al-Dardari, a leading economist with the U.N.’s Economic and Social Commission for West Asia.

“The most important characteristic of the region now is conflict,” Dardari told The Daily Star. Conflicts, he said: “have derailed already many of the achievements” made in recent years.

Five years ago, it seemed many countries in the region were on track to achieve several of the so-called Millennium Development Goals, a series of eight development targets that governments around the world committed to achieving by 2015.

“By 2010, four Arab countries had exceeded expectation in the achievement of Millennium Development Goals. These countries are Saudi Arabia, Syria, Egypt and Tunisia,” Dardari told the Daily Star. “Three of them are Arab Spring countries.”

“Now we are certain that Syria will not achieve the MDGs by 2015. We are not sure whether Egypt will be able to do so.”

“ Syria alone has increased the number of refugees in the region, increased the number of school dropouts,” he said.

While Lebanon has long been considered one of the more developed countries in the region, the Syrian crisis has “affected the ability of Lebanon to maintain its advanced position with it comes to the Millennium Development Goals,” Dardari said. “It affected them considerably.” “There is more pressure on water and sanitation, health care and education” than there once was.

Largely as a result of conflicts in Iraq, Palestine and Syria, malnutrition increased across the Arab world between 1990 and 2013.

“Fifty percent of the world’s refugees are Arabs today, even though Arabs are only 5 percent of the world’s population,” he said.

Moreover, the rapid advance of ISIS in Iraq and the ensuing political and security crisis could have serious economic ramifications for Jordan, Lebanon and Syria.

“A drop of 1 percentage point of growth in Iraq should lead to a drop of 0.88 or 0.9 percentage point in each of the three countries.”

A deteriorating security situation in Iraq threatens trade throughout the region, Dardari said.

“ Iraq takes about 14 percent of Jordanian exports and about 34 percent of Jordan’s agricultural exports. ... Iraq is probably the only trading partner for Syria today, and up to 6 billion of Syrian exports go to Iraq now,” he explained. “ Iraq represents 7 percent of Lebanese exports, but Iraq is also the transit route to the Gulf.”

As ISIS consolidates power in eastern Syria and western Iraq, many trade routes have been blocked. For countries like Syria, which rely on trade with Iraq, this rupture could have serious effects on the economy.

While Dardari said Lebanon had a “comfortable monetary position,” manufacturers’ and exporters’ inability to access Gulf markets could send ripples through the economy.

 
A version of this article appeared in the print edition of The Daily Star on July 08, 2014, on page 5.

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Summary

The current crisis unfolding in Iraq poses a serious threat to regional economies, including that of Lebanon.

Largely as a result of conflicts in Iraq, Palestine and Syria, malnutrition increased across the Arab world between 1990 and 2013 .

The rapid advance of ISIS in Iraq and the ensuing political and security crisis could have serious economic ramifications for Jordan, Lebanon and Syria.

A deteriorating security situation in Iraq threatens trade throughout the region, Dardari said.

For countries like Syria, which rely on trade with Iraq, this rupture could have serious effects on the economy.


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