Ahmad Abdul-Rahman highlights the key factors that will impact the Middle East in the coming months, as the effects of covid-19 wreck havoc.
Restrictions imposed to curb the spread of the coronavirus and thus relieve pressures on weak healthcare systems have had an enormous impact on economic growth in the Middle East. In simplified terms, the World Bank Group's June 2021 edition of "Global Economic Prospects" said: "The coronavirus pandemic has created an unprecedented global crisis—a global health crisis, with massive human losses that have led to the most severe recession the world has seen since World War II."
The oil sector remains a drag on overall growth as countries cut production in line with the OPEC agreement in April 2020. Therefore, with both the oil and non-oil sectors facing hurdles, the GCC countries witnessed a significant GDP contraction of 5.3% in 2020, before recovering by 2.4% in 2021, according to the report.
Regional fiscal margins have already dwindled with the two oil crises and COVID-19, with the exception of the UAE and Qatar. Budgets also came under additional pressure last year amid the loss of dominant oil and gas revenues. Several governments, including Oman and Saudi Arabia, appear keen to reform their fiscal positions by imposing more restrictive fiscal policies in 2021-2022.
Cold wars
The Cold War in the 1970s and Iran remain among the most influential factors that dominate the geopolitics of the Middle East. Expectations in 2021 indicate a more hardline leadership in Iran that may lead to more confrontations. A new hardline president, EbrahimRaisi, has just been elected.
There is also the unofficial trade war between Turkey and Saudi Arabia that started in the first half of 2020. The two countries compete for political, ideological or religious supremacy in the geopolitics of the Middle East. Amid rising tensions in the Middle East, Russia has benefited from four years of relatively limited US focus on the region. The Russian Federation increased its influence in the Middle East by participating in conflicts in Syria and Libya.
Coastal instability
On the southern borders of the Middle East in the coastal regions, climate change and instability appear poised to dominate regional geopolitics. The military coup in Mali posed a threat to French and Algerian influence over the country. The renewed Western Sahara conflict has also deepened regional rivalry in the western-most regions. Meanwhile, Sudan and South Sudan in the east faced major floods and huge swarms of locusts. Sudan is also involved in a confrontation between Ethiopia and Egypt over the filling of the Grand Ethiopian Renaissance Dam, which may endanger the flow of water into the Nile River.
Geopolitics
Syria and Iraq have suffered greatly from the consequences of the pandemic while instability and violence continue to fuel insecurity in the two countries. Syria faces a rise in bread prices after the United States imposed new sanctions. Iraq remains the battleground in which Iran and the United States continue to settle their differences regardless of Iraq's social and economic problems.
However, Yemen remains the most desperate case in the Middle East, a victim of regional geopolitics with few positives in 2021. Yemen is on the verge of facing a famine because the international community has failed to raise the nearly USD 1.5 billion needed to confront the disaster. The geopolitics of the Middle East is heading toward confronting climate change, the post-coronavirus pandemic, and endless regional rivalries. The next decade will determine whether the global community is serious about tackling climate change. Africa and the Middle East could become victims if current trends continue.
The acceleration of the decline in economic activity
The remittances that migrants and expatriates send back to their countries are of particular concern. Over the past decades, the role of these remittances in alleviating poverty and promoting growth has become increasingly important. Just last year, these financial flows were equal to "government to government" foreign direct investment and official development assistance. However, the coronavirus pandemic has resulted in a severe setback, with remittances expected to drop by 14% by the end of 2021.
Famine
The United Nations has already reported famine-like conditions in parts of Yemen, where nearly half of the population faces hunger and food insecurity. A report issued by the United Nations' Integrated Food Security Phase Classification last December indicated that 54% of Yemen's population - about 16.2 million people - are likely to experience high levels of acute food insecurity between January and June 2021.
Undoubtedly, the intense fighting will make it difficult for aid agencies to reach those in need and help those most at risk of coronavirus, due to lack of access to healthcare facilities and malnutrition.