Most of the region’s oil-exporting countries are growing at healthy rates while the oil importers face subdued economic prospects, the IMF says in its latest assessment.

Owing to higher oil prices and production, the region’s oil-exporting countries—Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and Yemen—are forecast to expand by 6.6 percent in 2012 before moderating in 2013.

But faced with a difficult external environment, growth among the region’s oil importers—Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Sudan, and Tunisia—will register just above 2 percent in 2012. In the Arab countries in transition, continued domestic disruptions are also holding back growth.

“The biggest challenge facing governments in the Arab countries in transition is how to manage the rising expectations of populations that are becoming increasingly impatient to see a transition dividend at a time when there are threats to near-term macroeconomic stability and the margin for policy maneuver is limited,” Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, told a press conference in Dubai.

The region’s oil-exporting countries are expected to post solid growth in 2012, largely on account of Libya’s better-than-expected post-conflict recovery. In the countries of the Gulf Cooperation Council, growth remains robust, supported by expansionary fiscal policies and accommodative monetary conditions, but is expected to slow from 7½ percent in 2011 to 3¾ percent in 2013 as oil production reaches a plateau.

The price of oil is expected to remain above $100 per barrel in 2012–13. As a result, the oil exporters’ combined current account surplus is anticipated to remain near its historic high of about $400 billion in 2012. This has helped governments to respond to growing social demands by increasing expenditure on wages and salaries, which rose dramatically in most oil exporters in recent years.

Although many of the oil exporters have accumulated reserves to withstand short-run oil price volatility, a sustained drop in oil prices resulting from a further slowdown in global economic activity remains a risk to guard against. For example, a 10 percent drop in oil prices would bring down the oil exporters’ combined current surplus by about $150 billion. Stepped-up spending has increased the vulnerability to oil price declines in case of further deterioration in the global economy.

“Looking ahead, the main issue facing Middle East oil exporters is how to take advantage of their current positive position to strengthen their resilience against oil price declines and diversify their economies to boost private-sector job creation,” Ahmed said. “Fiscal policy could gradually shift to bolstering national savings, and countries could ease the pace of government spending, especially on expenditures that are hard to reverse, like public-sector hiring,” he added.

“In the interests of national reconciliation and long-term stability of the country, a mediated settlement is urgently needed,” the Secretary-General’s Special Representative and head of the UN Support Mission in Libya (UNSMIL), Tarek Mitri, said in a news statement, in regard to events in Bani Walid, located some 170 kilometres south of the capital, Tripoli.

According to media reports, Libyan army forces have launched a full-scale assault against the town, accusing it of being controlled by supporters of the former dictator Muammar al-Qadhafi, who was overthrown in 2011 after decades of autocratic rule.

The small city was one of the last to fall to rebels groups during last year’s conflict, and some are said to consider it a shelter for regime loyalists and criminal gangs. Fierce fighting has reportedly raged in the town for two days.

In addition to his concern over the military developments in Bani Walid, Mr. Mitri also spoke of his concern over growing civilian casualties resulting from reported indiscriminate shelling.

He urged all concerned to abide by international humanitarian principles, noting “their obligations to ensure the protection of civilians and take all necessary measures to avoid the targeting of civilian areas, allow for the evacuation of all wounded, and to provide unimpeded humanitarian access, including provision of food and medical care.”

Furthermore, in light of the publicly stated positions, the United Nations remains fully convinced that a comprehensive peaceful outcome is achievable, the statement noted.

This, it added, includes the right of the State to fully assert its national authority over the city of Bani Walid through the deployment of units from the national army and police; the immediate and unconditional release of all detainees who continue to be held inside Bani Walid; the handover to the judicial authorities of all those wanted on suspicion of having committed crimes, along with guarantees for their security and fair trial; the resumption of all basic services to the city; and, the holding of local elections in due course.”

Mr. Mitri emphasized, according to UNSMIL, the role and responsibility of the State in ensuring the security of all and extending its authority over its territory.

Incidents of renewed fighting in various parts of the country are among the security challenges facing the North African nation, which also needs to prepare a new constitution, promote rule of law, protect human rights, and counter illicit arms proliferation.

UNSMIL has been assisting the country’s transition toward a modern democratic State, after the toppling of the long-standing al-Qadhafi regime.

The UN envoy also praised the “huge efforts exerted by President Mohammad al-Magariaf, the General National Congress, as well as by civil society representatives and reconciliation committees, to prevent an outbreak of armed hostilities, and later, through political means, to put an end to various forms of violence.”

In addition, Mr. Mitri reaffirmed the world body’s readiness and commitment to work closely with all concerned to achieve a peaceful outcome to the violence.

Khaled Boujemaa, a human rights activist and an organizer of the festival, told Human Rights Watch that he called the chief of police several times to inform him about threats from people he identified from their beards and clothing as salafists. The officer ordered the organizers to cancel the festival, and accused them of being Shi’a, Muslims who are in the minority in Tunisia. When a large group of bearded men started tearing down the photos and the flags posted for the event, Boujemaa made another call to the police, but the police did not intervene to protect him, or the participants, and they were severely beaten. The police visited the victims in the hospital, and an attempt to identify the assailants was made, but nothing was heard since and nobody knows if a trial will take place or when.

As Joe Stork, deputy Middle East and North Africa director at Human Rights Watch, states: “The failure of Tunisian authorities to investigate these attacks entrenches the religious extremists’ impunity and may embolden them to commit more violence.”

It is clear that the extremis tend to target artists, intellectuals, and political activists. Some of the victims are drama teachers and civil society activists, assaulted on October 14, 2011, and again on May 25, 2012, in Le Kef; organizers for Doustourna, a social network, attacked on April 21, 2012, in Souk Al Ahad; journalists, documentary filmmakers and philosophy professors, intimidated on May 25, 2012, in Bizerte and May 30, 2012, in Tunis.

Based on the victims accounts, these attacks have taken place in the past 10 months in various parts of the country by people having similar clothing and appearance. The attackers used weapons such as swords, clubs, and knives to prevent festivals, gatherings or celebrations, and have beaten people, apparently for their ideas, dress, or activity.

In all cases the victims filed complaints at the police stations immediately after the assault, in most cases identifying the attackers. As far as Human Rights Watch has been able to determine, police have not arrested any of the alleged attackers, or initiated formal investigations or prosecutions against them.

“I have consistently urged leaders to stop flouting human rights and start meeting the legitimate demands of their people,” Ban said in his keynote address to the World Forum for Democracy in Strasbourg, France.

“This is my message to leaders around the world, from President Assad of Syria to others who must listen to their citizens before it is too late,” he added.

According to the website of the event’s organizers, the Council of Europe, the Strasbourg World Forum for Democracy brings together reformers and global leaders to identify democratic responses to the economic, social and political challenges which affect societies today.

In his speech, Ban noted that the case of Syria shows how the current democratic transitions have given life to hope and many changes, but have also generated uncertainty and fear. “Success is not guaranteed. It takes time to build democracy. But we must join forces to nurture progress until democracy takes a firm root in all countries around the world,” he said.

More than 18,000 people, mostly civilians, have died since the uprising against President Bashar al-Assad began some 18 months ago. Amidst an escalation in violence over recent weeks, UN agencies now estimate that some 2.5 million Syrians are in urgent need of humanitarian assistance.

“The recent escalation of the conflict along Syrian-Turkish border and the impact of the crisis on Lebanon are extremely dangerous,” Ban said referring to shelling incidents that took place between the two countries last week. “They show that this is a regional calamity with global ramifications.”

While the situation in Syria has worsened, putting at risk the stability of its neighbours and the entire region, it is still possible to find a political solution to the crisis, the UN chief stated, stressing that militarization only aggravates the situation and puts civilians in danger.

“I call on those who have influence over any side in Syria to exert it to promote a political solution, and empower political leaders, not armed groups or the regime’s military. Our goal is to create the appropriate conditions for a credible political transition that meets the legitimate aspirations of the Syrian people, and ensure their equal rights and human dignity,” Mr. Ban said.

The Secretary-General reminded the Forum that UN Member States have “clearly defined democracy as a universal value,” and stressed that they must make sure that nations live up to their obligations under international law.

In addition, he stated that democracy is not just about giving citizens a voice, but also about advancing their economic and social development.

“That is why it is so critical to achieve the Millennium Development Goals (MDGs),” he said, referring to the eight anti-poverty targets which have a completion deadline of 2015. “There has been progress since the Goals were adopted a dozen years ago, but for the mothers of South Sudan and countless others around the world, we have to press for urgent action.”

The eight MDGs, agreed on by world leaders at a UN summit in 2000, set specific targets on poverty alleviation, education, gender equality, child and maternal health, environmental stability, HIV/AIDS reduction, and a global partnership for development, all by 2015.

The Secretary-General has put together a top-level panel advise on the global development agenda beyond the 2015 deadline. In addition its 23 members, the panel is co-chaired by President Susilo Bambang Yudhoyono of Indonesia, President Ellen Johnson Sirleaf of Liberia, and Prime Minister David Cameron of the United Kingdom.

“Their approach will be participatory. They are seeking the views of development experts and ordinary citizens around the world,” Ban told the audience in Strasbourg.

He added that the United Nations will also continue to foster democracy around the world, promote human rights and help countries make a smooth transition from insecurity to instability.

Also on Monday, the UN chief met with the Secretary General of the Council of Europe, Thorbjørn Jagland, and the Council’s President of the Parliamentary Assembly, Jean-Claude Mignon. The three men exchanged views on ways to strengthen cooperation on democracy-related activities between the world body and the Council of Europe, and the latest developments in the Middle East and North Africa. In addition, they discussed access to asylum and the situation of Roma and minorities in Europe, as well as developments in the Western Balkans.

- The Middle East suffers from the highest youth unemployment in the world, currently recorded at over 25 percent, with North Africa reporting approximately 24 percent. Female youth unemployment is even higher, reaching and exceeding 30 percent across the Arab world.

- The region’s labor force youth participation rates are among the lowest globally, currently standing at around 35 percent, compared to the global average of 52 percent.

- The economic loss of youth unemployment exceeds US$ 40 – 50 billion annually across the Arab world, equivalent to the GDP of countries like Tunisia or Lebanon.

- The large number of youth in the Arab world will continue to add pressure on the labor market over the coming years – approximately a third of the total population is currently below the age of 15, and a further third is aged 15-29. In consequence, tens of millions of young people will enter the region’s work force over the next ten years needing to find jobs either at home or through regional labor mobility

Tackling the youth unemployment challenge will require a dual focus on creating employment opportunities, including self-employment, and ensuring youth have the right skills for the jobs being created. To date, governments in the region have not focused sufficiently on the latter.

Constitutions are being rewritten, political parties and youth groups are vibrant, and everyone has an opinion on current events. The older generation seems worried by the uncertainty associated with change. The young generation continues to be energized.

But, what I noticed during a week of travel through the region is that almost no one is talking economics, and that is a worry. Because while 2011 was a year of major transitions in the political domain, almost every economic indicator in the non-oil countries went in the wrong direction. Growth halved, unemployment rose, reserves came under pressure and deficits ballooned as governments responded to social pressures by increasing spending on wages and generalized subsidies.

New governments across the region are keen to respond to the demand for jobs and justice that brought them to power but are quickly faced with the hard reality of limited resources and powerful vested interests.

So, just as the “Arab Spring” opened a debate about politics in the Middle East, we now need an “Economic Spring” on how to rethink the region’s economic future.

Of course each country will have to define its own strategy, but there will be some common issues that will have to be addressed. How can countries move away from generalized subsidies to ones targeting the poor to free up resources to invest in improving the education system and infrastructure? How can tax systems become fairer so that the poorest can be given a minimum standard of living? Given bloated public sectors, how will the private sector be induced to create the 50-75 million jobs needed in the next decade?

Unfortunately, there is not yet any real discourse about these issues.

The region has to make this historic transition in a much tougher external environment than that which faced Eastern Europe after the fall of the Berlin Wall.

In the 1990s the world economy was booming, Europe was keen to embrace the transition countries by providing a policy anchor through membership of the European Union, and external finance was readily available.

None of these conditions are the same for MENA (the Middle East and North Africa) today and while there is willingness from the international community to help, resources are limited. Most of the economic transition in MENA will have to be financed through domestic resources and that means the numbers need to add up.

It must be indigenous and engage the younger generation whose economic futures are at stake — both their job prospects and the debts that will have to be repaid if their economies are mismanaged.

It was refreshing to listen to students from universities in Beirut during a presentation I gave at the American University in Beirut (AUB). They had many questions on the economy and the implications for their futures. There was obvious energy and talent in the room as well as worry about what lay ahead for them.

Their concerns ranged from the need for better access to education, to jobs, to protecting the environment. They also commented about the need for transparency in public finances and how the IMF can help address the many challenges facing the region.

This visit to the region, has made me more convinced that without an “Economic Spring” to accompany the “Arab Spring” and the important political transitions taking place in the Arab region, we risk failure on both fronts.”

Source: IMF Direct (article by Nemat Shafik).