Breakingpoint?
Middle East Socioeconomic Overview
Report: July 2024
12 children fell in the Golan Height, sparking rumours of escalation. Photo credit: CNN
Introduction
With the notorious warmonger visiting Washington to address the US congress about the war in Gaza, the world watched as he spewed lie after lie, unashamedly denying the reports of genocide coming from occupied Palestine. As though the plethora of images, recordings, and UN-confirmed reports are nothing but a fabrication and that he and the entity he represents, are the victims. To make matters worse, he is taking advantage of an event which occurred in the Golan Heights to increase the intensity of the war. Things are definitely escalating towards a dangerous situation, a probable breaking point.
2. THE SOCIO-ECONOMIC SITUATION
Egypt
Prime Minister Mostafa Madbouly declaring the electricity is over and that energy minister has a plan to increase energy output. Photo credit: https://www.arabnews.com/
The International Monetary Fund has diverted from international expectations concerning the growth of the Egyptian economy to record 4.1% during the current fiscal year, a decline of 0.3% from the last expectations in April. Experts attributed the reasons for these expectations to the continuing geopolitical tensions in the region, and the state’s pursuit of an austerity policy to control the budget deficit and inflation. In response to the IMF’s decleration, the Chairman of the Planning and Budgeting Committee of the Egyptian House of Representatives, Fakhri Al-Feki, said that the International Monetary Fund’s expectations for the growth rate of the Egyptian economy are close to the government’s targets, explaining that the state wants to achieve a growth rate of 4.2% during the current fiscal year 2024/2025. In fact, he added that the government's work program aims to increase to 6.5% by 2030. What will allow this to happen is the improved internal demand and consumption, which motivates investors to expand and increase productivity. Another factor is the increase in the volume of local and foreign direct investments to meet local demand while at the same time providing more direct job opportunities. This was vivid during June when the Purchasing Managers' Index for the private sector in Egypt rose by nearly 5 points to reach 49.9 points, the highest level in 3 years.The third is the government’s plan to increase the volume of Egyptian exports to various markets, which is reflected in an increase in foreign cash flows.
Aside from the above, Egypt did also record some positive developments during the month, as it was reported Egypt’s total budget deficit fell to 505 billion Egyptian pounds in the fiscal year 2023/24 that ended June 30 compared to 610 billion pounds a year earlier. Another development is the conference held between Egypt and Serbia over the possibility of enhancing economic cooperation between the two countries and investment collaboration as both parties seek to create greater economic resilience and a better investment climate. This will be done by taking into account Serbia’s potential as a supplier of industrial inputs for joint manufacturing ventures in Egypt, aiming to increase joint exports to other countries. Another positive development during this month, is Egypt solving its electricity crisis which had emenated during the summer. For time being it has solved the problem with a temorary solution such as importing gas. However, Egypt’s Minister of Electricity and Renewable Energy unveiled action plan to boost renewables, efficiency, and grid modernisation to diversify the energy resources. This includes projects totalling 30,000 megawatts added in recent years, with private sector partnerships contributing 1,956 megawatts in renewable energy fields.
Jordan
Jordan’s digital economy is a driving force behind the Kingdom’s successes. Photo credit: https://www.modee.gov.jo/
Economic experts confirmed that Jordan’s economy stands on solid ground and it diversification qualifies it to achieve more successes and achievements regionally and globally. They confirmed, in statements to the Jordanian News Agency (Petra), that Jordan has the ability to become a leader in the Digital Economy in the Middle East and North Africa region since the majority of the population is young and willing to learn. Also it has a growing technology sector aimed at continuing to enhance economic development and building an active economy, relying on its flexible legislative framework which is based on the Economic Modernization vision 2030. They pointed out that Jordan seeks to be a regional center for digital innovation and artificial intelligence and for the development of cybersecurity skills and standards. Also they stated that the digital economy in Jordan has been established on a solid foundation that has qualified it to achieve more successes and achievements at regional and global arenas, pointing out that this is due to several main factors. Most notably is the fact that the digital infrastructure in Jordan is enjoying great development, especially with the spread of Internet services High-speed, fifth generation (5G) and cloud computing technologies, which provided a supportive infrastructure environment for digital economic activities. What makes the country also standount is the advanced technological education system in Jordan and specialized training programs in the field of technology. All these factors have contributed to the success of the digital economy which has in turn paved the way for further investment from foreign entities and companies aiming to take advantage of Jordan’s developed IT services.
Iraq
Market in Baghdad, March 20, 2024 (Getty)
A report released in July, indicated that Iraqi non-oil revenues rose to unprecedented levels compared to previous years, after reaching 7.06 trillion Iraqi dinars, which represents a contribution rate of 11% of the total revenues of the Iraqi state, compared to only 0.09 trillion Iraqi dinars, in the same period last year, which only contributed 0.19%. The Iraqi Ministry of Finance revealed that the volume of state revenues within the federal budget of the Iraqi state during 5 months exceeded 54 trillion dinars (about 40 billion dollars), confirming that the oil contribution to the budget remains at about 89%. Recently, Iraq has been subjected to international pressure to increase its non-oil financial revenues, to limit the economy’s exposure to oil price shocks, in accordance with the recommendations of the International Monetary Fund, which warned that greater declines in oil prices, or extending “OPEC+” production cuts, would detrimentally affect Iraq. The financial statements for the first five months of 2024 indicate a significant improvement in non-oil revenues, which contributes to enhancing the country’s financial and economic stability. Nevertheless, the Iraqi government still faces major challenges in diversifying the economy and increasing reliance on non-oil revenues to ensure sustainable growth, in light of growing expenditures and lack of clarity in their transparency. To matters worse, revenues from Iraq's border crossings are controlled by parties and militias that manipulate tax revenues. Also, there is still the lack of real parliamentary laws that work to achieve sustainable development for Iraq. In short, Iraq throughout the years have succeeded in diversifying its economy, but various challenges have weighed down on its successes, preventing it from achieving more.
Lebanon
The assassination will lead to major escalations in the region. Photo credit: France 24.
The month of July ended with a targeted assassination of a key figure in the suburb of Beirut, sparking anxiety over future of the country and the ramifications the incident will have on the economy. According to Amin Salam, the Lebanese Minister of Economy, claimed that 50 percent of all Lebanese sectors have already witnessed a decline compared to 2023. In terms of the tourism sector, several tourists who were supposed to travel to Lebanon, cancelled their flight reservation as fears of a larger war is expected. Others left the country in a hurry fearing they will get stuck in Lebanon. To matters worse, airline companies suspended flights going to Lebanon as even the country’s Middle East Airlines made changes impacting how long its fleet remain at the Beirut Airport. As for the southern part of the country, it is being severely impacted by ongoing hostilities, with daily exchanges of fire across the border. The most intense bombardment is concentrated within 12 km of the Blue Line, while targeted Israeli airstrikes reach deep into the country, extending up to 100 km from the border. To date, the extent of the destruction has reached 3,000 housing units that have been either completely or partially demolished. Additionally, 12,000 housing units have been severely damaged, and 20,000 units have sustained minor damage. The total value of the damage so far has been estimated at 1.7 billion US dollars. The agricultural sector lost 17 million square meters, due to the use white phosphorus shells, with effects that will last for many years. Additionally, farmers were unable to harvest crops from 12 million square meters of their land. Moreover, at least 13 water infrastructures have been damaged due to cross-border hostilities, impacting the water supply for nearly 200,000 residents in the South and Nabatieh. However, the incident which occurred in Beirut may increase the level of destruction and further inflate these numbers throughout the coming month.
Palestine
A Palestinian is walking next two personnel armored carrier in the West Bank as the occupier carries out raids. July 23, 2024, Associated Press.
With the death toll piling up in Gaza and the economy is all but nonexistent, things are also deteriorating in the West Bank as occupying forces are increasing their raids within the area. Moreover, the occupier has increased the number of checkpoints in the area thus limiting people’s movements and preventing them to buy necessities from Jenin and Tulkarm. Consequently, this has impacted economic activity while residents are unable to travel for work. To make matters worse, continues to withhold tax revenue from West Bank authorities, aiming to weaken them and impose broader restrictions on Palestinians. Up until this point since October 7, the Palestinian Authority has been able to pay only 50% of public employee salaries owed to its estimated 140,000 employees. Also, the number of jobs lost amounted to 144,000 within the West Bank in addition to the 148,000 Palestinians who already lost their job due to travel restrictions. As a result, poverty is rising and frustration with the occupiers is mounting. As socioeconomic conditions are continuing to decline, crime rates related to theft are increasing and Banks are the main targets. With the financial system already in danger due to the occupier’s imposing of monetary restrictions and its threats to terminate a banking waiver, the situation is increasingly becoming precarious. Commenting on the waiver issue, a U.S. official predicted to the non-governmental organization Crisis Group that, should the occupier fail to renew the waiver, the West Bank would face a financial crisis and an ensuing economic collapse so vast and complex that international actors won’t able to handle the ramifications.
Syria
A country in shambles. Photo credit: Tehran Times.
The private sector in areas controlled by the Syrian government recently resorted to reducing its employment amid a severe economic crisis and a decline in the profitability of all business sectors in the country. As such this exacerbates the already high unemployment rates, threatening thousands of additional families to descend into the quagmire of poverty and destitution. According to Damascus Chamber of Commerce member Imad Al-Qabbani, the private sector has recently resorted to reducing the number of employees due to the recession in the markets, the inability to sell products, and weak purchasing power. For his part, Magdy Al-Jamous, a professor at the Faculty of Economics at Damascus University, confirmed that the unemployment rate in Syria exceeds 37%, while the disguised unemployment rate has exceeded 85%. In a related context, Shafiq Arabsh, a professor at the Faculty of Economics at the University of Damascus, indicated that the economy is in a state close to “complete paralysis,” stressing that the labor market in Syria suffers from a major structural defect due to the migration of Syrian workers, and that all productive sectors in Syria produce at a minimum level. To top it all, the recent assassination of Katerji, a famous buiseness man in Syria, has raised worries about the shrinking of the private sector and the further loss of jobs.
Syria’s problems are piling up heavily impacting the economy. Nevertheless, there are a few developments that might mitigate this downward descent. For instance, Saudi investors from the influential Bin Laden family have established a construction company, and an Emirati construction company has opened a branch in Rural Damascus. Also a Romanian investor has partnered with Syrian investors to establish a trading company specialized in the import of power and renewable energy equipment. Moreover, regular flights between Riyadh and Damascus have been reestablished after 12 years being suspended. On the policy front and to tackle the crisis in the country, the Syrian government formed a plan to restructure the subsidies system and shift from subsidizing items that can be bought through the Smart Card system, to directly transferring cash subsidies to citizens, according to a statement by the government. According to the government, it has instructed Syrians who have Smart Cards but no bank accounts to open one within three months in order to receive the cash handouts.
Cyprus
Because of the improvement of the economy, civil servants received their pay raise. Photo credit: https://www.ekathimerini.com/
Similar to Jordan, the Cypriot economy has been showing signs of renewal and growth since the beginning of 2024 thanks to its tech and services sector. As stated by Cyprus’s statistical service, economic activity increased across most industries because of the advancements in the IT and communication sector which saw exceptional growth of 14.9% within the first three months of the year. As technology is becoming a driving force within the operations of mostly every sector, administrative and support services grew by 13.1%, while professional and technical services increased by 4.1%. Moreover, transportation and storage grew by 29.3%, while accommodation and food services soared by 44.8%. The arts and entertainment sector, benefitting from its access to advanced technologies, also had a strong year, with a 40.2% increase. Consequently, this has led to increased employment in all these sectors thus improving the overall purchasing power of citizens and the health of the economy. Another notable indicator that demonstrates the sustainability of the economy, is that Cypriot civil servants finally received their long overdue pay raise of 1.5% in basic salaries, with a minimum raise of 27.40 euros per month. This raise applies to both permanent and retired workers, as well as fixed-term employees. According to government sources, this raise was in tandem with the improvement of the economy and the high growth rate and it will be extended in the near future to employees and pensioners of semi-state organizations and local authorities. Moreover, it is a symbolic gesture that Cyprus has triumphed over the economic crisis it faced back in 2009.
3. THE HUMANITARIAN SITUATION
Egypt
· According to human rights groups, Egyptian authorities are increasing forced deportations of refugees as the UNHCR suffers from a slowdown in processing refugee applications. [1]
· During the EU-Egypt Investment Conference, Egypt's prime minister requested World Bank cooperation to share the 10 billion dollar annual cost of hosting nine million migrants and refugees.[2]
Jordan
The UNHCR states that there are currently 628,135 registered refugees in Jordan up until the beginning of July.
The proportion of Syrian displaced people registered within the UNHCR for the beginning of July, are distributed as follows:
187,424 in Amman Governorate (29.8%)
161,232 in Mafraq Governorate (25.7%)
123,120 in Irbid Governorate (19.6%)
92,292 in Zarqa Governorate (14.7%)
16,159 in Balqa Governorate (2.6%)
12,499 in Madaba Governorate (2%)
8,228 in Jarash Governorate (1.3%)
8,130 in Karak Governorate (1.3%)
8,045 in Maan Governorate (1.3%)
5,435 in Ajlun Governorate (0.9%)
3,773 in Aqaba Governorate (0.6%)
1,327 in Tafilah Governorate (0.2%)
471 in other (0.1%)
· Jordan condemned a decision by the occupier’s parliament, to classify the UN agency for Palestinian refugees (UNRWA) as a terrorist organization, considering it a violation of international law and obligations as the occupying power.[3]
· An alliance of philanthropists, higher education institutions, vocational training institutes, a Syrian business association in Jordan and UNHCR, the UN Refugee Agency, signed an agreement that paves the way for refugees to contribute their full potential to economy and society.[4]
Iraq
{UNHCR Iraq did not update its figures for the month of July}
The UNHCR states that there are currently 307,251 registered Syrian refugees in Iraq.
The proportion of displaced Syrian people registered within the UNHCR up until the beginning of June, are distributed as follows:
116,406 in Erbil (51.9%)
39,431 in Dahuk (17.6%)
31,623 in Sulaymaniyah (14.1%)
2,239 in Ninewa (1%)
13,114 in Baghdad (4.6%)
2,749 in Kerbala (1.2%)
2,339 in Najaf (1%)
2,704 in Kirkuk (1.2%)
1,687 in Anbar (0.8%)
20, 822 in other areas (6.6%)[5]
· The United Nations Mine Action Service (UNMAS) in Iraq welcomed an additional contribution of DKK 22,000,000 (approximately USD 3,173,170) from the Government of Denmark, which will contribute to support the Government of Iraq to humanitarian, socio-economic, and reconstruction efforts.[6]
· UNHCR welcomed a recent donation of 940,000 Swiss Frances (approximately one million US dollars) from the Government of Switzerland. This funding strengthened UNHCR’s programs supporting refugees, internally displaced Iraqis and individuals at risk of statelessness in Iraq.[7]
Lebanon
{UNHCR Lebanon did not update its figures for the month of July}
Since the beginning of April, the number of registered Syrian refugees in Lebanon is 779,645.
Refugees in Lebanon are distributed as follows:
295,392 in Bekaa (37.9%)
220,434 in North Lebanon (28.3%)
176,611 in Beirut (22.7%)
87,208 in South Lebanon (11.2%)[8]
· The International Committee of the Red Cross (ICRC), in collaboration with the Lebanese Red Cross (LRC), has launched a large humanitarian initiative to distribute food parcels to around 8,000 families across 55 regions within 5 kilometers range from the blue line in southern Lebanon. This effort aims to provide much-needed relief to families affected by ongoing tensions and escalations, economic challenges, and instability in the region.[9]
· The humanitarian situation in Lebanon continues to escalate due to conflict with Israel at its southern border. Nearly 100,000 people have been internally displaced and hundreds of civilians have been injured and killed.
· Due to the war, civilian infrastructure for agriculture, water and sanitation, livelihood, health and education has sustained heavy damage that impacts hundreds of thousands more people in Lebanon.[10]
· UNIFIL peacekeepers, collaborating with the Lebanese Red Cross, provided crucial medical care to displaced people in Tyre, southern Lebanon.[11]
Syria
· The Syria Recovery Trust Fund (SRTF) announced the receipt of a new contribution from the Kingdom of Denmark, amounting to approximately EUR 2.41 million.[12]
· The SRTF announced this year’s average wheat yield of 3.53 MT per hectare (HA) in Northeast Syria, following the end of the harvest season under the intervention, "Agricultural Support to Farmers in Ar-Raqqa Governorate – Phase VII".[13]
· The UNHCR declared that in 2024, 195,061 children and caregivers benefited from awareness raising sessions, and 12,161 children benefited from case management services. [14]
· The Syrian Network for Human Rights, released a report in July detailing that 62 Civilians Deaths, Including Eight Children and Four Women as well as 10 Victims Who Died due to Torture, in June 2024.[15]
Cyprus
· As life in Cyprus grows increasingly difficult for many asylum seekers, the number of Syrians opting into the island’s “voluntary return” program is going up. So far this year, 114 Syrians have returned, compared to just around 30 in all of 2023.[16]
[1] New Arab, July 15, 2024, https://www.newarab.com/analysis/egypts-crackdown-refugees-shows-no-signs-slowing
[2] Info Migrants, 03/07/2024, https://www.infomigrants.net/en/post/58179/egypt-seeks-cooperation-for-hosting-9-million--refugees-and-migrants
[3] Anadolu Agency, 23/7/2024 https://www.aa.com.tr/en/middle-east/jordan-condemns-israels-designation-of-unrwa-as-a-terrorist-organization/3282685
[4] UNHCR, July 10, 2024, https://www.unhcr.org/jo/27151-jordan-new-alliance-allows-more-refugees-to-access-university-studies.html
[5] https://data2.unhcr.org/en/situations/syria/location/5
[6] OCHA, July 24, 2024, https://reliefweb.int/report/iraq/government-denmark-provides-additional-contribution-unmas-support-mine-action-sector-iraq-enar-0
[7] OCHA, July 16, 2024, https://reliefweb.int/report/iraq/switzerland-bolsters-support-displaced-people-iraq-usd-1-million-donation-enarku
[8] https://data2.unhcr.org/en/situations/syria/location/71
[9] OCHA, July 23, 2024, https://reliefweb.int/report/lebanon/relief-southern-lebanon-8000-families-receive-food-parcels
[10] OCHA, July 24, 2024, https://reliefweb.int/report/lebanon/lebanon-situation-report-july-2024
[11] OCHA, July 9, 2024, https://reliefweb.int/report/lebanon/supporting-displaced-people-south-lebanon
[12] OCHA, July 19, 2024, https://reliefweb.int/report/syrian-arab-republic/denmark-contributes-eur-241-million-srtf-northeast-syria-efforts
[13] OCHA, July 14, 2024, https://reliefweb.int/report/syrian-arab-republic/srtfs-agricultural-support-yields-notable-results-northeast-syria-bountiful-wheat-production-and-improved-livelihoods-ar-raqqa-governorate
[14] OCHA, July 9, 2024, https://reliefweb.int/report/syrian-arab-republic/fact-sheet-child-protection-syria-january-december-2023
[15] OCHA, July 1, 2024, https://reliefweb.int/report/syrian-arab-republic/429-civilian-deaths-including-65-children-and-38-women-well-53-deaths-due-torture-documented-syria-first-half-2024-enar
[16] Syria Direct, https://syriadirect.org/worsening-conditions-in-cyprus-push-scores-to-return-to-syria/