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Regional challenges to remain intractable through 2016
February 13, 2016, 5:33 pm

The annual Arab Strategy Forum (ASF) has since its inception in 2001 been an international networking event to discuss challenges and recommend solutions to some of the problems faced by the world and the Arab region in particular.

The eighth iteration of ASF held in Dubai in December 2015 as part of the Mohammed Bin Rashid Global Initiatives, released a report at the end of the confab titled ‘The State of the Arab World Economy in 2016’.

The report highlights that low oil prices, continued failure to diversify economies, civil wars and their spillover effects, persistent unemployment and less than average educational opportunities, all suggest the Arab world's economic problems are likely to compound in 2016 rather than improve significantly.

The report highlights major challenges the region will face economically as a result of the large displaced refugee population, especially countries such as Jordan, Lebanon and Kurdistan in northern Iraq and potentially Tunisia, Egypt, Turkey, and Iran. 

However, Gulf Cooperation Council (GCC) countries are expected to do better than other states in the region. But in the long-term, this optimistic view will depend on the price of oil; if it remains for long below the US$45 mark, GCC states could find it difficult to balance their budget. However, if oil recovers and maintains a pricing in the above $75 range for an extended period, the countries could build up a treasure chest of over $6 trillion, which should be sufficient to tide them over any potential problems.

Given the current sliding oil prices, GCC states are attempting to reduce or eliminate the profligate subsidies and to increase taxes. But this again will depend on how effective they are in implementing these policies as governments remain wary of the fact that any large-scale reduction or removal of subsidies and application of broad range of taxes could fuel social turbulences.

In its geopolitical assessment of the region, the ASF report notes the potential for proxy wars and ongoing turbulences in the Middle-East to become exacerbated. In its evaluation of the war in Yemen, the report points out that, while the coalition states aligned against the Houtis and their allies can claim to have achieved their combat objectives, a lasting settlement will require intervention by external diplomacy along with a serious commitment from local parties.

With regard to Syria, the report points out that continued strong support from the Russians and Iranians to President Assad means that various opposition factions are unlikely to achieve their objective of unseating him any time soon. The civil war will most likely continue as long as the powers that could end it disagree about what the endgame should be. However, the growing realization on all sides that the conflict cannot be resolved by use of force will possibly brighten prospects for engaging in internationally mediated negotiations.

On Libya, the report reveals that continuing instability in the country will make it even more difficult to resolve regional issues. A highly porous border allows armed groups based in Libya to export their violence and weapons, to destabilize neighboring countries and in Europe, heightening an already volatile situation.

Assessing Iraq, the report is equally pessimistic; it projects the country to remain united in name only, with the Kurds largely autonomous in the north and the Daesh — a pejorative used to describe the so-called ISIS militant group — controlling portions to the west.

In Egypt, while the situation in Sinai Peninsula is expected to be an irritation for the government, the extremists operating there are unlikely to pose a serious threat to the country’s security. But the ongoing turmoil could have an impact on the country’s tourism industry, which brings in much needed income to the state’s coffers.

Highlighting the operations of Daesh, the report says that unrelenting attacks by different factions opposed to its presence in the region will contain the group’s advance and gradually push them into smaller areas. However, it will not be defeated as long as the civil war continues in Syria, as the Daesh is banking on the inability of the major regional and international powers to set aside their differences.



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