The Future of the Arab Economy in the Next Five Years

Will the world be transformed in the second half of the first decade of the 21st century? What about the economic stands and the relative importance the countries and the economic blocs gain in the world economy? Will they alter too? Will we witness, similarly to the first five years, a new transformation during the next five years of this decade characterized by turmoil and swift changes?

At the end of the 20th century, the United States ranked first internationally thanks to its dominance and strength at the economic, political, and cultural levels. However, things have soon altered, as the united Europe took the lead, thus building its own radiant, breathtaking entity. China too has emerged at the international scene as a superpower followed by a steadily advancing India. By contrast, in the MENA - as some refer to our countries - the situation has relatively deteriorated, while the rapidly changing rules of the international game seem to confuse us. Even the hope of reshaping the region after the peace process has faded away due to constant conflicts, wars, and quest of the people for freedom and democracy.

All of a sudden, everything has changed mid-last year on. A once-falling dollar has regained its standing thanks to the US military and political pressures, while the Federal Reserve has kept on raising interest rates instead of reducing them. Many countries, instead of tempering down tensions, have also exerted pressures on China to force it to reconsider its currency's exchange rate. As for the alarming oil prices, instead of standing at $20-to-25 price range per barrel, they have doubled, thus hitting a $50 floor.

Early this year, the French have voted down the European Constitution. The German economy too has fallen into recession. Hence, Europe has seemed weak, tottering, and incapable of definitively settling any issue. The Chinese and the Indian balances of payments were also strained as a result of the mounting prices of oil, its derivatives, and the energy-intensive materials, like cement, iron, and other construction materials. The world has then focused on stabilizing prices - a trend that lasted for a long period of time. Meanwhile, the production costs have alarmingly soared at a pace even the enhanced productivity cannot keep up with. Hence, attention was directed to swift profits in the speculation in shares and real estates.

In short, the dollar is now on the rise, which enables the US economy to partly regain its international hegemony despite the successive upheavals that have shaken Bush Jr. administration. Hence, the "euro" has been falling against the dollar and the gold, thereby reflecting the anxiety gripping the European economy, even if a decline in the euro exchange rate may enhance to some extent the European exports. On the other hand, China and India still endeavor to flourish, each one alone. Unfortunately, their growth may be stalled. For instance, the South East Asian countries (i.e. the ASEAN group) suffer at times from natural catastrophes, like tsunami, and at others from the outbreak of epidemics, like bird flu. However, they remain stable, even if they lose their international sparkle and their status as a promising economic bloc.

By contrast, the Arabs' position on the world economic map has not apparently changed. The Arab world is still at a standstill though it has outstripped the African countries, thus getting closer to the other groups ahead of it. Nonetheless, the chances of success are not the same in all the Arab countries. For instance, the countries in North Africa show signs of economic progress, while the sustained growth has not been only limited to Tunisia, Morocco, and Algeria, but has characterized countries, like Egypt, Libya, and even Mauritania. Therefore, the countries in North Africa including Egypt are increasingly emerging at the international scene.

As for the GCC countries, they are presented now, and as expected in the foreseeable future, with many opportunities to diversify their economies, buttress their international standing, develop their infrastructures, and join the world economy under suitable and plausible conditions. Had the Gulf countries averted some of the easily contained internal struggles, had they favored the mutual public interest to pride and showoff, they would have reaped more real long-term qualitative gains.

Furthermore, the condition of the Fertile Crescent countries is not the least satisfactory. Some states are even undergoing an ambiguous and complex transition period compelling them to take difficult decisions. Syria seems, for instance, trapped and is likely to remain embroiled in this critical situation, irrespective of its response, whether it bows to the international pressures or not. By contrast, the situation in Lebanon is expected to improve. However, the question we all ask, though it cannot be easily answered, is the following: What will take place when the assassins of the late PM Rafik Hariri are tried? In Iraq, change has been awaited after the legislative elections. Nonetheless, Iraq's fate is still ambiguous, even as concerns its territorial unity and capacity to build its potentials. As for Palestine, and given the international circumstances, it has seen its dream of establishing a state vanish. Jordan, on the other hand, is still trying to preserve its stability despite the violent changes and disturbances at its borders and in the neighboring countries.

On the other hand, Sudan, like Yemen, has endeavored hard to initiate reconciliation and normalize its foreign relations. Yet, in Yemen, often do the domestic social and political conditions and arrangements pose many challenges. Besides, this country is sensitive to the dangerous developments in the Horn of Africa, especially between Eritrea and Ethiopia. In fact, the Arab world seemingly overlooks the countries of the Horn of Africa and the other states to the south of the Red Sea, like Somalia and Djibouti. Likewise, no one seems to care for the fate of the divided Comoros Islands.

If the current trends remain unreversed, the United States will certainly succeed, in the next five years, in re-dominating the world. The dollar will remain the main currency engine in the Arab countries, while the Europeans will try to find common grounds with the Arabs. Nonetheless, the Arab-European relations are bound to deteriorate at all levels in the light of the recent developments in France and the United Kingdom. Amid the prevailing European circumstances, the conservatives and the right-wing parties may even gain clout - a problem the United States has long overcome.

The next five years are expected to be the most complex for the Arab world at the political, economic, national, and regional levels. They may be even crucial in reshaping the Arab world, its map, and economic systems for many years to come.

* Mr. Anani is an economic expert in Al Basira Consultants

Jawad Anani, Al-Hayat