-->Hi,

hier eine Beschreibung der Folgen, die der Irakkrieg auf einige arabische Volkswirtschaften im Mittleren Osten wie auch Marokko haben könnte:

VOL. XLVI
No 13
31-March-2003

Regional Economic Outlook Uncertain As Analysts Focus On Outcome Of Iraq Conflict

The outlook for the Middle East economy remains uncertain a week after the US-led invasion of Iraq commenced in the early hours of 20 March. As the long-awaited attack began, the question concerning investors, bankers and economists across the globe was not whether the US would defeat Iraqi forces, but how long it would take: would it be a quick and decisive victory as many had expected, or would the battle to take Baghdad be a messy and protracted affair? The initial optimism apparent on 20 March which saw oil prices drop and world markets stage a slight rally, has dissipated as the prospect of a victory along the lines of the 1991 Gulf war has receded. Instead, in the face of new uncertainties, analysts have retreated to the pre-war position of scenario forecasting.

War Scenarios
The baseline scenario, and the most favorable outcome in terms of economic costs now that the war has begun, would be a swift and decisive victory for the US-led forces which results in the collapse of Saddam Husain’s regime. This scenario also does not see the conflict drawing in any other countries in the region, does not result in the use of weapons of mass destruction (WMD), and does not result in the disruption of oil supplies from the region. The result of such a scenario would be that damage to Iraq’s fragile infrastructure would be relatively limited, and humanitarian services and reconstruction efforts could begin as soon as possible. Assuming that a reasonable level of security could be maintained following the war, and that sufficient funds are made available by donor states, the extremely difficult work of institution building and the repair of the oil industry (which is expected to pay for much of the reconstruction) could also begin. A short war with limited aftershocks would also help to dispel uncertainty and give a much-needed fillip to the world economy.

The worst case scenario on the other hand sees a drawn-out conflict in which casualties and costs are high, Iraqi oil fields and those in neighboring countries are badly damaged or destroyed, WMD are used, and serious civil conflict follows the end of hostilities. Ripple effects from this scenario could also include serious unrest against other regimes in the region or terrorist attacks (against the US in particular) in response to the US invasion. In this case, it is evident that the economic costs for the region and for the world would be high, particularly against the backdrop of world recession and tumbling stock markets. Such a scenario would result in even higher government spending in the US, with serious consequences for the US economy which is currently the only major engine for growth for the global economy. Other consequences of this scenario would include high oil prices; negative effects on consumer and business confidence, equity prices and risk spreads; and serious negative effects on certain industries such as tourism and aviation.

In reality, the outcome of the war will most likely lie somewhere between these two extremes - an intermediate scenario - which will involve elements of both. Indications so far are that the most serious elements of the worst case scenario, such as the destruction of Iraq’s oil fields and the involvement of neighboring states, are unlikely to be realized. Despite damage to a handful of wells in the south of the country near Basra, systematic destruction of oil wells as was seen in the 1991 retreat of Iraqi forces from Kuwait has not occurred. There has also been no serious involvement of neighboring states in the conflict so far. Apart from several Iraqi missiles aimed at Kuwait at the start of the conflict, there have only been minor incidents on the borders with Syria and Iran. Significantly,
there has also been no indication of Iraq attempting to target Israel, although like the use of WMD (which has also failed to materialize so far), the risk of Saddam’s regime in its death throws resorting to these tactics cannot be totally discounted. The fear that the war would result in large numbers fleeing Iraq has also proved to be unfounded so far. Anecdotal evidence suggests that the reverse may even have happened, and that expatriate Iraqis have actually been returning. These positives are, however, weighed against the strong possibility that the battle for Baghdad will be hard-fought and may take some time, extending the period of uncertainty to several weeks, instead of days, as was originally thought.

The Economic Impact Of The War
The economic impact of the war on the countries of the region depends in large part on the nature of their economies. For the oil-dependent economies of the Gulf states the immediate impact of the war has been to remove the ‘war premium’ of around $5-10/B which had inflated oil prices in the run-up to the war. Oil prices will remain volatile as the war continues, however, and there remains the potential for prices to climb again should the conflict be drawn out, as has been witnessed in the last few days. In the longer-term, in the aftermath of the war, with uncertainty removed and Iraqi oil supplies back onstream, there is the potential for prices to move down towards $20/B. Since a large proportion of the revenues of the Gulf states are tied to the price of oil, the effect of the war on oil prices over the coming months will directly affect the impact on those economies. The longer-term impact on oil prices of the resumption of full Iraqi production growth remains to be seen. Other regional economies will suffer direct impacts as a result of decreased trade with Iraq, and adverse effects on industries such as aviation and tourism. Jordan and Turkey are expected to be hit hard by the reduction in trade and the drop-off in tourism, while Egypt, Tunisia and Morocco will also see fewer holiday-makers this year.

Jordan
Jordan is likely to be one of the countries worst affected by the war due to its close trading ties with Iraq. According to Jordanian Minister for Trade and Industry, Salah al-Din al-Bashir, trade is continuing as normal, and more than 200 trucks have made the journey since 17 March, but as fighting intensifies some exporters are demanding the return of vehicles. According to Jordanian economist Fahd al-Fanik losses to the economy will amount to some $2bn, equivalent to 25% of GDP. This includes $800mn in extra crude oil and petroleum products costs resulting from the loss of Iraqi oil imports which Jordan received at rates below market prices. Mr Fanik also estimates that the cost in terms of reduced tourism revenues will amount to $700mn. Exports to Iraq, which amount to $230mn per annum and represent 11.9% of total Jordanian exports are likely to be hit, as is the amount of foreign direct investment the country will receive. Jordanian Finance Minister Michel Marto puts losses to the Jordanian economy at the smaller but nevertheless significant figure of $1.5bn, closer to the amount of $1.46bn the US is expected to give Jordan to help cover the cost of the conflict to the economy.

Saudi Arabia
The outlook for Saudi Arabia in 2003 is for a downturn in the country’s economic fortunes, according to Said al-Shaikh, Chief Economist at The National Commercial Bank (NCB). He expects overall nominal growth for the year of some 2%, about half that achieved in 2002. His forecast for the oil sector is growth of around 10% due to relatively high oil prices and increased production which he suggests may average over 8mn b/d for the year. This is in contrast to 2002 when estimated negative growth of 1.6% was recorded in the oil sector. The private and government sectors, which were the main drivers of growth in 2002, are expected to see depressed activities this year. Demand for goods and services, particularly consumer durables, is likely to be down, while government capital expenditures and projects are being postponed until the outlook for the region is more certain. Meanwhile, foreign direct investment is likely to be put on hold until political risk abates, but Dr al-Shaikh warns that the effects of the current crisis will hang over the region for some time after the conflict is resolved.

Kuwait
The Kuwaiti economy is benefiting from contracts to supply the US forces stationed there. Following regime change, Kuwait would also stand to benefit from reconstruction efforts, acting as a port and entry point for Iraq. Despite a lack of investment in the infrastructure of Kuwait’s ports since 1990 compared to developments in Saudi Arabia and the United Arab Emirates, for example, Kuwait’s proximity to Iraq gives it a competitive advantage. Furthermore, despite a lack of government initiatives to mobilize the private sector to take advantage of the lucrative contracts which would follow regime change in Iraq, local businessmen hope that the improved security situation will encourage inward investment. The reduced threat from Iraq is also expected to bring down military expenditure which has in recent years accounted for around 20% of the budget, leaving more money available for productive capital expenditures. On the negative side, the fate of compensation which is still owed to Kuwait by Iraq remains in the balance, and it is not clear how Iraq will be able to meet its large obligations. However, a study has recently been prepared in Kuwait to examine the idea that Iraqi compensation payments to Kuwait could be diverted to reconstruction projects. Kuwait would then liquidate its assets at a later date through sales to the private sector (MEES, 10 March).

Egypt
Egypt is Iraq’s largest Arab trading partner and Iraq accounts for around 30% of Egyptian exports. As a result there are potentially serious consequences for Egypt as a result of the war following disruption of this trade. However, following regime change in Iraq, Egypt could have an opportunity to take advantage of this preeminent position. Egypt’s tourism sector has already suffered as a result of the increased tension in the region and the industry federation has forecast that lost revenue as a result of the war will be at least $1.7bn, almost half the country’s yearly earning from this sector. The knock-on effect will be significant as a large number of Egyptians are employed either directly or indirectly in the industry. On a more positive note, the Suez canal - another important foreign exchange earner - has seen a healthy flow of traffic recently due to the build-up of US forces in the Gulf, and this is expected to continue. Overall, according to Adel Satel of ratings agency Moody’s in Cyprus, the Egyptian economy is likely to suffer in the short-run, but notes that there is good potential for growth. He adds that while the recent floating of the pound was a welcome step in the right direction, subsequent moves to impose capital controls indicate that there is still some way to go in implementing market reforms and Moody’s has no plans to change Egypt’s current rating.

Syria
Syria will also feel the effects of war through oil prices and trade. According to Dr Nabil Sukkar, the loss of the oil agreement with Iraq (under which Syria received discounted oil and as a result was able to export more of its own oil at world market prices), will cost the country $500mn per annum. However, Dr Sukkar also notes that with Syrian oil exports standing at some 350,000 b/d, the
country will also benefit from current high oil prices. Trade with Iraq, which has been growing steadily in the past three years to reach a total of $2bn in 2002 will be negatively affected to the detriment of local industries. Offsetting these negative indicators are the good agricultural season expected this year due to heavy rainfall and the potential for increased business for Syria’s Mediterranean ports as reconstruction efforts in Iraq get under way. However, he adds that if the regime installed in Iraq turns out to be little more than a puppet regime controlled by the US, Syria is unlikely to cooperate in any reconstruction work.

Lebanon
The effects on Lebanon will largely be related to trade and the current high level of oil prices (which remain relatively high despite the recent fall from pre-war levels), according to Fadi 'Abbud, the head of the industrial association. As an importer of oil, Lebanon is not afforded the luxury of providing for its own energy needs with domestic supplies like most of its neighbors. The war premium which has inflated oil prices and the volatility of oil prices which will remain as long as the war continues will therefore hurt the Lebanese economy. As for trade, Lebanese exports to Iraq total some $150-200mn per annum out of gross exports of around $1bn. In addition Lebanese contracts with Iraq worth $150mn have been suspended. However, Lebanon has so far benefited from Gulf tourism in the first two months of 2003, and is likely to continue doing so for the rest of the year given increasing restrictions on entry visas for Gulf visitors to the US and some European countries.

Palestinian Territories
The aid-dependent Palestinian economy is expected to suffer directly as a consequence of the Iraq conflict. Muhammad Ishtayyah, director-general of the Palestinian Economic Council for Development and Reconstruction (PECDAR), told Palestinian daily al-Ayyam that international aid to the Palestinians has slowed as donor countries wait to assess the amount of aid needed for reconstruction in Iraq. This has resulted in the World Bank postponing the establishment of a $100mn fund to support the private sector, he noted. He also said that the US might pressure Arab countries to pay the costs of the war in Iraq as occurred in 1991
which would decrease the amount of aid available for the Palestinians. However, this seems an unlikely prospect given the hostility towards the war throughout the Arab world. In short, the war in Iraq is likely to have only negative repercussions for the Palestinian economy which is already in a desperate situation after more than two years of intifada against Israel.

Morocco
In Morocco the direct loss to the economy as a result of the war is estimated at some $1.6bn, while indirect losses are expected to be in the region of $1.2bn. Both tourism and foreign direct investment are likely to be affected. The government will need to find domestic and foreign financing to cover $2.7bn ($1.2bn in government debt and $1.5bn in fiscal deficit), but has also signaled its intention to use its foreign reserves of some $11bn to cover any shortfall. Independent think-tank Centre Marocain de Conjoncture (CMC) has revised down its GDP growth forecast for the year from 5.8% to 4.1% (against a government forecast of 5.5%), and says that the negative impact will mainly be felt in construction and infrastructure spending and in services. However, following heavy autumn rain, officials see a good performance from the agricultural sector (the traditional engine of the Moroccan economy)counterbalancing much of the negative effect of the Iraq crisis.

Quelle: MEES

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