G8 plans to help Arab Spring economies
Washington, May 22, 2012
Industrialised nations have stepped up plans to help countries swept up in the Arab Spring rebuild their economies through more access to international credit markets, investment and trade, a senior US State Department official said.
Undersecretary of State Robert Hormats said while headlines from a G8 leaders' summit at the weekend focused on the economic crisis in the euro zone, the meeting also underscored efforts needed to stabilise the transition economies of Egypt, Libya, Jordan, Morocco and Tunisia.
The G8 launched the so-called Deauville Partnership last year, including global lenders such as the IMF and World Bank, after uprisings in Tunisia, Egypt and Libya ended decades-long dictatorships and protests prompted political reforms in countries such as Morocco and Jordan.
Hormats said there had been political and economic advances in the countries since the Arab Spring events, but financial conditions were still challenging and countries needed to export more and attract foreign investment.
'This meeting... was designed to give political support to the countries and also recognise we need to continue to build,' he told Reuters.
'Things are changing but they still have big financial challenges and need resources. The fact that there is economic weaknesses in their biggest Mediterranean markets is not helpful to them,' he added, referring to the euro zone economic crisis.
The G8 agreed to create a capital markets access initiative to help the five countries tap international capital markets 'under reasonable financing terms' to meet their financing needs and allow government enterprises to invest in projects that create jobs, according State Department and US Treasury statements on Monday.
G8 donors also agreed to create a new transition fund to strengthen government institutions vital for economic development, they added.
The European Bank for Reconstruction and Development was also trying to change its charter to create a special fund worth $4 billion to invest in the region over the next three years, Hormats said.
'We'd like to get it done within the next month or so but certainly by September,' he said of the plans.
Hormats said further meetings around the Deauville Partnership would take place at a G20 leaders' summit in Mexico next month, on the sidelines of the UN General Assembly in New York in September, and at October meetings of the World Bank and IMF in Tokyo.
He said he would travel to Paris and Tunis over the next few days to encourage more investment and trade opportunities.
While budget constraints prevented the United States from committing new aid to the countries, Hormats said Washington could support through the United States Agency for International Development (USAID), the Export-Import Bank of the United States, and the Overseas Private Investment Corp.
Hormats said G8 efforts were also focused on improving transparency and accountability in the countries, which will help improve the business climate.
It would also facilitate the return under the Stolen Asset Recovery Initiative, or StAR, run by the World Bank and United Nations, of stolen loot stashed outside countries by former senior government officials.
Political turmoil across the Middle East and North Africa has translated into slower economic growth and forced some governments to spend billions of dollars to create jobs and counter rising costs to stave off further protests.
In addition, countries have been hard hit by the debt crisis in the euro zone, which has triggered global economic uncertainty and a slowdown in demand. Tourism, a major source of revenue for both Tunisia and Egypt, has been hammered, while worker remittances have fallen sharply.
Egypt is currently in talks with the IMF to finalise a $3.2 billion loan although analysts have put the country's financing needs at about $15 billion. The Fund has said it could provide $35 billion to help emerging Arab democracies. - Reuters