The Middle Eastern Economy: Kick-Starting Growth

28.02.2017

During the seventh session of the Valdai Club's Middle East conference, titled " The Middle Eastern economy: kick-starting growth" experts discussed the possibilities of the normalizing the economic situation in the Middle East with the help of regional and external actors, as well as non-governmental organizations. According to the discussion's moderator, Leonid Grigoriev, Chief Adviser to the Head of the Analytical Centre under the Government of the Russian Federation, all Middle Eastern countries are characterized by quite noticeable social stratification and rapid population growth, which allows one to trace some general trends.

Taisuke Abiru, Senior Representative for Moscow at the Japan Bank for International Cooperation said that Japan is highly interested in stability in the Middle East. He added that more than half of oil imports to Japan comes from the region, with 30% coming from Saudi Arabia and 25% from the United Arab Emirates, with a high proportion of energy also coming from Qatar, Kuwait and Iran. Despite Japan's desire to increase diversification of its oil supply, dependence on Middle Eastern imports is extremely high.

Today, Japan is one of the major investors in the economic recovery process of Syria, as well as a significant supplier of humanitarian aid since 2012. Japan's role in the reconstruction of the region is also confirmed by the fact that the initiator and chairman of the Bank's regional development is Japanese. In addition, Japan is one of the main participants in the stabilization of the situation in Afghanistan.

Abdallah Al-Dardari, Senior Advisor for reconstruction and rehabilitation in MENA countries at World Bank Group and former Syrian Deputy Prime Minister for Economic Affairs named the amount of damage that caused to Syria's ongoing civil war. Only to return to the level of the Syrian economy in 2010 will require more than $ 1 trillion, and around 10 years, which even in the immediate cessation of the conflict plunge the country 17 years backwards in economic development. Stability and sustainable growth of the Syrian economy cannot be made with the help of only one country or even a combination of several countries, which makes the process of Syria's economic recovery in the full sense of the task of the entire international community. The success of the recovery process, according to Al Dardari, will ensure inclusion and involvement of civil society, as well as an open and tolerant state system.

During his speech, Gurkan Kyumbaroglu, Director of the Energy Policy Research Center at Bosphorus University stressed the duality, which energy reserves create for each country. Despite the opportunities for economic growth, if the funds from the sale of energy are not properly managed, the economy may cease to grow in other sectors. Additional difficulties for the development of the economies of the Middle East create a high level of credit risk.

At the same time, according to experts who participated in the discussion, it is the factor of energy that is fundamental to economic growth in the region. Because of OPEC's agreement to cut oil production, there is a possibility of a slight increase in prices, which will have a positive impact on the economies of oil-producing countries.

In the context of economic stabilization in the Middle East, experts also discussed the creation of safety zones and prospects of building pipelines on the Syrian territory.​

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