Politics and Governance

On December 1, the EastWest Institute (EWI) and the Center for Applied Research in Partnership with the Orient (CARPO) hosted the ninth “Brussels MENA Briefing”—a series of after-work briefings on the Middle East and North Africa (MENA) region—on “Kuwait and the post-Sheikh Sabah Era.” 

Speakers included Vice Admiral (ret.) Ahmad Al-Mulla, advisor to the Kuwaiti Ministry of Defense, and Dr. Courtney Freer, assistant professorial research fellow at the Middle East Center of the London School of Economics. Well-known experts on the Persian Gulf region and members of the European policy community virtually attended this briefing, which was held under the Chatham House Rule.

Speakers began by highlighting the main accomplishments of Kuwait’s late Sheikh Sabah Al-Ahmad Al-Jaber Al-Shabah. Among them, his efforts towards women empowerment, strategic development policies and a neutral foreign policy aimed at protecting Kuwait from conflicts in its immediate neighborhood stood out for the speakers—in particular, Kuwait’s neutrality as a country located in the “triangle of danger” between Saudi Arabia, Iraq and Iran. Many top officials perceived Sheikh Sabah as a “humanitarian leader” with Kuwait being on the forefront of financial aid and the coordination of donor conferences for countries in conflict. 

Both speakers held that the legacy Sheikh Sabah leaves behind cannot be filled by his successor and half-brother Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah alone; the entire Kuwaiti political establishment must invest in continuing the path outlined by the late Sheikh Sabah. Speakers noted that Sheikh Nawaf has left the Kuwaiti cabinet untouched—an important indicator for demonstrating his commitment to ensuring continuity.

Among the most important challenges ahead, speakers emphasized the need to tackle comprehensively endemic corruption in both the private and public sectors . The economic transformations in light of the country’s demography, the changing geopolitics of energy and the severe impact of the COVID-19 pandemic on Kuwait’s various business sectors require strategic and long-lasting readjustment policies.  

One speaker observed that Kuwait’s parliament is representative of the ethnic and sectarian diversity of the nation, a unique characteristic that ought  to be safeguarded. Participants held that this domestic pluralism entails a pluralistic foreign policy approach, which seeks to balance conflicting interests. This diversity is illustrated in the country’s tolerance of the political presense of the Muslim Brotherhood, as well as its leniency towards  a powerful Shia parliamentary faction. Both experts argued that these disparate  political fractions impact the country’s foreign policy—for instance, in its overall pan-Arab outlook, as well as its continued support for the Palestinian cause. 

Considering the country’s efforts to “nationalize” the Kuwait private and public sector, one speaker pointed out that it remains to be seen whether this process will change public political attitudes, impacting the future composition of the parliament. Given the importance of this process, both speakers held that Sheikh Nawaf will be well-advised to not view his reign as a one-man show, but to seek the involvement of Kuwait’s entire political class.

Dates for upcoming Brussels MENA Briefings:

Tuesday, February 2, 2021: Topic to be confirmed

Event Reports from Previous Briefings:

The Biden Administration’s Middle East Policy and Transatlantic Relations

The Economic Dimension of the Conflict in Yemen 

Jordanian Foreign Policy in Light of Regional Geopolitical Shifts

How to Rescue Sudan’s Transition Process?

A New Iraqi Government in Place: Challenges and Opportunities for Iraq in its Neighborhood

The Status Quo of the Libyan Conflict: Is the Berlin Process Obsolete? 

Post-Sultan Qaboos Oman: Transition Opportunities and Challenges

Iran After Parliamentary Elections

On November 30, the EastWest Institute (EWI), together with its partners at the German Chambers of Commerce in Algiers and Casablanca (AHKs), held a webinar entitled “The Startup Industry: Challenges and Opportunities for Cooperation”—the fifth in a series of virtual meetings as part of EWI’s ongoing Algeria-Morocco Business Dialogue. The webinar brought together six entrepreneurs, three Algerian and three Moroccan, to take part in a cross-border business dialogue aiming to promote greater economic connectivity between the two countries in the startup sector.

The Startup Industry

Startup initiatives are a relatively new phenomenon within the Maghreb, with regional countries varying their measures to cultivate a thriving ecosystem for young businesses. Numerous startups have sprung up throughout the region recently, especially the three main countries of Algeria, Morocco and Tunisia, as innovative leaders pursue sustainable and inclusive approaches to their respective country’s development. As a new generation of workers begin to graduate from university, the region is experiencing a growing trend of fresh graduates increasingly seeking opportunities in the private sector instead of applying to safer governmental jobs in the public sector—a characteristic of previous generations. This growing entrepreneurial spirit not only needs to be harnessed, but must be actively encouraged so regional states can diversify their markets and explore new streams of revenue.  

The respective startup ecosystems in Algeria and Morocco are experiencing disparate levels of success. In Algeria, there remains plenty of room for government intervention in terms of promoting innovation and seeking means to attract investments. Local investors are familiar with bureaucratic hurdles to conducting business in the country, resulting in the negative conviction that the local startup ecosystem lacks the capacity to scale up. Morocco, on the other hand, boasts a more vibrant startup ecosystem with the country increasing its Global Entrepreneurship Index (GEM) from 5.6 to 8.8 percent between 2017 and 2018. Nevertheless, this is offset by the fact the country failed to continue this trajectory into 2019 as a lack of promotion and a culture of risk-aversion hindered the country’s burgeoning startup industry. 

Local Experience

The webinar assembled startup entrepreneurs from across a wide spectrum of business interests, including renewable energies, logistics management, communications and IT and digital solutions. Each of the startups represented differed in their business life span, ranging from eight years to only one month. This enabled EWI and its partners at the AHKs to ask a range of questions pertaining to the different stages of development required for founding a new business in the region, as well as the trials and tribulations which inevitably accompany such an endeavor in the world’s least economically integrated region. 

Consistent with previous webinars under the framework of  the Algeria-Morocco Business Dialogue, participant testimonies affirm that opportunities for business collaboration across the border are rare. All the entrepreneurs present discussed their various projects in Europe, sub-Saharan Africa and North America, yet not one participant had any current avenues of business in the respective neighboring country. From an economic perspective, the current state of affairs is immensely counterproductive given the proximity, similarities in culture, shared desire of young graduates to develop startups, and market complementarity between the two countries. 

It must be noted however, that this dearth of bilateral trade is not a result of lack of trying from the perspective of business leaders on the ground. During the webinar and in previous project meetings, participants attested to a distinct lack of knowledge and trust in the respective markets on each side of the border. With this in mind, EWI, the AHKs and the participants of the webinar composed the following policy recommendations to help identify means to kickstart better commercial relations. 

Recommendations

Pool resources: A major concern for one of the participants who worked in digital solutions for the transport sector was the incurred cost due to a lack of synchronization between companies in the same industry. Companies on either side of the border possess the capacities to make operations more cost-efficient and environmental. However, to move beyond this current state of affairs, Algerian and Moroccan organizations need to pool resources to overcome this fragmentation.

Foster a more cooperative culture: In order to pool resources and develop more efficient and environmentally friendly operational practices, local companies must address the lack of trust, which currently hinders the region unlocking its economic potential. Fostering a culture of cooperation requires the sharing of information so organizations on either side of the border understand each other’s markets and learn how to navigate administrative bottlenecks and bureaucratic hurdles. 

Build on current successes: Despite the dire analyses of multiple international institutions regarding regional integration, there are some cooperation success stories in the Maghreb. The energy sector presents one of the flagship cooperation sectors in the region. This should act as a launching pad to explore new avenues of cooperation, such as joint regulation or an interconnected network of production lines. Startups could offer local assistance in developing these initiatives. 

Learn from the Tunisian model: Both Algerian and Moroccan participants praised Tunisian initiatives in the startup industry, which could act as a successful regional model in their respective countries to develop a healthier ecosystem for upcoming enterprises. Tunisian startups formed an association to harness their collective bargaining power to lobby the government in granting them economic subsidies and advantages. To date, there is no such Moroccan or Algerian union for startups to lobby for their collective needs. 

Encourage market access: The inability of both Algerian and Moroccan startups to found their own collective associations means young organizations often have to navigate their respective markets without any discernible structure or local administration. Private and governmental mistrust towards startups is a consequence of the lack of understanding in how startups operate. Market access can be encouraged by providing startups with financing and regulations tailored towards their particular needs. 

About the Algeria-Morocco Business Dialogue

Despite its vast potential, the Maghreb region is often cited as being one of the least economically integrated regions in the world. The Algeria-Morocco Business Dialogue project seeks to bring together Algerian and Moroccan business leaders from multiple business sectors with the aim of overcoming obstacles to bilateral trade between the two neighbors.

The dialogues center on topics vital to successful entrepreneurship in Algeria and Morocco such as food security, agriculture, healthcare, the impact of digitalization and new technologies and energy—with a particular focus on how to attract quality investment, ensure environmental protection and empower businesswomen.

COVID-19 has unfortunately had a detrimental effect on the overall operation and schedule of the project. Each meeting was envisioned as an in-person conference such as the first event on the agricultural industry, which took place as a two-day delegation to Berlin to attend the city’s Green Week—one of the world’s largest international agriculture trade affairs. Nevertheless, EWI has moved the project online in order to maintain the good momentum of the project generated in Berlin. Although this means the discussions between participants are less interactive, they proved no less intensive nor productive as the following policy recommendations attest.

Click here to read a French translation of this event report. 

Click here to read an Arabic translation of this event report.

Links to Reports of Previous Briefings:

Cooperation in the Automobile Industry

Women’s Empowerment and Entrepreneurship: Challenges and Opportunities

The Agricultural and Food Manufacturing Sector

The discussion, chaired by CRC's Dr. Ranj Alaaldin, will focus on the main challenges to stabilization and reconstruction, the future of democracy promotion in the region, reconciliation and peace-building and the role that international actors like the United States and Europe can play to constrain the fallout from conflicts and their second-order effects. 

Participants include EWI Vice President of the MENA Program Kawa Hassan, Frances Brown from the Carnegie Endowment for International Peace, Jomana Qaddour from Atlantic Council and Emad Badi from the Geneva Centre for Security Sector Governance.

Click here to learn more and register.

Read Hassan's remarks from the lecture, below.

Today, I will talk about the root causes that produced ISIS and other terrorist organizations in post-2003 Iraq and the outlook ahead.

I would like to begin my lecture with a very basic but nonetheless crucial question: how could a brutal, apocalyptical menace like ISIS succeed in occupying large swaths of Syria and Iraq during its heyday (from 2014 to 2017), impose its will on millions of people and make sextual slavery the norm in the twenty-first century?

The answer or answers are not as straightforward and simple as the question itself. Too many structural reasons—internal and external—could be identified for the rise and surge of ISIS:

• On a macro-political level, the post-colonial state in Iraq—and as a matter of fact, in Syria and other countries in the Middle East—dismally failed to produce a polity that is inclusive and respects basic human rights. The barbarism of ISIS leader and henchman, Abu Bakr al-Baghdadi, does not originate within a vacuum: it builds on and is the logical conclusion of decades of unimaginable brutality and human rights violations committed by Saddam Hussein, Hafez and Bashar al-Assad, Gaddafi and other dictators. ISIS is an authoritarian byproduct—a consequence, not a cause of the current catastrophe in the Middle East. The violent political culture in these states and prisons were, and still are, top universities for the graduation of the leaders and the rank and file of ISIS and other extremist groups. The only difference between ISIS and dictators is that ISIS meticulously documents and broadcasts its barbarism with pride;
• Sectarian, political and economic exclusion and marginalization of Sunnis by the post-Saddam political order;
• Systemic corruption of the post-Saddam ruling kleptocracy and the subsequent lack of good governance, rule of law, transparency and accountability;
• Intolerant and exclusivist educational curriculum pre- and post-2003;
• Political and military miscalculations and overreach by the U.S in the early years of the occupation; and
• Geopolitical jockeying by regional and international powers for influence that exploited the political vacuum and state failure after 2003.

With massive military, political and financial support from the global coalition against ISIS, the Iraqis managed to liberate Mosul and other areas previously occupied by ISIS. Militarily, ISIS has been significantly weakened, but not completely defeated. ISIS ideology is still very much alive and kicking.

The reconstruction of ISIS liberated areas and return of internally displaced persons (IDPs) pose daunting challenges. Recently, the Iraqi Ministry of Migration and Displacement announced that all IDP camps will be closed and their residents relocated by the beginning of 2021. Aid agencies warn that hasty closure of the camps will render 100,000 people homeless. 400,000 “ISIS families” face the danger of exclusion from reintegration efforts, and hence, stigmatization for the rest of their life. To date, there are no serious indications how Iraqi authorities will deal with 50,000 undocumented “ISIS children.” Lack of strategic, long-term and coordinated reconstruction planning hampers the return and reintegration of IDPs. All in all, these problems, in particular, the lack of policy for dealing with “ISIS families and children,” create a ticking time bomb scenario for Iraq and the international community.      

The hard-won “post-ISIS” stability and reconstruction opportunities in Iraq have been systematically undermined by the ubiquitous and endemic corruption of the post-2003 ruling elites. Iraq’s real problem is not ISIS, nor is it the Iran-U.S. regional rivalry and proxy conflict. Iraq’s key challenge is internal—the politically sanctioned corruption of the post-2003 ruling elites has whittled away the state from within to the extent that it is poised to crumble. The October Uprising of 2019 shook the system to its core. The youth-led protest movement has shown resilience in the face of brute violence by government and paramilitaries, but it also faces daunting internal and external challenges to change the system. 

The international attention given to Sudan’s normalisation with Israel has shown the country’s importance as a geostrategic site subject to regional rivalries in the Horn of Africa. But increased regional pressure on Sudan is endangering its transition towards an inclusive, civilian government following the peaceful popular revolution that led to the ousting of long-ruling president Omar Al-Bashir on 11 April 2019. This article will describe how regional interference in Sudan could destabilise the transitional process, with a specific focus on the rivalry between the ‘Arab Troika’ and the Qatar-Turkey alliance.

The Sudanese Revolution and Political Shifts

Following the ousting of Bashir in 2019, military and civilian leaders signed a power-sharing agreement which initiated a transition towards a democratic government, under the guidance of Prime Minister Abdalla Hamdok and Chairman of Sudan’s ruling Transitional Military Council, Lieutenant-General Abdel Fattah al-Burhan. This transition signified a shift in Sudan’s foreign policy.

During Bashir’s 30-year rule, Sudan enjoyed close relationships with Turkey and Qatar. This included a deal between Turkey and Sudan that gave Ankara control over the Suakin Island in the Red Sea, a deal which has since been suspended. However, this did not prevent Bashir from moving closer to the UAE and Saudi Arabia from 2014 onwards, in the hopes of bettering relations with the US and securing financial gains from the Gulf. When the Qatar diplomatic crisis erupted in 2017, Bashir decided to remain neutral, a move that accelerated Sudan’s eventual economic collapse.

Click here to read the full article on the LSE Middle East Centre Blog.

Click here to read an Arabic translation of the article.

Other speakers included EU Ambassador to Iraq, Martin Huth; Netherlands Ambassador to Iraq, Michel Rentenaar; Middle East Institute Non-Resident Scholar, Hafsa Halawa; and MENA Special Advisor at the Center for Humanitarian Dialogue, Maria Fantappie, who moderated the discussion.

Click here to watch the full webinar. Hassan’s comments occur during the time interval 35:49-45:42 and begin again at 1:09:01. Click here to read an Arabic translation of Hassan's comments. Read excerpts from his comments, below.

I will talk about one, specific dimension of the EU's Iraq strategy, namely supporting Iraq’s good relations with its neighbors. On January twenty second 2018, almost three years ago, the EU adopted a new Iraq strategy. One of the objectives of this strategy is to support regional dialogue, help Iraq to foster diplomatic engagement with neighboring countries, and encourage Iraq’s neighbors to play a constructive role, to sustain and increase their support to Iraq. Three years on, this strategic objective is more than ever relevant for Iraq and the EU, but it may need to be updated and operationalized to reflect internal, Iraqi and external, regional developments. 

Given systemic corruption and mismanagement, coronavirus pandemic and low oil prices, post-2003 Iraq is on the verge of economic collapse. Without real reforms, Iraq is on the brink of the transition from a fragile state to a failed state. This transformation, should it occur, will be disastrous for Iraq and its neighborhood, and will negatively impact the interests of the EU and its member states as it will undoubtedly unleash waves of migration in the region and towards the EU, will provide ISIS with a new lease of life, and further deteriorate regional security.

In light of these developments, the EU is uniquely well positioned to help Iraq become more independent from external actors especially Iran and the US by developing balanced, win-win political and economic relations with its neighbors. One of the key takeaways of our joint project at EastWest Institute with our partner organization CARPO entitled “Iraq and Its Neighbors,” and supported by EEAS is that across the board in Iraq and the region the EU is considered and perceived as a neutral player without a negative agenda or problematic track record. In the current polarized and fragmented middle east, this neutrality is a unique, strategic asset that assists the EU to pursue its strategic goal of fostering bilateral and regional dialogue focused on the future of Iraq as an independent state. 

In the 1980s during the Iraq Iran war, Saddam Hussein portrayed Iraq as a strategic buffer against Iran, or in Saddam’s terminology Iraq was “Albawaba Alsharqya” or the Eastern Gate [against Iran]. Since 2003, Iraq has become a strategic battleground for proxy and direct conflicts between Iran and the US. History has shown that both regional roles have proved to be disastrous for Iraq and beyond.

Therefore, there is a need for the development of a third way. The EU can help Iraq become a prosperous, positive actor, a meeting, neutral point between and for regional rivals, or what we can call a positive, strategic balancer as opposed to a strategic playground between Iran and the US, and a strategic buffer against Iran.

To translate this analytical concept into a practical policy, the EU can implement a two-prong strategy. Internally, It can engage and encourage key, powerful Iraqi players on official and unofficial levels to achieve a minimum internal consensus that should aim at supporting Iraqi government’s goal of developing balanced relations with neighboring countries in particular Iran and Saudi Arabia. Externally, the EU can engage the key Iraqi neighbors to develop balanced economic and political relations with Iraq, instead of simply seeing Iraq as a market for their products and hence correct the current imbalance trade ties with Iraq, and secondly to stop using Iraq as a theater to settle scores with their rivals.

On November 17, the EastWest Institute (EWI) and Center for Applied Research in Partnership with the Orient (CARPO) hosted their eighth “Brussels MENA Briefing”—a series of after-work briefings on the Middle East and North Africa (MENA) region—on the recent election of Joe Biden as U.S. president-elect and the changes his administration could bring to both the United States’ own Middle East policy, as well as its transatlantic relations with the European Union (EU) vis-à-vis the Middle East. 

Speakers included Cameron Munter, former U.S. ambassador and former president of the EastWest Institute, and James Moran, associate senior fellow at the Center for European Policy Studies (CEPS). The discussion was moderated by Wael Abdul-Shafi, EWI MENA program associate. 

Biden’s election was received with a huge sigh of relief by the international community, including in Europe. The speakers stated that a Biden administration will likely make efforts to re-establish relations with traditional allies, while rebuilding the damage done under Trump’s “America First” policy. 

As the experts noted, Biden’s strategy in the Middle East will probably be restorative rather than innovative. Preoccupation with national issues, such as the COVID-19 pandemic, as well as an unwillingness by the American public to support strong military interventions in the Middle East, will most probably lead to a decreased role abroad for the U.S. military. Instead, Biden will likely emphasize his support for a multilateral approach to the region, one speaker suggested. It is therefore expected that one of his priorities will be reinstalling the Joint Comprehensive Plan of Action (JCPOA). Although, as pointed to by one speaker, the question of Iran’s willingness to rejoin remains to be seen.  

The speakers mentioned that the most daunting challenge facing Biden’s administration is to reevaluate and determine U.S. foreign policy towards Israel and Turkey. Although the discussants elaborated that while Israel will remain a strong ally of the U.S., Biden will also be willing to deal with the UAE and Bahrain—likely giving more attention to the Palestinian case, for example, by reviving U.S. aid to Palestinians in the West Bank and Gaza. Considering Turkey, both speakers foresee the need for a delicate balancing act and close coordination between the EU and the U.S., as Turkey plays an important role in the EU’s migration policy, and the Eastern Mediterranean crises remains unresolved.

During the briefing, Biden was also predicted to take on a tougher stance towards specific Gulf countries, emphasizing a concern for the protection of human rights and democracy. This focus would also affect Egypt, one of the experts explained, where President Sisi could be encouraged to give more space to civil society. One speaker suggested that the U.S. might be able to play an important role in Yemen, where, by working together with the EU within the context of the UN-led peace efforts, it could achieve some sort of breakthrough without upsetting other major players on the international scene, such as Russia. 

Although the Biden administration was received with much optimism in the EU, a word of caution is in order according to one discussant, as a democratic administration will need some time to develop and move ahead with its initiatives. Therefore, it is important for the EU to develop a degree of strategic autonomy. One speaker added that the U.S. will need to adapt to a European continent that has changed. With Britain having left the EU, the U.S. can no longer rely on its traditional ally. Rather, it will need to invest in relations with member states such as France and Germany, who have their own views on the Middle East. 

That being said, the EU will see some familiar faces in the new administration from the Obama presidency. The two speakers concluded on a hopeful note, stating that this offers the possibility of fruitful cooperation in the Middle East in the four years to come. 

About the Brussels MENA Briefings

The Brussels MENA Briefings are in-depth round-table discussions on topics of current significance in the MENA region hosted by EWI and CARPO bimonthly, the first week of every second month. As in-person-briefings are impossible due to COVID-19, EWI and CARPO have temporarily turned this series into a monthly webinar. Please note that attendance is by invitation only.

Should you be interested in being considered for the invitation list, kindly send an email to Desirée Custers mentioning your name, affiliation and geographical or thematic area of interest and expertise in the Middle East.

Dates for upcoming Brussels MENA Briefings:

Tuesday, December 1, 2020: Kuwait

Event Reports from Previous Briefings:

The Economic Dimension of the Conflict in Yemen 

Jordanian Foreign Policy in Light of Regional Geopolitical Shifts

How to Rescue Sudan’s Transition Process?

A New Iraqi Government in Place: Challenges and Opportunities for Iraq in its Neighborhood

The Status Quo of the Libyan Conflict: Is the Berlin Process Obsolete? 

Post-Sultan Qaboos Oman: Transition Opportunities and Challenges

Iran After Parliamentary Elections

The meeting kicks off a year-long, Track 2 dialogue series, aimed at exploring avenues for military-to-military cooperation between the United States and Russia on urgent security and strategic issues.

American participants included General (ret.) George W. Casey, General (ret.) Curtis M. Scaparrotti and Ambassador Karl W. Eikenberry. Russian participants included Lieutenant General (ret.) Evgeny P. Buzhinsky, Colonel General (ret.) Viktor Yesin and Major General (ret.) Pavel Zolotarev.

As U.S.-Russia relations continue to deteriorate, the meeting afforded participants a timely opportunity to exchange perspectives on the major geopolitical obstacles hampering bilateral military-to-military cooperation, as well as assess issues of mutual concern and interest, including arms control, nuclear non-proliferation and emerging technologies.

Participants agreed that the current state of U.S.-Russia relations is characterized by tension, competition and higher levels of unpredictability and mistrust; however, as compared to the Cold War period, communication and interaction between both militaries is at an all-time low. Discussions underscored that this vacuum in communication poses significant risks, and there remains a greater need for dialogue between Russia and the United States in order to avoid miscalculation and misunderstanding, which can escalate into conflict. 

Co-moderated by Bruce McConnell, EWI president, and Vladimir Ivanov, director of EWI’s Russia program, the meeting also allowed participants to share their respective experiences working with American and Russian colleagues throughout their distinguished careers.

Future meetings of the U.S.-Russia Military-to-Military Dialogue will be organized for later this year and next year.

The dialogue was made possible by the generous support of Carnegie Corporation of New York.

The seventh edition of the Brussels MENA Briefing, co-hosted by the EastWest Institute (EWI) and the Center for Applied Research in Partnership with the Orient (CARPO), in partnership with the Rethinking Yemen’s Economy initiative, was dedicated to the economic impact of the ongoing conflict in Yemen—a war that started in 2014/15 and has since turned the country into the world’s worst humanitarian crisis according to the UN. 

The Rethinking Yemen’s Economy initiative aims to contribute to peacebuilding and conflict prevention, economic stabilization and sustainable development in Yemen by building consensus in crucial policy areas through engaging and promoting informed Yemeni voices from all backgrounds (the "Development Champions") in public discourse on development, economy and post-conflict reconstruction in Yemen, and by positively influencing local, regional and international development agendas. It is implemented by CARPO, DeepRoot Consulting and the Sanaa Center for Strategic Studies and is generously funded by the European Union and the Embassy of the Kingdom of the Netherlands to Yemen.

The speakers of this briefing were Laila Tawfik Anaam, development champion, co-founder and managing director of the Yemen Loan Guarantee Program at the Social Fund for Development in Yemen, and Rafat al-Akhali, founder and managing director of DeepRoot Consulting. CARPO President Marie-Christine Heinze moderated the session.

When discussing the economic impacts of the war in Yemen, what needs to be emphasized first, the speakers argued, is the plight of the Yemeni population. 80 percent of Yemenis are living in poverty with approximately 70 percent of them lacking access to water, sanitation and health care. This leaves 24.3 out of 29 million Yemenis in need for humanitarian aid. A spike in unemployment further complicates the living conditions, particularly among the youth, where unemployment is estimated at 50 percent.

One of the speakers explained that approximately 40 percent of Yemeni households have lost their primary source of income in both the private and public sectors. It was emphasized that fisheries and agricultural entrepreneurs, in particular, had been hit hard by the devastating effects of the war.

In addition to that, it was outlined that the banking sector has effectively collapsed and that the monetary system has become dysfunctional. Both speakers referred to the severe consequences caused by the split of the Central Bank of Yemen, which has led to conflicting monetary policies. It was highlighted that those government agencies that provided regular income for both public servants, as well as recipients of social welfare have either halted or interrupted their services.

The experts shed light on the grim prospects for small and medium-sized enterprises (SMEs) in Yemen, which are heavily impacted by closures of and restrictions at sea and airports, as well as land border crossings, which make any form of cross-border trade extremely difficult and cost-intensive. Mobility within Yemen has been reduced massively, it was pointed out, because of the country’s infrastructure—i.e., roads, bridges, tunnels, etc.—being destroyed during the war and because of the high number of checkpoints and lines of conflict that need to be crossed.

Basic needs of companies, such as electricity, pose serious challenges for entrepreneurs, it was explained. They are dependent on private generators, which too often cannot operate due to fuel shortages in the country.

What SMEs in Yemen direly need, according to one speaker, is a legal framework which enables them to operate at sea and airports and border crossings, an overall easing of taxation and the establishment of supporting microfinance institutions with lending capital. It was reiterated that the agricultural sector (fishery, livestock, etc.) should be prioritized in this effort as this would help to address food insecurity.

In general, the war should be seen through the lens of economics, one speaker argued. It is a battle for the “commanding heights” of the country’s economic resources and institutions. It was highlighted that there are currently no real economic incentives for any party to stop the war.

It is important, it was established, that any peace agreement for Yemen entail a clear roadmap for economic stability. The ongoing UN-led peace efforts, it was argued, fall short of addressing the economic drivers of the conflict.

What needs to be put on the agenda, one speaker urged, is the need to re-establish one Central Bank, ensure the resumption of the payment of public sector salaries, define a way to reach an agreement on how to allocate natural resources revenues, and to clearly outline the path towards reconstruction and economic recovery.

While this is a major task, one speaker recalled precedents and blueprints of similar approaches in the past, namely the Dayton Accords and their focus on the Central Bank board and governor in Bosnia and Herzegovina; the Accra Agreement, which entailed a Governance Reform Commission and a Contract and Monopolies Commission; and the case of Angola, where economic power-sharing in the Cabinda Province was part of the conflict settlement strategies.

It was recommended by both speakers that for the European Union to play a role in conflict-resolution in Yemen, these economic factors not only serve as important issues to raise, but as points of departure for European initiatives to support the Yemeni process through diplomacy, aid, investment, capacity-building and efforts for reconstruction and reconciliation.

About the Brussels MENA Briefings

The Brussels MENA Briefings are in-depth round-table discussions on topics of current significance in the MENA region hosted by EWI and CARPO bimonthly, the first week of every second month. As in-person-briefings are impossible due to COVID-19, EWI and CARPO have temporarily turned this series into a monthly webinar. Please note that attendance is by invitation only.

Should you be interested in being considered for the invitation list, kindly send an email to Desirée Custers mentioning your name, affiliation and geographical or thematic area of interest and expertise in the Middle East.

Dates for upcoming Brussels MENA Briefings:

Tuesday, November 3, 2020

Links to Reports of Previous Briefings:

Jordanian Foreign Policy in Light of Regional Geopolitical Shifts 

How to Rescue Sudan’s Transition Process?

A New Iraqi Government in Place: Challenges and Opportunities for Iraq in its Neighborhood

The Status Quo of the Libyan Conflict: Is the Berlin Process Obsolete? 

Post-Sultan Qaboos Oman: Transition Opportunities and Challenges

Iran After Parliamentary Elections