G8 steps up plans to aid Arab Spring economies: U.S. official

By Lesley Wroughton

WASHINGTON (Reuters) – Industrialized 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 State Department official said on Monday.

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 stabilize 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 recognize 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.

BOOSTING INVESTMENTS

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 U.S. 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 U.N. 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 finalize 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.

(Reporting by Lesley Wroughton; Editing by Lisa Shumaker)

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Posted on May 22, 2012, in Morocco News and tagged , , . Bookmark the permalink. 1 Comment.

  1. G8 Aid for Arab Spring is no more than another empty promise to add to Deauville’s failure.
    The reality of a sick Europe and G8 with it, is gradually surfacing and joining the fall of the aftermath of the Soviet Union turning into a Russian federation of chaotic mini-states.
    Europe failed to help itself let alone helping others. The ‘Arab/Amazigh Spring is the backbone of the world mineral resources and it is Africa and the ME that are maintaining Europe and the World and not the other way around in exchange for meagre returns which the MENA region is now rejecting, demanding better terms of trade and less corruption from western multinationals.
    G8 only shows the demise of Western economic power and the hypocrisy it generates through its empty rhetoric and failed promises. The helplessness of the West is becoming apparent not only in the failure to deal the collapse of Greece, the downfall of Spanish banking and the economic recession of most European countries including France, or dealing with Syria but more so the appeasement shown at this meeting in accommodating Iran, and rightly so, to develop its own nuclear energy. They unanimously gave the ‘Fingers up’ to the Arab/Amazigh Spring and Deauville hopes or perhaps, the other way around as they have already been snubbed by Libya.
    They defaulted in Deauville Plan and who is going to believe them that this new plan is different, or is the threat of the role of China in Africa motivating them more?
    G8 should be scrapped and replaced, not only by G28 but by a new G50 of the most performing economies in the world. European economic and financial management is no longer viable to give guidance, but Europe must adapt, just as it did by adopting Japanese skills to modernise its business management, organisation and production systems, so the emerging nations are giving a new economic outlook to how to manage macro- as well as micro-economics in a developing world, which Greece and Portugal are part of this developing world and need to adjust to it badly.
    It remains that the future is with the BRICS and other emerging nations within North Africa/Africa, the Middle East, Asia and South America and not the Old bankrupt European Continent and North America.
    Oxford, Dr Ben Kirat

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