In contrast to Iran, the Arab world has so far recorded relatively few COVID-19 infections. While Iran has nearly 25,000 confirmed cases, Arab countries have only reported less than 4,000 combined infections as of March 24. Yet, it is not safe to conclude that the Arab world will be spared the worst of the coronavirus pandemic for at least two reasons.
First, many Arab regimes may be concealing the full extent of the virus in their countries. The Egyptian government, for instance, originally dismissed reporting that the coronavirus had arrived in Egypt as “false rumors.” Then, displaying its characteristic lack of transparency, it downplayed a COVID-19 outbreak on a Nile River cruise that reportedly accounted for at least dozens of cases worldwide. Later, it was forced to acknowledge the spread of the virus within its borders, but officials claim (as of March 24) that there have been just 366 confirmed infections in the country—including several high-ranking generals, two of whom have died. Independent experts estimate the actual infections to number at least 6,000, however. And in the war-ravaged Arab countries—Libya, Syria, and Yemen—it is highly unlikely that local authorities have the resources or capacity to test potential patients, let alone to produce an accurate tally of cases nationwide.
The second reason why the Arab world is unlikely to escape a severe hit from COVID-19 is that, even if regional governments somehow manage to contain the immediate public health crisis, the pandemic could still plunge the region into a severe economic crisis. The global economy is likely already in a recession, and the world’s two largest economies—the United States and China—are under enormous strain. Economists are predicting China’s economy will contract 6 percent in the first quarter, while the U.S. economy is projected to decline between 14 and 30 percent in the second quarter. Recessions in China and the United States—important sources of foreign direct investment in Arab countries and drivers of demand for oil, the region’s most valuable asset—will have quite an adverse effect on Arab countries.
POSSIBLE ECONOMIC CONSEQUENCES
On top of this global downturn, Arab economies that were already struggling before coronavirus—which is to say most of them—will have additional vulnerabilities resulting from the pandemic. The oil and gas revenues on which several Arab countries rely directly or indirectly are under pressure not only due to weakened global demand but also because of Saudi Arabia’s reckless oil price war with Russia, which has flooded the market with additional supplies, further depressing the price and profitability of this industry. Oil prices have already dropped from around $50 per barrel to the $20 per barrel range. While major oil producers in the Gulf likely have sufficient financial reserves to weather this crisis, other countries with lower reserves, like Algeria, will be in a tougher position.
Closely related to oil prices is the economy of labor remittances—transfers of earnings from Arabs working in the wealthy Gulf states to their less wealthy home countries (Egypt, Lebanon, et al.). Furthermore, tourism, important to several Arab nations, is being disrupted by travel restrictions (and likely will take a big hit from the global downturn as well).
In Egypt, for instance, tourism and labor remittances each account for more than 10 percent of GDP. If these sectors contract, Egypt’s recent macroeconomic gains, including strong growth rates and reductions in debt, could be wiped out quickly. Like Egypt, Jordan depends on tourism and remittances for a combined 20 percent of its economy. With a debt-to-GDP ratio in excess of 94 percent, the Jordanian government was already on the verge of an economic crisis; coronavirus could tip it over the edge. For Lebanon, whose economy had reached the point of insolvency before the COVID-19 outbreak, declines in the tourism and remittance sectors (more than 30 percent of its GDP) could make it nearly impossible for the Lebanese government to stabilize the financial situation. Dubai, the glitzy Gulf emirate, is also dangerously exposed to the economic dislocations of the coronavirus epidemic, with 20 percent of its GDP coming from travel and tourism.
In Syria, Yemen, and Libya—countries already suffering from humanitarian crises—the coronavirus may have the most immediate and devastating impact, cutting off vulnerable populations from life-saving support. As just one example, the nearly 1 million people recently displaced by fighting in Idlib Governorate could find themselves without a lifeline.
In the past, the less wealthy Arab countries could rely, to a degree, on external backers—such as Saudi Arabia and the United Arab Emirates (UAE)—to buttress them during emergencies. In 2009, Abu Dhabi, the wealthiest of the UAE’s seven emirates, rescued Dubai, another one of the emirates, with a $10 billion bailout when the financial crisis brought the latter to its knees. In 2011, Jordan received more than $10 billion in aid from Saudi Arabia and the UAE to inoculate it from the Arab uprisings spreading across the region. In 2013, following the Egyptian army’s coup against President Mohamed Morsi, Saudi Arabia, the UAE, and other Gulf countries provided the new military-backed regime in Cairo in excess of $20 billion in support, which helped to avert a foreign currency crisis. And, less than two years ago, Saudi Arabia and the UAE pledged $10 billion in support to Bahrain, a country teetering on the brink of insolvency, as it began implementing austerity measures.
What makes this crisis different is that it comes at a time when Saudi Arabia and the UAE are arguably less able to bail out friends than at any other point in recent years. While Saudi Arabia still has $490 billion in foreign currency reserves, the Kingdom is projected to run a budget deficit of $100 billion with oil at its current price, which would put enormous strain on the Saudi economy. The UAE, for its part, has $100 billion in reserves, but has already committed $27 billion to stimulate the economies of those emirates most affected, including Dubai. Furthermore, as rulers in both countries have sought to cut back on domestic social spending, the Saudi and Emirati publics may be less supportive of bailing out neighboring countries while they have to sacrifice at home. Even Qatar, which also has assisted poorer Arab countries and Gaza, has seen its economic growth slow due to the Saudi-Emirati blockade and declining natural gas prices.
It is not that the rich Gulf nations will be powerless to confront the impending economic crisis. Instead, for the first time in recent memory, there will be real limits on their ability to play the regional economic savior. If Saudi Arabia chooses to rescue Egypt, this may mean that it cannot help Bahrain. Or, if Abu Dhabi has to spend billions on Dubai, there may not be much left for Jordan. And whatever Saudi Arabia and Abu Dhabi spend on propping up these countries will almost certainly mean less for others already in severe economic crisis, such as Syria, Yemen, or Lebanon. Simply put, the potential size of the coming economic crisis in the Middle East is likely to outstrip the resources even of these wealthy petrol states. The Gulf economic backstop that has shored up several regional states could disappear, and countries like Egypt could go from too big to fail to too costly to save.
POSSIBLE GOVERNANCE CONSEQUENCES
If Saudi Arabia and Abu Dhabi are unable to rescue their regional allies, the political consequences could be as momentous as the humanitarian ones. Given that these countries have mostly invested in bolstering authoritarian regimes, not those with democratic aspirations, the region’s most repressive governments are likely to be the hardest hit.
Does this mean that coronavirus could lead, directly or indirectly, to democratic openings in the Middle East? It’s possible. In the immediate term, the coronavirus is set to hamper if not end popular mobilization. In Algeria, Iraq, and Lebanon—countries that had seen consistent anti-government demonstrations last year—COVID-19 is interrupting the steady pace of mass protests. But when the immediate health crisis passes and Arab countries are left with the economic fallout, and with anger over their leaders’ mismanagement of the pandemic, the probability of organized public discontent may rise. As just one example, it is quite possible that a regime like President Abdel Fattah al-Sisi’s in Egypt could prove more susceptible to domestic discontent if its external backing were to dry up and the economic situation became even more difficult for average Egyptians. Indeed, the coronavirus appears poised to inflame the very grievances that contributed to the Arab Spring and subsequent uprisings in places like Algeria and Sudan: economic mismanagement, neglect of the public interest, and corrupt, ineffectual governance. Amid rising unemployment and poverty, public frustration with rights-abusing, incompetent, or self-dealing governments is likely to increase. And these authoritarian regimes will have fewer resources to buy off dissent and co-opt elites.
On the other hand, Arab governments could exploit the public emergency created by coronavirus to enhance their already vast powers. Curfews and other restrictions on free movement can appear not only understandable but wise in a genuine crisis. But, unfortunately, repressive regimes do not make a habit of surrendering new authorities once they have gained them. Extraordinary measures taken in response to an emergency become normalized too easily, laying the foundation for new forms of repression. Arab regimes have been masters at capitalizing on crises, real and imagined, to increase their domestic control. They have seized on wars with Israel, terrorism, and Iranian adventurism to dismantle rights and to remove obstacles to their exercise of absolute power. The coronavirus pandemic will not necessarily be any different. On a slightly different note, this challenge could also be very dangerous for the Arab world’s new democracy, Tunisia, whose fledgling government has already been struggling with a weak economy. (Yet, Tunisia’s government appears to have acted somewhat more quickly and more transparently than many of the region’s authoritarian states. If Tunisia gets through the crisis better, this could be an important, concrete demonstration of the advantages of democratic governance.)
As both scenarios—growing pressure for change and deepening repression—are plausible, it remains to be seen whether coronavirus ultimately will weaken or strengthen the Arab world’s authoritarian regimes. Yet, it seems unlikely that the pandemic will have no impact on governance in the region. A public-health-cum-economic crisis as severe as this will invariably leave its imprint. The precise contours of that impact will depend not only on the severity of the pandemic, but also on the responses of many actors, both local and international. Not even the United States and other Western countries may be in a position to help Arab countries recover from this crisis. But, if they are, they should not lose sight of the multifaceted nature of the pandemic. Coronavirus is not just a crisis of public health or the economy. It is also one of politics and governance, including the reliance on outmoded and highly unequal economic models and political systems designed more to shield those in power than to solve problems. And any strategy to cope with this emergency that does not place the Arab world’s political dysfunctions front and center is destined to fail.
1. Saudi Arabia would need oil prices of $85 per barrel to achieve a balanced budget at its current level of spending.