awadallah3_MOHAMED EL-SHAHEDAFP via Getty Images_arableagueconference Mohamed El-Shahed/AFP via Getty Images

Shelter from the Middle East’s Perfect Storm

The COVID-19 pandemic threatens every region in the world, none more so than the Middle East. With oil prices plummeting and public-health costs poised to skyrocket, the Arab world must use this tragic occasion to forge a new cooperative regional order.

OXFORD – The COVID-19 pandemic has triggered a public-health emergency and a steep reduction in oil prices, which represents a perfect storm for the Middle East, where everything from salaries to subsidies are dependent on oil revenues. As in the past, the oil-price shock will inevitably spill over to non-oil-producing countries through reductions in official aid transfers and lower worker remittances, further eroding the fiscal cushions needed to cope with COVID-19.

Worse, the pandemic has hit the region at a time when it was already reeling from multiple crises. The Syrian tragedy continues, civil wars have been raging in Libya and Yemen, and the “Arab street” has been remobilizing. From Algeria and Sudan to Iraq and Lebanon, protesters are speaking out in unison against a development model that has produced only corruption and social instability.

The public’s perceptions are not unfounded. Though it is still characterized as a middle-income region, the Middle East has witnessed a worrying uptick in poverty and income inequality. A recent World Bank report shows that the share of the region’s people living in close proximity to violent conflicts increased from 6% to 20% between 2007 and 2017 – far exceeding the global average of 3%. The region now accounts for 40% of the world’s displaced people. With the world’s highest youth-unemployment rate, its bloated public sectors were already becoming increasingly difficult to sustain. Whether Iraq can even pay its civil servants’ salaries next month remains to be seen. And it is not alone.

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