BEIRUT: Arab banking officials warned that regional unrest and the world financial crisis had created an economic "state of emergency", and called for a special aid fund backed by wealthy Arab states to help recovery.
Speaking at the opening of the annual Arab Banking Summit in Beirut on Thursday, the chairman of the Arab Union of Banks Adnan Yousif said countries hit by pro-democratic protest movements, which have swept the region and forced out four long-standing rulers this year, would see severe economic losses.
"It is necessary to announce a state of emergency for Arab economies in order to reduce the impact (of recent unrest) on affected countries, and to lessen the impact of the world economic crisis on other Arab states," he said.
Some Arab central bankers said on Thursday that the global financial crisis presents an additional barrier to recovery as foreign investment dries up.
Foreign investment in the region has dropped to $4.8 billion for 2011 from $20 billion, according to the World Union of Arab Bankers, mostly due to regional instability.
Tunisia and Egypt, the first to topple their long-ruling presidents earlier this year, will have 2011 economic growth of zero and 1.2 percent respectively. Yemen, whose three-decade ruling President Ali Abdullah Saleh transferred his powers on Wednesday, will see its GDP shrink by 2.4 percent.
The economy of Syria, still in the throes of an eight-month revolt against President Bashar al-Assad that has seen at least 3,500 killed, will shrink by at least 2.2 percent, Yousif said, citing IMF figures.
"The economic cost of the ongoing uprisings and the collapse of Arab regimes are immensely high," said Joseph Torbey, chairman of the World Union of Arab Bankers in his opening remarks.
Arab Marshall Plan Needed
Torbey pointed to falls in bank growth, stock markets and financial flows as well as rising interest rates and public debt in the Arab world.
Unemployment, which many highlight as a catalyst for this year’s unrest, remained high, Torbey said. He argued that gains made by protesters must be bolstered through economic development plans, echoing calls by Arab financiers at the World Economic Forum in Jordan who called for a regional "Marshall Plan."
"We call for the creation of an Arab fund backed by rich Arab countries, similar to the ‘Marshall Plan’ created by the United States of America for the reconstruction of Europe after World War Two," Torbey said.
"If political revolutions in our Arab world are not followed by institutional reforms, economic and human growth, the efforts of the people … will be in vain and will give way to feelings of resentment, more poverty, underdevelopment and extremism."
Under the Marshall Plan, large sums flowed into Western Europe to rebuild the continent, restore productivity and prevent US allies from falling under the influence of its main rival, the former Soviet Union.
Funding for such a plan would likely fall to oil wealthy Gulf Arab countries, which for the most part prevented protests in their region through billions of dollars in social spending packages — although Oman and Bahrain stifled burgeoning movements through security crackdowns.
"If the crises in the region are prolonged," Torbey warned. "The so-called ‘Arab Spring’ might well turn into a harsh economic winter."
