Tag: economic crisis

Sudan Donor Event Raises $1.8 billion

Posted on by webmaster

The event co-hosted by Germany, Sudan, the European Union, and the UN, gathered 50 states and international actors in Berlin to seek political and financial support for Sudan’s democratic transition and struggling economy, on June 25.  

The event raised $1.8 billion in badly needed funds for projects aimed at propping up the country’s poorest citizens. It is hoped that reducing Sudan’s economic instability will give the transitional government the best possible chance of moving forward with democratic reform after the exit of former leader Omar al-Bashir last year.  

Over $1 billion in funding came from three donors — the European Union ($350 million), United States ($356m) and United Arab Emirates ($300m). Co-host Germany pledged $168m, while France and the United Kingdom offered $112m and $186m, respectively.  

“We are thankful and extremely delighted with the level of participation in today’s partnership conference, it was indeed unprecedented,” the Sudanese PM tweeted after the event on June 25. 

“This partnership lays a solid foundation for us moving forward. We know that there is a lot of work to be done, but with this type of support, we will certainly move ahead,” the Hamdok added.  

 “The participants took stock of the achievements of the Sudanese transition so far, and discussed the challenges ahead,” said the end of conference communiqué.  

“Building on the progress made by the Transitional Government in putting in place political and economic reforms, a strong political consensus emerged to support Sudan and its transition in building peace, democratic governance and inclusive economic recovery as well as in progressing towards debt relief,” the countries present declared.   

Despite Hamdok’s positivity about the Berlin conference, the $1.8 billion raised still falls far short of the $8 billion in aid he called for in August 2019. It also falls short of the $1.9 billion Sudan’s The Ministry of Finance and Economic Planning said it needed to support a cash-handout program aimed at alleviating the rising living costs.  

Prior to the conference, Hamdok told donors they needed to show up, stressing “I do not want to paint a rosy picture. Any transition is messy and there are so many challenges.” 

“So Many Challenges” 

Hamdok’s transitional government remains in a precarious power-sharing arrangement with the military and has struggled to restructure the economy after losing oil revenues through South Sudan’s recession in 2011. The Sudanese have taken to the streets multiple times to protest the lifting of fuel and other subsidies, which cost the government an estimated $3billion.  

Sudan’s government debt still stands at $62 billion, and it has struggled to get international financing after defaulting on International Monetary Fund loans and because it remains on the United States’ state sponsors of terrorism blacklist.

The country’s Central Bank is on life support, and with foreign currency reserves depleted, the Sudanese Pound has crashed. As a result of the pound’s devaluation, inflation currently stands at 114.33% and remains highly volatile, which places significant cost of living pressures on the Sudanese people  

The pledging conference not only raised funds, but has brought some progress on debt relief and international financing, which are challenges that have long plagued Sudan. 

Following the conference, Poland announced it is ready to settle $122 million of debt, “with favourable conditions to Sudan,” the Sudan News Agency (SUNA News) reported on June 26.  

A number of participants in Berlin including Spanish Foreign Minister Arancha Gonzalez Laya, threw their weight behind calls for Sudan to be removed from the state sponsors of terrorism list.  

“The conference had political targets and it has put Sudan back on the map and signalled its return to the international community. Many countries asked for Sudan to be removed from the state sponsors of terrorism list which is very important for economic recovery,” Khartoum-based journalist Shawqi Abdelazim told the Inter-Press Service on June 26.  

Meanwhile, the US has indicated that a deal could soon be reached with Sudan regarding compensation for the victims of the terrorist attacks on the American Embassies in Kenya and Tanzania in 1998.  

“My team on the ground is working closely with the Sudanese leadership to try to reach a good result, and I hope that this will be achieved in the coming weeks,” US Secretary of State Mike Pompeo told Sudanese media on Wednesday. 

The agreement, and growing international pressure, as expressed in Berlin could pave the way for the US to remove Sudan from its terrorism blacklist and open up crucial financing opportunities for Hamdok’s government.  Both will be crucial to providing international and local legitimacy for the civilian branch of the government and ensuring they can make the major economic advancements required to support Sudan’s transition. 

Read also: Sudan, Egypt Push for Diplomatic Solution to GERD Dispute

 

MENA Region Faces Wave of Post-Lockdown Protests

Posted on by webmaster

Citizens of several countries in the Middle East and North Africa (MENA) have taken to the streets following the easing of COVID-19 measures. Citizens are demanding action from their governments after having adhered to painful lockdowns and curfews that brought severe economic hardship.

In Lebanon, Iraq, Syria, and Tunisia, large protests have emerged over the last week as citizens call upon government officials to ease their suffering. While COVID-19 fears begin to wane, a new focus on structural poverty and inefficient government is emerging across the region as protesters express their discontent.

Lebanon

The Lebanese military arrested dozens of protesters on Monday, June 15, for alleged acts of vandalism. Protesters expressed their frustration with skyrocketing inflation amid a spiraling currency crisis, while the indebted nation struggles to balance its debt obligations with popular demands for a significant increase in living conditions.

After nearly two months of empty streets, economic deprivation, and fear of the coronavirus, the Lebanese people have returned to the streets to protest the lack of solutions offered by the government of Hassan Diab. Banks and shops were attacked as Lebanese people grow more desperate, even as new sanctions on neighboring country Syria are likely to further damage Lebanon’s economy.

Iraq

Newly inaugurated prime minister Mustafa al-Kadhimi’s “honeymoon phase” in government has ended quickly as increasing austerity measures are sparking furious protests. Monthly pensions were hit by a drop in oil-revenue that is forcing the government to take unpopular measures. Nearly one million Iraqis depend on their pension each month and this month the $920 pension was more than $100 short, according to France24.

The Iraqi government has introduced several ambitious reform plans, but a dramatic fall in government revenue as a result of cratered oil prices and production cuts has meant introducing painful cuts to public sector salaries and pensions. Public sector employment has served as a method to appease Iraqis since the 2003 US invasion, but falling state oil revenues have now undermined this strategy.

Syria

Syria has seen few large protests since the 2011 pro-democracy protests that started a civil war. But protests again emerged over the rise in prices of basic necessities, a doubling in food prices and continued corruption in government. The city of Druze saw four days of intense protests as the Syrian Pound continues to fall dramatically in value.

The protesters are unlikely to see a swift resolution to their concerns as the “Caesar Act,” a new round of US sanctions targeting Syria, is set to heavily impact the last remaining economic activity that has sustained the country’s flailing economy. With an apparent consolidation of power ongoing in Damascus that has gone public, Bashar al-Assad’s regime is facing renewed pressure from all sides.

Tunisia

Protests have emerged in at least seven Tunisian cities, Reuters reported on Thursday, June 18. Unemployed and economically deprived people across the country protested what they considered government inaction in the face of a continued economic crisis. University graduates shouted “we need jobs” in Gafsa and hundreds protested in Hajeb el Ayoun and Sidi Bouzid.

The Tunisian tourism sector has suffered an unprecedented crisis after COVID-19 measures closed borders and shut the industry that provides 10% of state revenue. After a decade of high inflation and unemployment, Tunisians now call for an increased focus on jobs by protesting and even halting the country’s phosphate production through sit-ins.

A new era

The current protests across the MENA-region are likely only the beginning of popular unrest in the region, with global institutes like the IMF predicting that local economies will suffer from post-lockdown economic woes for some time to come. Protests against corruption and ineffective government appear to be supported by data, and the World Bank has called for greater transparency from MENA-governments.

As global oil prices continue to be volatile, supported by painful production cuts, revenue will likely remain impacted in many oil-dependent MENA-countries. With structural economic issues in many countries, unemployment and poverty are likely to worsen in the months ahead, as the region braces itself for a new era of popular discontent.

Caesar Act Sanctions: Another Blow to Syria’s Collapsing Economy

Posted on by webmaster

The US and European Union’s latest round of sanctions, known as the “Caesar Act,” aims to cut Bashar Al Assad’s final foreign economic lifelines. 

Lawmakers passed the  legislation in December 2019 but it came into force today, June 17. They named the act in honor a military photographer codenamed “Caesar” who infiltrated Syrian jails where he took over 50,000 photos of torture and death.  

The sanctions are meant to “compel the government of Bashar al-Assad to halt its murderous attacks on the Syrian people and to support a transition to a government in Syria that respects the rule of law, human rights, and peaceful co-existence with its neighbours.” 

In reality, Syria’s economy is in dire straits. The currency has crashed in the wake of the impending sanctions, driving up the cost of living for ordinary citizens while the regime continues unphased. 

An estimated 80% of Syrians were already living below the poverty line prior to the recent economic decline, which has only intensified their struggle. Their situation is so distressing that thousands of Syrians took a huge risk, returning to the streets for the first time since 2011 to protest the worsening conditions in towns like Suweida, Daraa, and Idlib. 

UN envoy’s report

In his latest briefing to the UN Security Council, UN Special Envoy on Syria Geir Pederson reported that the Syrian pound has depreciated at lightning speed, driving up food and medicine prices and disrupting supply chains.  

“I heard a new level of alarm at the dramatic collapse in economic conditions throughout the country. It is easy to understand why,” Pederson told the Security Council. “During just one week during the reporting period, the Syrian lira’s market rate depreciated more than in the entire nine years prior.” 

“The economic crisis is hitting every part of Syria, regardless of territorial control: from Damascus and the southwest … to Aleppo and the northwest … and to the northeast,” the UN envoy explained.  

The devastating financial and political crisis in Lebanon is one factor that has driven its “twin” economy in neighboring Syria into a spiral of decline, Pederson said. The collapse is also gaining momentum from the fallout from the country’s civil war, long-running structural issues with the economy like poor governance and corruption, the COVID-19 pandemic, and now the Caesar Act. 

“In recent weeks, we have seen many Syrians begin to express new fears – even panic in some quarters. We have heard of shops and pharmacies forced to close, unable to cope with the recent volatility; of jobs being lost; of remittances drying up. In some areas of northwest Syria, reports have emerged of locals increasingly using foreign currencies,” Pederson said. 

The new sanctions effectively penalise any country that does business with any company in Syria. As a result, they cut off the few trade ties Syria has left with its primary trading partner Lebanon, for one – but also with European and Gulf States. 

UNSC response

Security Council permanent members Russian and China spoke out against the sanctions on June 16.  

China called the move to forge ahead with the Caesar Act in light of the COVID-19 pandemic and ensuing global and economic crisis, “simply inhumane.”

Meanwhile Russia, who supports the Assad regime, told the Security Council “that the purpose of these measures is to overthrow the legitimate authorities in Syria.”

The US has been imposing sanctions on Syria since 1979, and gradually ratcheted up the restrictions since civil war broke out in 2011. Nine years on, they have had minimal effect on Assad, and failed to trigger the downfall of his bloody dictatorship. 

Sanctions have proven ineffective time and time again and, often missing their target, devastate the lives of the everyday citizens they are supposed to be helping. 

It is unlikely the Caesar Act will be any different or achieve the regime change it so boldly hopes to bring about, and instead will be the catalyst for more pain and suffering for the Syrian people.

Read also: Syrians Brace for Looming Sanctions

The United States Is In a State of Crisis

Posted on by webmaster

In the midst of a global combined economic and public health crisis, American stock markets have been doing rather well. The country has pumped trillions into its large corporations which has avoided a large-scale market crash such as that seen in 2008. But while Wall Street remains relatively intact, the rest of the country is spiraling into chaos due to several inter-connected crises.

Just a month ago it was incomprehensible that any news could top the historic global pandemic as 2020’s biggest story. But a wave of protests across the United States has highlighted that the country is suffering from more than just COVID-19.

Crisis in health

After months of economically painful lockdowns, curfews, and restrictions the US is reopening the economy even as its cases continue to climb. Wednesday, June 10, saw the two millionth COVID-19 case recorded. US President Donald Trump has pushed for reopenings even while many public health experts warn the nation might still be in the first wave of infections.

Those who died from COVID-19-related complications have disproportionately comprised minorities, and continue a sad historic trend of hitting the country’s Black communities the worst.

The unique nature of the US healthcare system means many will now face thousands of dollars in medical bills just as a “tsunami” of bankruptcies is due to hit in the aftermath of lockdowns that saw millions lose their jobs.

Crisis in inequality

The brutal death of George Floyd served as another painful reminder that the United States still has not created even a semblance of parity between Black and white people in the country. The death of another Black man in police custody triggered protests around the country, and a heavy backlash from the country’s elites.

Media and many officials instantly painted the protests as violent riots, and labeled protesters “looters.” State officials and media channels rushed to discredit the genuine demands of the mostly peaceful protests. The anti-racism demonstrations have since been used by agent provocateurs from groups advocating for a second civil war to stir up more violence and resentment between racial and economic sections of the population.

Pulitzer-prize winning reporter Chris Hedges has called the government response to protests “treason by the ruling class” and says a “mafia state” has replaced the country’s capitalist democracy. “We are serfs ruled by obscenely rich,” Hedges wrote in Common Dreams, saying the country’s wealthy constitute “omnipotent masters who loot the U.S. Treasury, pay little or no taxes and have perverted the judiciary, the media and the legislative branches of government.”

According to Hedges, who has seen several countries spiral into chaos and war, the US has only two possible paths left: Revolution or tyranny.

Crisis in the economy

The country’s shocking poverty has only worsened in a time of record highs in the country’s stock markets. The disconnect between main street and wall street is now painfully exposed as news of record highs in the NASDAQ feature on the same front pages as record numbers of deaths, unemployment, an approaching “avalanche” of evictions, and severe public discontent.

The crisis has similarly exposed the country’s nearly defunct labor laws to daylight as millions were immediately laid off from their jobs when lockdowns became a reality. Constantly clicking refresh on overwhelmed and continuously crashing state unemployment websites, citizens have started to realize that a welfare state is not a comfortable “handout” to those too lazy to work, as politicians have told them for years.

Instead people have been left to their own devices with little help from the government outside a one-time stimulus check that did not cover rent and expenses in most US cities. For decades Americans have swallowed tax cuts for big business, but the crisis has again proven that businesses actually have a responsibility to create as few jobs as possible to ensure maximum profits for shareholders.

Crisis in leadership

Amid the disintegration of the American social contract, US Donald Trump is rapidly undoing the post-WW2 era unspoken agreement that has sustained American hegemony. For decades, the US paid the most to global institutions such as the WHO and NATO. In exchange the US did not have to decolonize, was able to invade nations at will, and made its currency the favored exchange in the international market.

But President Donald Trump apparently considers that the country’s superior military strength alone should be enough to force the global community into compliance. By withdrawing funding from the WHO, pressuring NATO allies into paying higher dues, and sanctioning the world’s highest court, Trump is changing the image of the US from a benevolent global empire into a rogue state.

Vetoes at the Security Council are casually and repeatedly suppressing the will of the global community, while calls for mercy on states suffering under crippling US sanctions remain ignored. Trump has willfully broken the unspoken agreement between the US and the world, silently approved by Democrats who have signed off on every increase of the military budget, corporate hand-out, and even his wall on the Mexican border.

With America’s reputation badly damaged abroad and civil discord in the streets at home, the US is facing a historic crisis that could precipitate the final tumultuous decline of “global America” as we know it today.

Lebanon: Currency Collapse, Protests Trigger Emergency Cabinet Meeting

Posted on by webmaster

Angry citizens in cities across Lebanon shrugged off recent sectarian clashes to present a united front that called for Central Bank Governor Riad Salameh and Prime Minister Hassan Diab to resign in the wake of a spectacular currency devaluation.

Violent skirmishes with security forces and arson punctuated last night’s demonstrations and, amid calls for calm, triggered an emergency cabinet meeting on the morning of Friday, June 10. 

Pound plunge 

The currency hit a new low on Wednesday and Thursday, trading at 5,000 pounds to the dollar on the country’s parallel market. After trading at an official rate of 1,500 pounds to the dollar for 35 years, there were rumors the Lebanese pound hit highs of 6,000-7,000 pounds to the dollar on Thursday, although those appear to be unfounded. 

The dramatic plunge represents a 25% depreciation in the Lebanese pound in just two days. 

The pound has lost 70% of its value since protests kicked off last October and is heading into uncertain territory as neighboring Syria’s currency has also spiraled out of control in recent days, ahead of a fresh round of economic sanctions. 

The cost of living has risen exponentially, dollars are scarce, and, as the recent drop shows, the government’s efforts to stabilize the currency have so far failed.   

In response to the raging protests, Diab called an emergency cabinet meeting on Friday morning. In attendance was controversial Central Bank Governor Salameh, who many believe is responsible for mishandling Lebanon’s foreign currency reserves and the exchange rate. 

Speaking after an additional meeting between himself, Diab, and President Michel Aoun, Speaker Nabih Berri ruled out sacking the Central Bank governor.  

“It was agreed with President Aoun and PM Diab to lower the dollar exchange rate as of today to below LBP 4,000 and gradually to 3,200, but the results will not begin appearing before Monday,” Berri announced on Friday afternoon.  

Berri added the ruling triumvirate will be “addressing the International Monetary Fund with a unified language,” referring to the ongoing negotiations with the IMF over a bailout triggered by Lebanon’s sovereign debt default, and ensuing economic deterioration. 

“Citizens in a State,a new political party which has gained a large following during the October revolt, rejected the government’s announcement and instead called for more protests on Saturday. 

Citizens in a State, backed by a coalition of 20 civil society movements, parties, and unions, is calling for Diab’s administration to be replaced by a transitional government with exceptional powers to drag the country out of the economic and political crisis it is now mired in.  

Protestors set up roadblocks and tents amid last night’s fury, indicating they are again in for the long-haul after a COVID-19-enforced break. Hezbollah and Amal supporters, who were behind last weekend’s unsettling sectarian violence, also rushed to join last night’s protests, according to Lebanese journalist Luna Safwan.

“With Hezbollah and Amal supporters joining the protests tonight, it seems that there’s a plan to take down the cabinet. Back to October 17th 2019,” Safwan tweeted last night. 

Thursday night’s fiery protests 

The streets of Beirut, Saida, Jal el Dib, Tripoli, Zouk, and many other cities filled with major demonstrations for the first time since the October 17 uprisings that brought down ex-Prime Minister Saad Hariri. 

There was nothing to be seen of the sectarian clashes that punctuated demonstrations on June 6, with large moped-convoys of residents from majority-Shia suburbs joining the protests shouting, “Shia, Sunni, F*ck sectarianism.” 

In Beirut, law enforcement was minimal, and protestors set a massive bonfire directly in front of the country’s seat of government. Protestors set a branch of the Central Bank alight in Tripoli, along with tire barricades, billboards and other buildings. When riot police did try to disperse demonstrators in downtown Beirut, young men pelted them with rocks and fireworks, screaming “the riot police are sons of b**.”

The currency crash has reduced first responders’ wages to a pittance, and like the protestors they are supposed to control, police and fire crews are growing tired of the declining economic situation. 

“Why do you destroy shops and things and attack us security forces—do you think we’re happy? Go and f****** break that wall or go to the politicians’ houses,” a police officer told Al Jazeera as he stood by, watching protestors tear down a barrier set up to protect Parliament.  

“In the end we are with you and we want the country to change. Don’t you dare think we’re happy. My salary is now worth $130,” the officer added. 

The Civil Defence, whom the fire brigades fall under, later told local news channel LBCI they did not fight the many of the fires around Beirut, because they had no diesel to run their fire trucks—just another consequence of Lebanon’s economic implosion. 

The government — under intense pressure from protestors, the currency collapse, COVID-19, and Lebanon’s unenviable economic situation — will be waiting on tenterhooks to see what eventuates tonight, and if the protest movement maintains momentum.

Read also: Despairing Domestic Workers Dumped at Ethiopian Consulate in Lebanon

Most Popular