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Shop agent use handgel for clients during the first opning of the shops after the lockdown in Tunis, Tunisia on May 11, 2020. With the health ban in its first phase (from 4 to 24 May) entering its second week, the commercial movement in the capital resumed its activity in a significant and significant way by recovering the activity of selling ready-made clothes and shoes and the rest of the other commercial activities. Since the early hours of Monday morning, most shops selling ready-made clothes and shoes have opened their doors to the public amid strict precautions to prevent the spread of the new Coronavirus (COVID-19), despite Tunisia's relative control of this global pandemic. (Photo by Mohamed Krit/ Sipa USA)No Use UK. No Use Germany.
Op-Ed

Governance in the Arab region: Experts discuss public responses to COVID-19

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Introduction

The COVID-19 crisis has posed a daunting test for Arab countries, which had already faced governance and institutional challenges prior to the pandemic. Most Arab countries have seen their healthcare systems and economies pushed to their limits; while conflict-affected and fragile states have been left particularly exposed, even the region’s stable and higher-income countries have been deeply affected.

A

Adel Abdellatif

Deputy Director - United Nations Development Programme Regional Bureau for Arab States

E

Ellen Hsu

Researcher - UNDP Regional Bureau for Arab States

Bessma Momani

Professor of Political Science - University of Waterloo

R

Rahel M. Schomaker

Professor for Economics - CUAS Villach and Associate Research Fellow at the German Research Institute for Public Administration Speyer

I

Ishac Diwan

Chaire Socio-économie du Monde Arabe - Paris Sciences et Lettres

Khalid Abu-Ismail

Senior Economist - United Nations Economic and Social Commission for Western Asia

V

Vladimir Hlasny

Associate Professor of Economics - Ewha Womans University in Seoul

On June 16, 2020 the Brookings Doha Center and the Hamad Bin Khalifa University College of Public Policy held a joint online workshop to discuss governance in the Arab region and what can be learned from responses to the COVID-19 crisis. Workshop participants included a number of distinguished scholars based at universities, think tanks, and international organizations. These scholars considered how the pandemic has exposed and intensified governance problems in the Arab region, as well as how the crisis might provide an opportunity for Arab policymakers and the international community to rethink institutional responses and overcome governance deficits.

In this roundup, workshop participants outline their thoughts on a range of institutional and governance issues facing the Arab region and offer recommendations for how these can be addressed as the pandemic continues. Touching on issues of trust, corruption, reform, and inclusivity, these pieces offer key insights into the current situation in the region, as well as into what actions can be taken to improve institutions and governance in the months ahead.

COVID-19 has made clear the need for a new social contract

Authors: Adel Abdellatif, Deputy Director, United Nations Development Programme Regional Bureau for Arab States, and Ellen Hsu, Researcher, UNDP Regional Bureau for Arab States

Arab countries have made significant progress on health indicators in recent decades, as evidenced by longer life expectancies, broader child immunization coverage, and lower maternal and infant mortality rates. However, the COVID-19 pandemic has seriously tested the public health capacities of Arab governments, revealing fissures in their preparedness and demonstrating the absence of national public health emergency response plans to address epidemics or pandemics, as indicated by the Global Health Security Index. Once the coronavirus arrived, Arab governments (with some exceptions, like the Gulf countries and Jordan) could neither turn to strong coordination between ministries nor to a vibrant civil society to deliver an effective, whole-of-government, whole-of-society response.

Arab countries have also struggled to assess and address the socio-economic impact of the COVID-19 crisis, putting into question their ability to absorb shocks, whether environmental, global, or societal. This institutional fragility, which can be attributed to inadequate investment in key social services, has resulted in weak capacities to deliver core functions, susceptibility to breakdown when shocks and crises hit, slow recovery, and deteriorating state-society relations. Governance structures, highly centralized and poorly digitalized, present yet another hurdle. Service delivery can be improved by devolving decision making and introducing digital technologies, including in the health care system where digital medical records play a crucial role in epidemiological surveillance.

Social safety nets in the region are a case in point of how the quality of government investment in social services matters. Besides being fragmented, social protection often fails to cover the most vulnerable groups, such as informal workers, unemployed women and youth, and refugees, leaving them exposed during a crisis like the COVID-19 pandemic. While it is still too early to quantify the social cost of the lockdowns implemented across the region starting mid-March, we already have indications that in many Arab countries, poor and middle-class households are losing their livelihoods and falling below poverty lines. Meanwhile, the top 10 percent of adults, who are estimated to hold 76 percent of the wealth, continue to live mostly unaffected, suggesting a deepening of inequalities is underway that will be irreversible in the foreseeable future.

With all the usual lifelines being cut, from remittances to foreign direct investment and official development assistance, Arab countries are faced with few funding prospects and must turn to domestic sources, which have historically been scant due to low taxing capacities. Yet, it is easy to imagine how improving tax collection and instigating broader tax reform at such a juncture would only trigger more capital flight and fuel fierce public resistance. The latest Regional Economic Outlook from the International Monetary Fund (IMF) projects a 5.7 percent contraction in 2020, the largest in 50 years, which suggests that the region, already battered by conflicts and crisis, has entered an even longer, darker tunnel, from which it can only emerge through a paradigm shift in governance, resulting in a new social contract. In this way, the COVID-19 pandemic is another call for change in the Arab region—an opportunity to adopt more inclusive social policies, reform institutions based on accountability, and build more sustainable economies.

IS COVID-19 in the Arab region a bane or blessing for reform?

Author: Robert P. Beschel Jr., Nonresident Senior Fellow, Brookings Doha Center

Health data for the Arab region indicates a paradox of sorts. Although policy responses to the COVID-19 virus have not varied much from country to country, the disparity in outcomes at this stage has been significant. While there were modest differences in the speed with which Arab countries reacted and in the quality of implementation, almost all proceeded with border closures, social distancing, quarantines, sheltering in place, shutting down non-essential services, and procuring necessary supplies. However, the number of COVID-19 fatalities per capita—a good proxy for both virus spread and the underlying quality of the health care system—has varied dramatically.

The countries of the Gulf Cooperation Council (GCC), which by any measure of overall government effectiveness, health care spending, or pandemic preparedness would have been expected to perform relatively well, have struggled to contain the virus. At the time of writing, Kuwait has experienced 113.8 fatalities per million, followed by Oman at 104.4; Saudi Arabia at 92.9; Qatar at 65.3; and the United Arab Emirates (UAE) at 36.1. In contrast, it has been the middle-income countries—specifically Jordan and Tunisia—that have led the way. Jordan has experienced slightly more than one death per million, and Tunisia around 4.4—figures that compare favorably with those of Australia, Korea, and New Zealand.

It is not entirely clear why these trajectories have diverged so markedly. Jordan moved quickly to implement a full lockdown, and its ability to enforce social distancing and ramp up testing for large numbers of vulnerable citizens was impressive. Yet other countries, such as Saudi Arabia and the UAE, also pursued robust responses and are experiencing fatality rates that are many times greater. It could be that the GCC is much more heavily integrated into the global economy, including early COVID-19 hotspots such as China, Europe, and Iran, and that this allowed the virus to spread undetected. In 2019, for instance, Dubai’s airport was the fourth busiest in the world, receiving nearly 10 times the passenger traffic of Queen Alia International Airport in Amman. It could also be that many GCC countries have large expatriate labor forces who live in crowded conditions where social distancing is difficult. Or it could be a matter of under-reporting in several countries. The most troubling hypothesis is that it remains early in the pandemic, and countries such as Egypt, Morocco, and Lebanon have yet to see major increases in cases and fatalities.

The pandemic has led to improvements in the quality of inter-governmental coordination—a chronic problem in the Arab region, where siloed ministries and vertical information flows are the norm. Several countries have also developed innovative tech solutions in areas such as contact tracing, and the pandemic could accelerate efforts to move more government services online. The pandemic may serve as a valuable learning opportunity and a useful impetus for improved health spending and services in the Arab region, particularly in rural hinterlands. It may even provide Arab countries with the necessary motivation and political will to institute long-awaited policy and administrative reforms that would better target and protect vulnerable populations while reducing the footprint of the public sector in the labor markets. To paraphrase Machiavelli, it would be a pity for Arab policymakers to let a good crisis go to waste.

Arab governments must foster inclusive governance during COVID-19

Author: Bessma Momani, Professor of Political Science, University of Waterloo

Amid the pandemic, Arab countries have been forced to contend with the global collapse of oil prices, reduced rents and workers’ remittances, and declining foreign aid and investments. At the same time, they face increasing political and social demands from a relatively young population seeking decent jobs, economic prosperity, and accountable governments. In a region where citizens often have low public trust in their officials and authorities, governments and policymakers will need to be ever more sensitive to the demands of their people.

Arab governments will have to provide more social services to counter economic malaise, even as government revenues invariably decline; they will also need to get broad-based buy-in to implement their policies. If governments cannot successfully meet citizens’ needs and obtain broad societal support for their policies, they could face increased political challenges to their rule, including public demonstrations, protests, labor strikes, and outright defiance of authorities’ rules. In times of crisis, an inclusive and cooperative approach to policymaking may not be easy, but it is key to ensure that clashes over dwindling state resources do not turn into outright confrontation.

In addition to effective and consistent political communication with citizens, inclusive and participatory governance requires engaging civil society, the private sector, youth groups, political parties, labor groups, and professional associations in charting a path forward for Arab economies and societies. When cooperation is institutionalized at a national level, be it through national discourses, bargaining, or town halls, political support can be better achieved and policies can be implemented more effectively.

To build and nurture public trust, transparency and accountability are key. Arab publics are rightfully skeptical about their governments’ past attempts at transparency, particularly with respect to the public purse and government finances. To ask citizens to tolerate expected economic and social hardship resulting from this global pandemic, Arab governments will need to demonstrate to their citizens the constraints on generating revenue and the allocation of national finances. Any policy option will require trade-offs, and it will be important for governments to explain the rationale for their choices. The critical nature of the pandemic and the deep economic recession it is likely to cause warrant new modes of governance.

To keep economies going in the time of COVID-19, governments will need to build, and earn, the trust of their citizens. Elevating the public profile of health authorities who can effectively communicate with people to build trust, compliance, and support is one key tool at the disposal of Arab governments. Utilizing security forces to carry out these public health directives is often tempting, but will heighten public fears over loss of civil liberties. In a region that has already experienced the momentous Arab Spring and where public trust in governments remains low, further empowering security services like military, police, and intelligence authorities to carry out the task of implementing public health directives is unwise. Instead, Arab governments can leverage the pandemic to chart a new political-economic course with their citizens, but only if they take on the difficult task of building broad-based consensus, trust, and accountability.

COVID-19 could be an opportunity for Arab governments to rebuild trust

Author: Michael Robbins, Project Director, Arab Barometer

While trust in government has declined significantly across the Arab region over the last decade, the COVID-19 crisis offers the possibility of a reset for governments. In the period since the Arab Barometer began conducting nationally representative public opinion surveys in the region in 2006, trust in government was at its highest during the Arab uprisings of 2011, at 53 percent. While political changes in countries like Tunisia translated into broad support for the government, trust was high even in countries like Jordan, which did not experience significant changes during the uprisings.

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By 2018, trust had fallen across the region to just 34 percent. The decline was most dramatic in Tunisia—a drop of 42 points to just 20 percent. Tunisians appear increasingly frustrated with the ongoing failure of their government to address the economic and social conditions that led to the revolution in 2011. However, trust also fell in countries where little changed as a result of the Arab uprisings. For example, the decline in Jordan was 34 points over the same period, falling to just 38 percent. In short, the inability of governments of all stripes across the region to tackle key problems, like corruption and economic conditions, has led to a crisis of political trust.

As COVID-19 has become a dominant concern in the Arab region, governments have been forced to make difficult choices. Evidence from across the globe suggests that governments that have taken strong action to prevent the spread of the virus, even at the cost of economic health, have been viewed favorably by their citizens. Meanwhile, governments that have been unable to protect citizens by limiting the number of virus cases and deaths tend to enjoy lower confidence.

Regardless of regime type, government legitimacy depends in large part on the ability to improve conditions for ordinary citizens. COVID-19 has offered a clear opportunity for governments to prove their ability to protect the lives of their people. For instance, Jordan’s decisive measures to close its borders, lock down, and provide for the basic needs of its citizens have limited the spread of COVID-19 and demonstrated the government’s competence. This policy success is likely to result in higher levels of trust in government. Other countries, such as Morocco, Lebanon, and many GCC states, have also taken decisive action, including imposing lockdowns and closing international links. These initial efforts are likely to be viewed positively by their citizens. However, countries such as Iraq have proved far less effective in finding ways to limit the pandemic’s spread or ameliorate its effects, meaning trust in government is likely to fall.

Overall, the pandemic’s potential positive effects on trust in countries like Jordan, Morocco, and Lebanon are unlikely to last if their governments are unable to address the long-standing challenges facing their societies. In Lebanon, for example, the government’s failure to prevent the massive explosion in the port has clearly undermined any increase in trust that may have resulted from its initial better-than-expected response to COVID-19. While positive performances on COVID-19 are likely to lead to new opportunities, Arab governments will need to continue meeting citizen expectations in order to permanently reverse the decade-long decline in trust.

COVID-19 could reinforce corruption and cronyism in Arab politico-administrative systems

Author: Rahel M. Schomaker, Professor for Economics at CUAS Villach and Associate Research Fellow at the German Research Institute for Public Administration Speyer

The majority of countries in the Arab region are characterized by high levels of cronyism, nepotism, and corruption compared to world averages. They also face a gridlock of administrative reforms and mistrust, both within the politico-administrative system and between the state and citizens. While various states have attempted to address these issues in the aftermath of the so-called “Arab Spring,” the current pandemic threatens to undermine or undo their efforts. The pandemic has not only had a negative economic impact on the region, resulting in around 50 million jobs lost, firm bankruptcies, and increasing public debt, but has also posed major challenges for public administration, which can hardly manage the additional burdens of spontaneous digitalization, infection tracking, and lockdown executions.

While there is some evidence that Arab governments have been exploiting the pandemic to entrench authoritarian rule, there are also indications that public administration in these countries is not able to follow the rules of good governance any longer. In times of crisis, oversight measures are often ignored for the sake of speed and sequencing of anti-crisis action, and administrative capacities may be bound up elsewhere.

This lack of oversight during the pandemic has opened up space for corruption and nepotism in areas such as public procurement and execution of public health measures.  For example, in Egypt, public authorities implemented the curfew more carefully in wealthy neighborhoods, while in Saudi Arabia, several cases of COVID-19 related corruption were reported, including bribery of hotel managers to skirt strict quarantine measures.

Meanwhile, in countries like Lebanon that were economically and socially vulnerable before the pandemic hit, the crisis has further lowered trust in political elites and led to social unrest and protests. While in many countries around the world people generally trust information provided by the government, a significant share of individuals in the Arab region are convinced that much of the information they are receiving about the virus is inaccurate, resulting in decreased trust toward public sources and the media.

Beyond the sheer challenge of implementing epidemiological measures during the pandemic, politico-administrative systems in the Arab region face the challenge of maintaining or (re)building public trust in public administration and the government. While high trust levels are most strongly correlated with openness and transparency in decision-making and low levels of administrative discretion, a first step to rebuilding public trust and reducing corruption could be to make more detailed information about public action during the pandemic widely available.

COVID-19 further expands the poverty belt of the Arab region

Author: Ishac Diwan, Chaire Socio-économie du Monde Arabe, Paris Sciences et Lettres

After years of progress, the Arab region’s poverty belt has started to grow again, a process that has been dramatically exacerbated by the COVID-19 crisis. The region now includes one of the largest concentrations of misery and despair in the world. The aim of this piece is to raise the alarm by presenting recent data from reputable sources.

The United Nations Economic and Social Commission for Western Asia (ESCWA) has estimated that the regional headcount poverty ratio for the 14 non-Gulf countries was 29.2 percent (101.4 million people) in 2019—up from 22.8 percent (66.4 million people) in 2010. ESCWA also predicts that COVID-19-related shocks will push an extra 16 million people into poverty in 2021.

Due to ongoing wars and policy failures, a growing number of countries around the world are now classified by the World Bank as “fragile and conflict-affected.” The list now includes eight countries and territories in the Arab region: Iraq, Lebanon, Palestine, and Syria in the Levant; Somalia, Sudan, and Yemen in the Horn of Africa; and Libya in North Africa. Using national poverty lines, 56 percent of the region’s poor live in these countries.

Three Arab countries—Syria, Yemen, and Somalia—are also among the United Nations’ top five largest humanitarian global operations. Humanitarian assistance to Arab countries represented 59 percent of the total funding committed toward UN-coordinated appeals in 2019. More than 30 million people in the region are in need of basic food support to survive. Internally displaced persons (IDPs) in the region constitute 47 percent of global IDPs.

The poverty rate is rising in poor countries. It stands at 73 percent in Yemen and at least 50 percent in Sudan. But the poor also constitute 76 percent of the population of middle-income Syria, 27 percent in Egypt, 38 percent in Palestine, and 17 percent in oil-rich Iraq. In Lebanon, the economic and financial crisis was expected to push as much as 45 percent of the population into poverty, even prior to the tragic explosion at the Beirut port, which could render even this somber estimate too conservative.

In 2020, vulnerable Arab economies have faced several devastating shocks. While more than 60 percent of the U.N. humanitarian appeal was funded in 2019, this collapsed to 17 percent in 2020 (through June) as donors became preoccupied with domestic problems relating to the COVID-19 pandemic. Meanwhile, Gulf Cooperation Council (GCC) countries are speeding up programs to replace migrant workers with nationals, with remittances projected to fall by 20 percent overall in 2020, and more in the most fragile countries. Lower availability of foreign exchange reserves is leading to devaluation, inflation, and higher food prices.

The case of Yemen is the most wrenching at the moment, with COVID-19 expected to lead directly to 42,000 deaths. Remittances have reportedly fallen by up to 80 percent this year, while official development assistance (ODA) pledges fell from $4 to $1.4 billion (through June 2), as GCC countries disengaged to focus on managing the effects of the pandemic at home. Foreign exchange reserves are nearly exhausted, and famine is now a real possibility.

The call for new social contracts to reverse the economic decline of the region has become common. Facts on the ground suggest that without urgent political progress, the future will be dire.

COVID-19 requires Arab governments to improve foreign aid management

Authors: Theodosia Rossi, Research Assistant, Brookings Doha Center, and Nader Kabbani, Director of Research, Brookings Doha Center

The COVID-19 pandemic has placed further strain on already tense relationships between Arab countries and international financial institutions (IFIs), at a time when many of the former are desperately in need of funds.

According to data compiled by the Center for Strategic and International Studies (CSIS), between January 27 and August 17 international financial institutions (IFIs) approved around $175 billion in COVID-19 funding globally. However, only $15.7 billion (9 percent) of this amount was allocated to Arab countries. While this share of funding is higher than the Arab countries’ share of the developing world’s population, it is strikingly low when considering the humanitarian needs of a region that faces some of the worst displacement crises in the world.

Gulf Cooperation Council (GCC) states, which have historically supported the economies of their Arab neighbors, are struggling with falling oil and natural gas prices. The International Monetary Fund (IMF) projected in July that Middle Eastern energy producers would earn $270 billion less in oil revenues year-on-year in 2020. As Gulf states reduce foreign aid and cut down on expatriate labor forces, pushing down remittances, IFIs could have an even more crucial role to play in propping up more vulnerable Arab economies.

Furthermore, although IFIs are providing emergency COVID-19 aid to Arab countries, the process has been contentious and fraught. One reason is that donors already provide the Arab region with an immense amount of non-COVID-19 aid and would prefer if these existing funds could be reallocated. Another reason is that IFIs want to know that any aid they provide is going to be used as it should be. In the past, IFI support to Arab countries has not always translated into effective service delivery, due to weak governance, high rates of corruption, and lack of transparency and oversight.

These tensions have been highlighted in the IMF’s recent dealings with Lebanon and Egypt. In Lebanon, talks with the IMF over a $10 billion loan have failed to make progress. The devastating Beirut port blast will only place more pressure on Lebanon to move the talks forward. Although the IMF said after the blast that it was willing to help, it emphasized that Lebanon’s institutions need to demonstrate willingness to reform, including restoring the solvency of public finances and preventing capital outflows.

In the case of Egypt, calls for reform have come from outside the IMF. In June, eight Egyptian and international civil society organizations (CSOs) submitted a letter to the IMF executive board pushing for voting to be delayed on a $5.2 billion loan. The groups cited concerns that the funds would not go toward “supporting inclusive growth, improving fiscal transparency, and increasing health and social spending,” and urged the imposition of rigorous anti-corruption requirements. Although the IMF approved the loan as scheduled, the letter underscores how corruption and transparency are increasingly important issues for IFIs to consider when offering support to the Arab region.

As the COVID-19 crisis continues, it will be crucial for IFIs, Arab governments, and civil society to work together to ensure that countries receive the aid they need and that it is distributed effectively. This will require improving the monitoring and transparency of public accounts and finances; ensuring that foreign aid is directed to agreed-upon public priorities; and targeting aid toward the region’s most vulnerable and marginalized populations.

A solidarity fund can address the poverty impact of COVID-19 in the Arab region

Authors: Khalid Abu-Ismail, Senior Economist, United Nations Economic and Social Commission for Western Asia, and Vladimir Hlasny, Associate Professor of Economics, Ewha Womans University in Seoul

Poverty in the Arab region is spiking, and the distribution of wealth is becoming ever more polarized, yet countries’ fiscal authorities are unable to cope with these challenges. COVID-19 confirms that the current growth model in the region is unsustainable: existing public revenue streams have dried up precisely when they are most needed, while private investors line their pockets with speculative gains. The pandemic has also exposed the stark contrast between the region’s unprecedented poverty rates and its high concentration of wealth.

In this way, COVID-19 has highlighted the need for both stronger civic solidarity and for civil society, the private sector, and the state to uplift those who are most deprived. In order to address this need, Arab governments should establish a solidarity fund independent of their existing fiscal redistribution system to help those who have fallen through existing safety nets.

Currently, Arab countries have some of the most unequal wealth distribution worldwide. The average wealth Gini coefficient in Arab countries is 73.6, compared to 73.1 elsewhere. In 2019, the 37 Arab billionaires (all men) owned as much wealth—$108 billion—as the bottom half of the adult population.

Meanwhile, in the absence of effective social protection floors, vulnerability to poverty is high and on the rise in many Arab countries. In 2020, the headcount poverty rate using national poverty definitions is projected to reach 32.4 percent, or 115 million people, in the seven middle-income countries (MICs) and seven less-developed countries (LDCs) in the Arab region. This is 16 million more poor individuals than in the projected pre-COVID-19 regional growth scenario.

In Arab MICs, the cost of closing the poverty gap is estimated at $15.6 billion, while the total wealth of the top national decile is estimated at $1.3 trillion. With perfect targeting of the poor in these countries, an annual levy of just 1.2 percent on wealth would suffice to close their poverty gaps. However, in LDCs and Syria, the top-decile wealth is only $66.8 billion, while the annual poverty gap cost is $29.5 billion, rendering the proposed levy infeasible.

Given the burning economic challenges amid the fallout of the COVID-19 epidemic, Arab governments should establish a regional solidarity wealth fund to address humanitarian needs and food shortages in those countries that are most vulnerable to health and economic emergencies. In addition to alleviating poverty, a solidarity fund would have positive spillover effects. It could dampen rent-seeking and speculative activities, while channeling funds to more productive investments and increasing decent employment and growth.

In conclusion, COVID-19 has underscored the urgency of addressing the Arab region’s growing poverty and extreme concentration of wealth. A social solidarity tax rooted in the well-established Zakat practice could feasibly alleviate poverty and be accepted by the affluent and powerful. Such a social solidarity fund could be a transformative instrument to promote social equity, solidarity, and peace in a polarized region rife with political instability.

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