By Gregory Viscusi
September 10, 2011 10:31 EDT
Western and Middle Eastern governments pledged to help Tunisia, Egypt, Morocco and Jordan transition to democracy, mobilizing $38 billion of financing, mostly through international lending organizations.
At a meeting today in Marseille, France, the countries receiving the aid presented national action plans to develop their economies. Libya sent representatives to the meeting, hoping to eventually join the so-called Deauville Partnership.
The aid is intended to support economies and create jobs as the countries undertake the delicate process of opening up their political systems and holding free elections. The political changes have hurt tourism and investment, at the same time unleashing expectations of better lives.
“We are facing an historical transformational moment, and while there are downsides, there’s enormous enthusiasm,” International Monetary Fund head Christine Lagarde said after the meeting. “It has to be focused on job creation, especially for the young people.”
Lagarde said the fund now recognizes the National Transitional Council as holding Libya’s IMF seat, and she’ll shortly send a team to the North African country.
The amount mobilized is up from the $20 billion that was promised at a May meeting of Group of Eight government heads in Deauville, France, which gave its name to the partnership.
More Partners
Morocco and Jordan have joined initial members Tunisia and Egypt since the initiative was launched at the Normandy resort. Representatives from Saudi Arabia, Qatar, Kuwait, Turkey and the United Arab Emirates, as well as nine international lenders, including the World Bank, the IMF and the African Development Bank, joined today’s meeting.
“What’s the novelty is that there are many more partners around the table,” Lagarde said. “We have donors from international and regional institutions that are engaged in the region.”
French Finance Minister Francois Baroin didn’t give details of the national action plans, and no Arab leaders spoke after the meeting.
The plans “demonstrate a clear and shared commitment to enhanced prosperity for their people supported by the objectives set out in the Deauville declaration: to strengthen governance, foster economic and social inclusion, create jobs and support private sector-led growth,” the final G-8 declaration said.
Increased Funding
Libya was an observer at the Marseille meeting. French officials say the new Libyan administration must be in full control of their country and fully recognized as the legal government before it’s inducted into the partnership.
British Finance Minister George Osborne said member states would increase the European Bank for Reconstruction and Development’s lending power to boost its financing in the southern rim of the Mediterranean.
“We want to get some money to the EBRD so it can get going without formal notification, and also a significant bringing together of the resources from all the other development banks,” he said. International lenders could mobilize “tens of billions of dollars” for Arab Spring nations, he said.
Osborne also said he wants expanded trade in the Middle East and for the EBRD “to play a similar role in supporting this region today as it did in the former Soviet bloc countries following the fall of the Berlin wall a quarter of a century ago.”
Funding Breakdown
The European Investment Bank said in a statement that it will lend $7.5 billion to the four member countries through 2013, with $3 billion to Egypt alone. It said it will focus on projects that will create jobs, including microfinance, transport infrastructure and social housing.
The World Bank said it would finance $10.7 billion of projects, the ADB $7.6 billion and the Islamic Development Bank $5 billion. Baroin said French assistance would amount to $2.7 billion.
Tunisia is seeking $25 billion in assistance from abroad in the next five years to support its economy and tackle unemployment, Finance Minister Jaloul Ayed said in an interview Sept. 7.
Tunisia and Egypt have yet to receive more than a fraction of the aid pledged by western and Arab governments to support their transition to democracy, the Financial Times reported yesterday, citing the two nations’ finance chiefs.
Egyptian Finance Minister Hazem el Beblawi said the country had received just $500 million of $7 billion promised by the United Arab Emirates and Saudi Arabia, though discussions on the remaining funds were ongoing and he expects an agreement by the end of the year, the FT said.
The kings of Jordan and Morocco have announced steps to allow more democratic representation. In Libya, dictators Muammar Qaddafi was overthrown after a six-month conflict in which North Atlantic Treaty Organization fighter jets backed rebel forces.
To contact the reporter on this story: Gregory Viscusi in Marseille, France, atgviscusi
To contact the editor responsible for this story: James Hertling atjhertling
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