Arab financial officials said Thursday that the global economic crisis had cost the region's investors about $2.5 trillion, offering a sobering look at the challenges confronting the region's leaders despite their repeatedly rosy assessments of their nations' ability to weather the financial downturn. The comments at the start of a two-day Arab Economic Forum focused the spotlight on the damage done in a region that has enjoyed steady growth for the past few years. It came as leaders of the Group of 20 wealthy and developing nations met in London to discuss a path through the world's worst financial crisis since the 1930s. Adnan Al-Kassar, a leading Lebanese banker and former economy minister, said that among the effects of the crisis in the Arab world was a 20 to 60 percent drop in the region's top stock markets, the decrease in worker remittance revenues and the cancellation of mega projects. “Estimated losses of Arab investments abroad are about $2.5 trillion,” said Al-Kassar, who currently heads the General Union of Arab Chambers of Commerce, Industry and Agriculture. The “drop in oil prices affected revenues in (oil-producing) countries, and expectations are that growth in the Arab region will drop to about 2.9 percent in 2009 after an 8 percent growth in the past two years.” But Al-Kassar didn't specify whether the $2.5 trillion in losses also included sovereign wealth funds held by some of the countries. Those funds are secretive and the exact amount of their losses has not been revealed. In tandem with the equity markets slump, the governments of many of the Arab world's top oil producers are seeing revenue fall as oil prices fell from mid-July highs of $147 per barrel to roughly $50 per barrel at present. Crude revenues are a mainstay for many of these countries, and the slide is forcing Saudi Arabia, for example, to project a deficit for the first time in 2002. Lebanese Prime Minister Fuad Saniora told the gathering that the crisis “ended five years of fast growth in the Arab world” that was the result of the oil boom and a decade of reforms efforts in many Arab countries. Saniora said the crisis should lead to strengthening joint Arab economic activities by mainly investing in what Arab economies need, like infrastructure and education. He warned that Arab countries will have to create 100 million new jobs in the next two decades to fight unemployment. On a near daily basis, Arab newspapers report layoffs, with some of the most troubling headlines coming from Dubai, the one-time Gulf boomtown now mired in debt. The job creation issue is paramount for many of the Arab nations. With a surging youth population, Arab governments face daily challenges of providing opportunities to a population that is often courted by Islamists. The ensuing tug-of-war carries broad domestic and international security ramifications. As a result, Arab nations - particularly in the oil rich Gulf - have been careful to ensure that layoffs stemming from the downturn hit the countries' expatriate workforce, not the much smaller national labor force. But the support networks they provide, ranging from subsidies on fuel to basic foodstuffs, are one of the biggest burdens on national budgets. The spike in crude prices earlier last year also drove up commodity prices, hitting harder the Arab nations like Egypt and Jordan which lack the oil wealth. Jordan's Prime Minister Nader Al-Dahabi summed up that dichotomy neatly. “Some of us are of us optimistic, while others are pessimistic, and both are right,” said Al-Dahabi. “We used to complain when oil prices were high and crossed $145, and we complained from the rise of commodities and inflation. Now we complain about drop in oil prices.”
