World Bank: War in Ukraine Raising Risks for MENA

The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)
The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)
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World Bank: War in Ukraine Raising Risks for MENA

The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)
The World Bank Group building is viewed on an empty street in Washington, D.C., US, April 13, 2020. (AFP Photo)

The war in Ukraine has "multiplied risks" for the Middle East and North Africa's poorer countries by raising food and energy prices, the World Bank said Thursday, warning of potential social unrest.

In its latest update to its MENA growth forecast, the development lender said inflationary pressures set off by Covid-19 "are likely to be exacerbated" by Russia's invasion.

"The threat of Covid-19 variants remains and the war in Ukraine has multiplied risks, particularly for the poor," the World Bank's MENA vice president, Ferid Belhaj, said in the report, titled "Reality Check".

World Bank president David Malpass said this week that the Russian war on Ukraine has started a chain reaction in the global economy, pushing energy and food prices higher, exacerbating debt concerns and potentially worsening poverty and hunger.

"Rising food prices may have far-reaching effects beyond increasing food insecurity," said the report, adding: "Historically in MENA, increases in bread prices have... contributed to increased social unrest and conflict.

"This link between food prices, conflict and low growth poses a serious concern for the humanitarian crisis in fragile, conflict and violence-affected states in MENA," it said.

Ukraine is a key source of grain, while Russia is a major producer of energy and fertilizer needed for agriculture. The MENA region is heavily dependent on wheat supplies from both countries.

According to the report, inflation in Gulf countries is expected to reach 3.0 percent this year compared to 1.2 percent in 2021, and will rise to 3.7 percent in oil-importing countries from 1.4 percent last year.

"For some oil importers, food subsidies would be hard to maintain due to limited resources," while "rising oil prices could delay reforms", the report said.

Despite that, the World Bank forecasts that economic growth in the region will be 5.2 percent in 2022, the fastest rate since 2016.

"The region as a whole is buoyed by oil" and is doing "much better" than any other in the world, lead economist for the MENA region Daniel Lederman told AFP in an interview.

However, the expected growth is "insufficient and uneven".

"Insufficient because a large number of economies in the MENA region will still be poor in terms of their GDP per capita relative to where they were in 2019 in the eve of the pandemic," he said.

And "uneven because the faster (recovering) economies for 2022 are expected to be oil exporters, but oil importers are expected to suffer".

Lederman urged greater transparency from MENA governments regarding their economic data, citing this as a factor behind previously overoptimistic forecasts.

"Published research in leading economic journals in the world indicate that overly optimistic and imprecise forecasts are associated with debt and financial vulnerabilities, higher probability of financial crises and even economic contractions in the near future," he said.



EU States Agree on 14th Sanctions Package Against Russia

The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)
The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)
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EU States Agree on 14th Sanctions Package Against Russia

The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)
The European Union flag inside the atrium during an EU summit at the European Council building in Brussels, Monday, June 17, 2024. (AP Photo/Omar Havana)

European Union countries agreed on a 14th package of sanctions against Russia over its war in Ukraine, diplomats said on Thursday, including a ban on re-exports of Russian liquefied natural gas (LNG) in EU waters.
Belgium, which holds the rotating EU presidency until July 1, said on the X platform that the package "maximizes the impact of existing sanctions by closing loopholes".
Countries debated the new measures for over a month and ultimately watered down one of the Commission's proposals, aimed at preventing even more circumvention, at Germany's prompting, Reuters reported.
The dropped measure would have forced subsidiaries of EU companies in third countries to contractually prohibit the re-exports of their goods to Russia. The EU is keen to stop the flow of dual-use technology such as washing machine chips that could be used by Russia for military purposes.
An EU diplomat said Germany had asked for an impact assessment, and the measure could be included at a later date.
The ban on trans-shipments is the first restriction the bloc has applied to LNG. However, gas market experts say the measure will have little impact as Europe is still buying Russian gas itself, and trans-shipments via EU ports to Asia represent only around 10% of total Russian LNG exports.
The package also tightens measures against the shadow fleet moving Russian oil outside the price cap on Russian crude set by the Group of Seven (G7) nations. EU countries added tankers to the list of sanctioned entities as well as at least two Russian-owned ships moving military equipment from North Korea, diplomats said.
Overall, 47 new entities and 69 individuals were added to the EU sanctions list, bringing the total to 2,200. The package is expected to be formally approved when EU foreign ministers meet on Monday, diplomats said.