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41. The Problem of the Growth of Georgia's Public Debt During the Economic Crisis Under the Covid-19 PAndemic

Author:
Vladimer Papava and Vakhtang Charaia
Publication Date:
01-2021
Content Type:
Commentary and Analysis
Institution:
Georgian Foundation for Strategic International Studies -GFSIS
Abstract:
The COVID-19 pandemic and the global economic crisis caused by it presented the world with numerous severe problems. This economic crisis will henceforth also be referred to as the “coronomic crisis” which is based on the concept of “coronomics.” This term was created through the combination of the two words corona and economics and introduced in order to draw attention to the problem of the influence of the spread of the coronavirus on economies. One of the problems exacerbated by the coronomic crisis is the quick and significant growth of the public debt (the sum of the government’s domestic and external debts). It must be pointed out that according to standards, the overall external debt of a country is divided into several components: government, central bank, commercial banks, company loans and other sectors. The traditional question is as follows: should certain states fear the growth of the public debt despite the fact that the interest rate of the loans may not be particularly high? In a standard case, the answer to this question is yes;4 however, certain specific issues require clarification. For example, the proven indicator of public debt – its ratio to the gross domestic product (GDP),5 does not allow for the comparison of specific countries with one another, let alone being an impeccable measure of their success or failure. The analysis of a state’s economic capabilities is absolutely necessary as debts are taken both by rich as well as poor countries during extreme difficulties (like a pandemic) and economic advancement alike (for example, for infrastructural development).
Topic:
GDP, COVID-19, Public Debt, and Economic Crisis
Political Geography:
Eurasia and Georgia

42. Hizballah’s Gain, Lebanon’s Pain

Author:
Joel Parker and Sarah Cahn
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
On August 6, Hizballah fired 20 rockets towards the Shebaa Farms area of the Golan Heights, highlighting the growing political instability in Lebanon. Hizballah's behavior should be viewed in light of the ongoing financial and political crisis that has affected every aspect of Lebanese life since late 2019 and has pushed hundreds of thousands of people into poverty. Hizballah may not be the primary or sole cause of the crisis, but it is important to understand how it may have contributed indirectly to it, how it may benefit from it, and why it may not have an interest in fully resolving it. Hanin Ghaddar, the Friedmann Fellow at the Washington Institute for Near East Policy (WINEP), argues that despite the collapsing economy in Lebanon, Hizballah has been able to expand its array of social-welfare institutions to deepen their Shiʿi constituency's dependence and even expand the reach of these programs by providing support to a growing number of Lebanese who are struggling to survive. Hizballah also receives funding from Iran and through its commercial activities around the world, so one might ask how much Hizballah really needs the Lebanese state. Lina Khatib, a scholar at Chatham House and SOAS University of London, contends that Hizballah benefits from its hybrid role as a part of the state and, at the same time, free to operate outside the official channels of government and public scrutiny. Michael Young, senior editor at the Carnegie Middle East Center in Beirut, however, has argued that the group might indeed benefit from a collapse of the state, which will allow Hizballah to continue to fill a growing political, economic, and social power vacuum.
Topic:
Foreign Policy, Hezbollah, Regional Power, and Economic Crisis
Political Geography:
Iran, Middle East, and Lebanon

43. Educating Refugees in Lebanon

Author:
Wissam Fakih
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Center for Contemporary Arab Studies (CCAS)
Abstract:
MAAS student Wissam Fakih explores how Lebanon’s triple crises—economic collapse, the port explosion, and the pandemic—have impacted the education of thousands of Syrian refugee children living in the country.
Topic:
Education, Children, Refugees, Crisis Management, and Economic Crisis
Political Geography:
Middle East, Lebanon, and Syria

44. Why the U.S. Should Help Prevent Lebanon’s Collapse

Author:
Imad K. Harb
Publication Date:
05-2021
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
Lebanon today is experiencing wrenching convulsions that threaten its complete disintegration. It may be difficult, or unwise, for the Biden Administration to wade into Lebanon’s waters. But if the United States wants to preserve its strategic posture along the eastern Mediterranean––which is essential for its influence in the entire Levant––it cannot afford not to be involved in helping the country.
Topic:
Politics, Foreign Aid, International Community, and Economic Crisis
Political Geography:
Middle East, Lebanon, and United States of America

45. Economic Crisis and Elections: A Recipe for Turbulence in Latin America

Author:
Jimena Blanco
Publication Date:
12-2021
Content Type:
Journal Article
Journal:
Fletcher Security Review
Institution:
The Fletcher School, Tufts University
Abstract:
Latin America experienced the second biggest pandemicinduced economic contraction of any region in 2020, just behind the Euro-zone, and Verisk Maplecroft’s Recovery Capacity Index—which measures more than a dozen factors that determine a region’s ability to recover from the crisis—puts Latin America below all but Africa in recovery capability. The resulting social and economic distress has worsened longstanding inequalities and acted as a catalyst for civil unrest. Despite restrictive lockdowns, the pandemic crisis and economic shock sparked demonstrations across the region throughout 2020 as governments proved unable to meet even the most basic needs of their populations. A string of general elections scheduled for 2021 will take place against a backdrop of a surge in poverty and unemployment, setting the stage for another unstable year. With forecasts from the International Monetary Fund projecting the regional economy unlikely to recover to pre-pandemic levels until 2023, and household incomes not until 2025, this situation will continue. Falling tax receipts will cripple governments’ ability to address spiralling demands from already impoverished workers likely to be pushed into even lower-paid, unstable, and informal jobs. Young people and informal workers who average 60 percent of the regional labour force, on data from the Organization for Economic Cooperation and Development, will continue to be disproportionately affected. Dissatisfied and often disenfranchised, these sections of society can be particularly restive, able to mobilise fast in political or anti-establishment protests.
Topic:
Elections, COVID-19, Civil Unrest, and Economic Crisis
Political Geography:
Latin America

46. Iraq and Lebanon’s tortuous paths to reform

Author:
Nancy Ezzeddine
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
The recent protests in Iraq and Lebanon are driven by the effects of inadequate governance, which itself is a result of years of corruption, nepotism, and the appropriation of public authority and resources for sectarian purposes and self-enrichment. The governance model of both countries – sectarian quasi-democracy – is increasingly proving to be a long-term dead end. Both countries stare into the abyss of public bankruptcy, crumbling social services, growing poverty levels, and the lingering threat of renewed violence. Yet, the Lebanese and Iraqi political elites are stubbornly refusing to make more than token concessions to the protesters’ demands. The reform protesters seek are ambitious due to the many mechanisms that have entrenched elite capture of public authority and budgets in both countries over the past decades. These include, in particular: (1) the deep institutionalization of consociationalism that prevents more radical reform; (2) the pervasiveness of public/private arrangements that political elites use to dominate socioeconomic interactions to their benefits; and (3) the steady courting by many domestic political parties of foreign alliances that sustain the sectarian status quo. Notwithstanding the roadblocks to reform thrown up by these three mechanisms, this paper argues that today’s mix of political and economic crises offers opportunities bring about change. This is because these crises starkly expose the deep failure and unsustainability of current governance and development mechanisms in Lebanon and Iraq. Faced with resilient, stick systems that feature many veto players, reform is inevitably bound to be a gradual, long-term process that slowly and painfully strengthens and changes political structures. Key ingredients of such a path are the capacity of civil society structures to influence and guide decision making, the extent to which the international community is ready to challenge the status quo via conditions and incentives for genuine reform, and the ability to protestors to keep pressing for and prioritizing domestic agendas despite geopolitical tensions.
Topic:
Civil Society, Corruption, Reform, Alliance, Political Crisis, and Economic Crisis
Political Geography:
Iraq, Middle East, and Lebanon

47. Looming Debt Crisis in Sub-Saharan Africa: Drivers, Implications and Policy Options

Author:
Léonce Ndikumana, Theresa Mannah-Blankson, and Angelica Espiritu-Njuguna
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This study explores the trends, patterns and drivers of recent debt accumulation in Sub-Saharan African countries with a view to sheding light on possible strategies to minimize adverse effects on the economies and ensure sustainable development financing. This is in light of concerns about a possible ‘looming debt crisis’ in the developing world, which have been exacerbated by the Covid-19 pandemic. The analysis in this study is based on existing data, supplemented by detailed information obtained from government sources for the cases of Ghana, Kenya, and Uganda. The evidence shows that Sub-Saharan African countries have experienced rapid accumulation of both domestic and external public debt since the 2008 global financial crisis. Governments have resorted increasingly to non-concessional borrowing and high-cost private short-term loans including Eurobonds, which has contributed to increasing the overall cost of debt servicing. The debt sustainability analysis by the IMF/World Bank completed before the Coronavirus pandemic suggested that debt ratios in SSA would stabilize or decline by 2023, assuming that appropriate fiscal consolidation plans are implemented and that most drivers of the debt acceleration dissipate in the medium term. With the Covid-19 pandemic, debt ratios in SSA are likely to rise and would only stabilize at a much later period if African economies are hit with a full-blown crisis as witnessed by advanced economies. Most importantly, the coronavirus crisis will exacerbate debt distress in countries that were already in weak conditions. It is imperative for Africa’s creditors and the donor community in general to assist African countries in combatting the pandemic and minimizing its impact on the economies by alleviating the debt burden through an expanded debt relief and a robust debt restructuring program. Going forward, given that African countries need high levels of financing to reach sustainable development goals, they must devise a strategy for ‘growing with debt’ in the post-crisis period. The paper offers some suggestions to achieve this goal.
Topic:
Debt, Political Economy, COVID-19, and Economic Crisis
Political Geography:
Africa and Sub-Saharan Africa

48. Explaining Turkey’s Current Economic Crisis

Author:
Erinc Yeldan
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Turkey entered a new phase of recession-cum-real economy crisis starting in the last quarter of 2018. In contrast to the previous crisis episodes of 1994, 2001 or 2009, when the economy had abruptly shrunk with a spectacular collapse of asset values and a severe contraction of output, the 2018- crisis is characterized by a prolonged recession with persistent low (negative) rates of growth, dwindling investment performance, debt repayment problems, secularly rising open unemployment, a spiraling currency depreciation and high inflation. Popular explanations from the mainstream tradition attribute this dismal performance to a lack of “structural reforms” and/or exogenous factors. Per contra, our analysis shows that the underlying sources of the crisis are to be found not in the conjunctural cycles of reform fatigue, but rather in the post-2001 neoliberal speculative-led growth model with excessive reliance on hot money flows and foreign debt accumulation. We argue that following the post-2001 orthodox reforms, a foreign-capital-inflow-dependent, debt-led, and construction-centered economic growth model dominated the economy and caused a long buildup of imbalances and increased fragilities.
Topic:
Emerging Markets, Financial Crisis, Financialisation, and Economic Crisis
Political Geography:
Turkey and Middle East

49. COVID-19 Future Trends: Impacts on Children and the Search for Opportunities

Author:
Sol Pradelli
Publication Date:
10-2020
Content Type:
Special Report
Institution:
Elevate Children Funders Group
Abstract:
This short thought-piece was commissioned by ECFG in September 2020 to help members navigate the uncertainty around how COVID would impact children in the longer-term. The paper includes a desk review of the impacts of previous pandemics and economic crises on children; an overview of likely impacts for children of the COVID crisis, including projections by age cohort; four potential scenarios and related planning questions; recommendations for funding, advocacy, and research; and a bibliography of key resources and reports.
Topic:
Children, Advocacy, COVID-19, Funding, and Economic Crisis
Political Geography:
Global Focus

50. Deposits Made “Sacred”: The Dangerous Red Line of Lebanon’s Elites

Author:
Mounir Mahmalat
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Facing the ashes of an economic model based on sectarianism and cronyism, Lebanon currently endures a perfect storm of overlapping financial, economic, and political crises. Since its inauguration on January 31, 2020, the technocratic government of Prime Minister Hassan Diab, aided by international advisors, elaborated an “economic rescue plan” to explore options for recovery. Leaked as a preliminary version in early April, the plan offers a sobering analysis of Lebanon’s economic realities. The plan exposes Lebanon’s present-day power struggle between traditional communal elites and a reformist protest movement. While some assumptions and projections are questionable or left unexplained, in conclusion, the plan depicts as inevitable a contribution of large deposits in the form of “bail-in’s” to cover losses only in the banking sector twice as large as the national economy. In such a scenario, a part of the largest deposits could be transformed into bank equity or placed into a dedicated fund to be replenished with reclaimed “stolen funds.” While some assumptions and projections are questionable or left unexplained, the plan makes visible the power struggle between an elite trying to preserve its interests in the status quo and a reformist protest movement. As a major conclusion, the plan depicts as inevitable a contribution of large deposits in the form of “bail-in’s” to cover losses only in the banking sector twice as large as the national economy. In such a scenario, a part of the largest deposits could be transformed into bank equity or placed into a dedicated fund to be replenished with reclaimed “stolen funds.” Communal elites and party leaders didn’t spare strong words to denounce that plan. While Nabieh Berri unceremoniously declared deposits as “sacred”, former Prime Minister Saad Hariri prophesied “economic suicide” when deposits would be used to cover banks’ losses (assumed that much more could be murdered in the economy). Other leaders from all political parties followed suit, including Hezbollah and the Progressive Socialist Party. Liquidity injections into the banking system in a “bail-out” scenario should leave deposits untouched and be financed largely by privatization of state assets. Despite the high stakes at play for politicians’ bank accounts and the legal complexity of bail-ins, this unusual unity is not trivial to explain. For sure, by accepting any cut on deposits, elites would admit political defeat and declare a 30-year legacy of economic policies as a miserable failure.
Topic:
Reform, Economy, Elites, and Economic Crisis
Political Geography:
Middle East and Lebanon