The financial crisis has cost the Arab world US$2.5 trillion (Dh9.18 trillion) in the past four months alone, Kuwait's foreign minister and acting oil minister, Sheikh Mohammed Al Sabah, says. Up to 60 per cent of the region's development projects had been cancelled or postponed, he said after a meeting of foreign and finance ministers on Friday at a preliminary event of the Arab Economic, Social and Development Summit.
"This just shows the huge damage caused by the crisis," Sheikh Mohammed said. However, the lead up to the two-day summit in Kuwait, which starts tomorrow, has been dominated by events in Gaza. "The situation in Gaza shadows the summit," said Amr Moussa, the secretary general of the Arab League, on Friday. "The occupation is a grave issue, but underdevelopment is, too." Foreign and finance ministers, who drew up a timetable for the summit, dedicated the first meeting to Gaza. Arab leaders will discuss a draft resolution calling for a halt to "Israeli aggression", a reopening of all border crossings and a fund, estimated at $2bn, to rebuild the ravaged territory.
Mr Moussa said the summit, which had been planned for more than a year, was the first devoted to economic and social development in the Arab world. "We want to make a number of achievements, the most important is to make a new approach to Arab action," he said. "We need inter-Arab trade, we need an Arab customs union", and an Arab rail network. The summit's agenda includes food and water security, trade, the free movement of capital and businessmen, the environment, unemployment and poverty. An emergency fund to support Arab financial institutions is also included.
These issues will be discussed under a cloud of bad economic news over the past year. The investment funds of the Gulf, among the world's largest, suffered huge losses when their overseas investments slumped because of the credit crunch. Gulf stock exchanges fared equally badly. Kuwait's own exchange lost 38 per cent of its value last year and Dubai's fell by 72 per cent. The crash in oil prices has hit the region just as hard. Prices have slumped to under $40 per barrel after reaching a record $147 in July. The price has since fallen below the minimum that some Gulf countries need to meet their budgets. A wave of major development projects launched last year have been put on hold or cancelled.
"For each dollar the oil price declines, Arab oil revenues fall between $4 billion and $10bn annually," the Organisation of Arab Petroleum Exporting Countries (OAPEC) said in a brief prepared for Friday's meeting. "There is a need to increase public investment spending" and improve the investment climate to counter the effects of the credit crunch, said Jassem al Mannai, the director general of the Arab Monetary Fund.
The chairman of the Arab countries' federation of chambers of commerce, industry and agriculture, Adnan Kassar, said the summit would discuss the creation of an Arab free trade zone and customs union by 2015, Kuwait's state news agency reported. This would pave the way for an Arab common market by 2020. Saudi Arabia, Egypt and several other Arab countries snubbed another conference, in Qatar, on Friday which focused on Gaza, preferring instead to discuss the issue in Kuwait.
At a press conference on Friday, Sheikh Mohammed played down the divisions exposed by the meeting in Doha and stressed the importance of the Kuwait summit. "Only the Kuwait summit will discuss? major issues important to the Arab citizen," he said, adding that health, education and poverty reduction were among the most important. Leaders from the 22-member Arab League will attend and Ban Ki-moon, the secretary general of the UN, is scheduled to conclude his eight-stop Middle East tour at the summit. jcalderwood@thenational.ae
