Even by the wanton standards of the Middle East, the last 15 years have been very destructive. No-holds-barred wars and civil strife have devastated nearly half of the region's population, enveloping Libya, Sudan, Yemen, Israel, Gaza, Lebanon, Syria and Iran. Even with Herculean efforts (of which there is no sign at present), the physical recovery from the carnage may take at least a decade, and its final bill could well reach one trillion dollars. The affected societies may need a generation or two for a “final closure”.
Although the cognoscenti are well aware of the devastation the mentioned parts of the region have undergone, it is deemed necessary to have the same captured in the table below:
The table above may be imprecise, but it does provide a perspective of the unfolding horror. The cold facts and figures are grossly inadequate to do justice to the accompanying heart-rending human and societal tragedies. At the risk of sounding detached, the article focuses only on the prerequisites for mitigating the macroeconomic damage inflicted. But before this is done, we need to dwell briefly upon both the commonalities as well as the specific nuances of the situations involved.
Man-Made Crises
At the lowest common denominator, all these crises are essentially man-made, even though long-festering political factors, such as a sense of politico-economic alienation, did make for a significant backdrop. Sectarian, ethnic and religious divides exacerbated the conflicts, as did stakeholders' recklessness and foreign powers' involvement. The triggers, such as the Palestine Cause, Arab Spring, Nuclear Autonomy, etc, often came in handy to justify and expand the conflict. In most cases, the national economy was broken by mismanagement, kleptocracy and ad hoc-ism long before being further damaged collaterally by the conflict.
However, each one of these crises has its specific complexities, which need to be acknowledged and taken on board.
The Specifics
Beginning with Syria, a new and inexperienced Sunni militant government is struggling with a perfect crisis with politico-ethnic agnosticism, economic sanctions and broken institutions.
After 14 years of civil war, oil-rich Libya is vertically split between two parallel administrations alternating between unity talks and fighting. They are kept afloat together by two united federal institutions, viz., the Central Bank and the National Oil Company.
While the civil war in Sudan is only in its third year, it has become the “world's worst humanitarian disaster” thanks to its large size and population, two already well-armed belligerents, viz. Sudan Armed Force (SAF) and Rapid Deployment Force (RSF), and their foreign sponsors. Both the SAF and the RSF are accused of ethnic cleansing.
Neighbouring Yemen, too, has suffered from instability and civil war since the Arab Spring of 2011. Even before the Sudan and Gaza conflicts, Yemen, the poorest country in the Arab World, had the dubious distinction of being the world's worst humanitarian disaster for many years - mostly due to a vicious civil war in which several regional powers waded in, wreaking destruction and imposing a sea blockade. Since November 2023, al-Houthis ruling northern Yemen have been embroiled in the Gaza conflict, disrupting maritime activity at the Bab al-Mandeb. They have also sporadically exchanged missiles and drones to bomb Israel. In return, they have suffered air attacks by Israel, the US and the UK.
Hamas' brutal attack on Israel on October 7, 2023, killed nearly 1,139 people and took nearly 200 hostages. It triggered a massive Israeli invasion of Gaza that is continuing, despite over 60,000 deaths and looming mass starvation. Since September 2024, Israel has decimated Hezbollah Shia militia in Lebanon, its most formidable enemy, decapitating its leadership and junking its arsenal.
Lebanon's domestic politics has also broken free of the longstanding Hezbollah-Amal stranglehold, being able to elect its new President and Prime Minister. Hezbollah is, however, resisting the call to disarm. After successfully curbing its proxies, in mid-May, Israel launched a vigorous 12-day war against Iran with the declared objective of degrading its nuclear and missile capabilities. A retaliatory barrage of Iranian missiles and drones also caused serious damage in Israel. Towards the end, the US made a massive surgical strike at three underground Iranian nuclear sites, the outcome of which remains doubtful. The politics in Israel has been in suspended animation during the war and needs to run its course.
Not An Easy Task
Now that the guns have fallen silent, at least temporarily, global attention needs to turn to the stabilisation of the post-conflict situations. Given the scale of the upheaval and upending of the long-established regional geo-strategic paradigms, it would be an enormously complex and expensive task requiring the concerned stakeholders to show the right mix of realism and flexibility. They would also need endurance, vision and deep pockets. Their long-term success can only be measured by the region's progressive return to normalcy and peace.
While the political and economic components of the post-conflict stabilisation are intertwined, their specific order would differ. In Gaza, for instance, averting an imminent famine takes precedence over everything else, while in Libya, Syria and Lebanon, respective political and ethnic stakeholders need to initiate an inclusive political process. In most cases, physical reconstruction has to go hand in hand with socio-political institution-building. Inevitably, the legacy of the past hostilities has created bitterness and mutual suspicions, complicating the recovery. Initial focus on “early harvest” projects, such as agriculture and MSMEs, would help trigger the virtuous cycle of trust and confidence.
Where The Money Comes From
With the possible exception of Israel, Libya and Iran, other affected countries would need massive Overseas Development Assistance (ODA) to get back on their feet. Two large sources of such funds can be located with the Bretton Woods institutions and the Gulf Cooperation Council states. The deployment of their funds would be subject to their respective conditions. Subsequently, other sources, such as UNDP-sponsored donors' conferences, expatriates, private equity funds, venture capitalists, etc, can also be leveraged.
At the risk of stating the obvious, the task of rebuilding the war-ravaged parts of the Middle East is too enormous and complex to be undertaken by one country or agency. Moreover, it would be self-defeating to see it too narrowly (e.g. “Depopulated Gaza as a World Riviera”). A people-centric approach would be imperative. Given the enormity of the task, it cannot be funded by grants or charity alone; many of the big projects would need to be commercially funded through long-term concessionary financing. At the same time, care must be exercised to leverage the appropriate technology serving the needs of the beneficiaries, creating the maximum number of jobs and imparting skills to manage them.
Historic Precedents
While the task of rebuilding the conflict-ravaged Middle East is gigantic, it is not without historical precedents. After the Second World War, the United States launched the so-called Marshall Plan for 16 countries of Western and Central Europe, rendering them $13.4 billion in assistance during 1948-51. Apart from restoring their economies, the programme also paved the way for the European Union and NATO. Conversely, it established the US as the dominant soft power and reinforced its global economic primacy. In recent times, China's $1 trillion 147-country Belt and Road Initiative and German unification projects are also examples of nation-building. Although BRI is controversial, it has enabled China to gain the goodwill of the Global South while securing numerous projects for its companies.
India, a large and well-integrated neighbour of the Middle East, has evident stakes in peace and stability in the region. There is no gainsaying in recounting the tangible aspects that engage our national interests: the presence of over 9 million of our nationals, their remittances, the sourcing of crude, bilateral trade and investments. We are well-poised to contribute to this regional reconstruction by sharing our socio-political experience and appropriate technology, particularly in such areas as institution building, healthcare, education, MSMEs, IT and skilling. Doing so would also enable us to leverage the emerging eco-commercial opportunities. This can best be done in tandem with the funding from the GCC countries. Given the size and urgency of the task, it would be desirable for New Delhi to expeditiously consult with the concerned domestic stakeholders, such as project exporters, exporters of foodstuff, medicines, etc. Establishment of a Public-Private Partnership to contact the affected countries, funding agencies, etc., to ascertain their requirements, would facilitate our endeavours. A substantive regional line of credit by EXIM Bank of India would also encourage the participation of Indian entrepreneurs. All these measures would position India to engage the affected region in its hour of need, creating new economic partnerships and contributing to the early return of peace and stability to this vital region. We have both the responsibility and the opportunity to do so.
(Mahesh Sachdev is a retired Indian Ambassador. He currently heads Eco-Diplomacy and Strategies, a Delhi-based consultancy.)
Disclaimer: These are the personal opinions of the author
