Massive G8 aid for Arab Spring

29 May 2011 - 05:08 By Reuters
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The Group of Eight promised tens of billions of dollars in aid to Tunisia and Egypt this week and held out the prospect of even more to help the "Arab Spring" and the new democracies emerging from popular uprisings.



Likening it to the fall of the Berlin Wall that changed Europe, G8 leaders ending an annual summit in France launched a partnership for North Africa and the Middle East that ties aid and development credits to political and economic reforms by states which have thrown off autocratic rulers.

Most is in the form of loans, rather than outright grants, to the two countries in the vanguard of protest movements that have swept the Arab world, from the Atlantic to the Gulf.

Egypt and Tunisia are planning to hold free elections this year.

Summit host French President Nicolas Sarkozy said on top of $20-billion of credits provided by the World Bank and similar regional lenders dominated by the major powers, there would be as much again from other sources - $10-billion from oil-rich Gulf Arab states and $10-billion in bilateral aid.

In a statement after the two-day summit in the northern French seaside resort of Deauville, the G8 leaders said they "strongly support the aspirations of the Arab Spring as well as those of the Iranian people".

"Changes under way in the Middle East and North Africa are historic and have the potential to open the door to the kind of transformation that occurred in Central and Eastern Europe after the fall of the Berlin Wall."

Multilateral development banks "could provide over $20-billion, including à3.5-billion from the EIB (European Investment Bank), for Egypt and Tunisia for 2011-2013 in support of suitable reform efforts".

The package was devised as a blueprint for aid to other Arab countries tussling with democratic reform, some experiencing the sort of street revolutions that brought down Egypt's Hosni Mubarak and Tunisia's Zine al-Abidine Ben Ali.

John Kirton, director of the G8 Research Group at Toronto University, called the summit's achievements historic and said the group was now set on doing for the Arab world what it had done, through credits tied to reforms, for eastern Europe.



Senior Egyptian and Tunisian officials met the leaders of the G8, which was expanded from seven Western powers to include Russia and bridge the East-West divide after the Cold War. They asked for massive support for their fragile economies.

Tourism, a major source of revenue for both Tunisia and Egypt, has been particularly badly hit by the popular uprisings, which have also spooked international investors.





An International Monetary Fund report said the external financing needs of oil-importing Middle East and North African states would top $160-billion over the next three years. The IMF said it could provide $35-billion of that, but many states are implementing austerity measures to rein in budget deficits and trim public debt, which could affect the amount they are willing to stump up to help emerging Arab democracies.

The European Bank for Reconstruction and Development, created after the Cold War to help former communist states become market economies, is now expanding its mandate into North Africa and the Middle East.

It could invest up to à2.5-billion annually in the region by 2015, with a billion euros going to Egypt, the biggest Arab country with a population of some 80million, EBRD communications director Jonathan Charles said.

The groundswell of demand for change in the Arab world, which has spread to Yemen, Bahrain and Syria, has also left Libyan leader Muammar Gaddafi fighting to stay in power.

Russia signalled it was ready to mediate in the crisis, Moscow's special representative on Africa Mikhail Margelov telling reporters Russia had contacts in Gaddafi's entourage. But Sarkozy said: "Mediation is not possible with Gaddafi."

British Prime Minister David Cameron said he did not recall Russian President Dmitry Medvedev's mediation offer and that Britain was sending attack helicopters to Libya to step up pressure on Gaddafi. Obama and Sarkozy said they were determined to "finish the job" in Libya.



During the two-day summit leaders also discussed nuclear safety and said the global economic recovery was becoming more "self-sustained", although higher commodity prices were hampering further growth.

They renewed a pledge to wrap up talks this year on Russia's entry into the World Trade Organisation and said long-stalled global trade talks were a matter of "great concern" . They would explore ways to get things moving.

With aid to Arab states dominating, the G8 also said it stood side-by-side with Africa and would intensify efforts to achieve peace, stability, economic development and growth and regional trade and investment.

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