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Saturday, 28 May 2011 17:28

G8 Finds $40 Billion For Arab Spring

BAKU, Azerbaijan, May 28, 2011 (APA) – The Group of Eight leaders pledged to support pro-democracy movements in North Africa, announcing a mix of loans from international development banks and direct aid totaling at least $40 billion, APA reports quoting “Bloomberg”.


Institutions such as the World Bank and the African Development Bank could provide more than $20 billion for Egypt and Tunisia through 2013, including 3.5 billion euros ($5 billion) from the European Investment Bank, to support “suitable reform efforts,” said a statement today on the so- called Arab Spring after a two-day summit in the French seaside resort of Deauville.


g8French President Nicolas Sarkozy, in a press conference, said G-8 countries will provide another $10 billion in direct aid to Tunisia and Egypt, and that oil exporting countries in the Gulf such as Kuwait, Qatar and Saudi Arabia will kick in another $10 billion. Those figures weren’t included in the communique.


Egypt and Tunisia have seen foreign investment plunge and tourism suffer since toppling their autocratic leaders this year, threatening economic instability as war rages in neighboring Libya. The International Monetary Fund says the region will need more than $160 billion over the next two years.


Hosted by Sarkozy, the fellow leaders of the G-8 nations -- the U.S., Russia, Italy, the U.K., Germany, Canada and Japan -- agreed to set up a “partnership” with the region to encourage the transition to democracy and foster “short-term economic stability.”


Sarkozy, who invited the interim leaders of Tunisia and Egypt as well as representatives of the IMF, the World Bank and Arab League to the second day of the summit that ended today, said the success of the two countries at the vanguard of the Arab Spring is “absolutely crucial.”


Fragile Democracy


Encouraging the fragile democracy in both countries “is the most important issue at this G-8,” Sarkozy told reporters in Deauville.


The promise of support was one of the main goals of President Barack Obama heading into the summit. Obama last week promised Egypt $1 billion in loan guarantees through the Overseas Private Investment Corporation and the cancellation of $1 billion in debt, about a third of what Egypt owes the U.S.


The European Union said two days ago it would increase aid to countries in North Africa and to the east of the 27-nation bloc by 1.2 billion euros. Sarkozy said France’s share of the direct aid is 1 billion euros. Chancellor Angela Merkel said Germany will contribute as much as 300 million euros, with the emphasis on creating jobs for young people in the region.


Aid Flowing


“What’s important now is to get the money to the people quickly,” Merkel told reporters in Deauville. The EU should set up “new, fast and efficient structures” to get the aid flowing.


Britain will provide Egypt, Tunisia and other Arab nations with 110 million pounds ($180 million) of aid over four years to encourage political and economic development, Prime Minister David Cameron’s office said.


Germany, Europe’s largest economy, doesn’t view debt cancellation as the right approach, said an official attending the summit who spoke on condition of anonymity because the talks are confidential.


“Most of the aid that will be delivered quite frankly will be done through multilateral channels,” Canadian Prime Minister Stephen Harper told reporters last night. “Debt forgiveness really would not be a particularly useful tool in terms of what we could do in this region.”


Tourism Drops Off


Foreign direct investment in Tunisia plunged 25 percent in the first four months of 2011, the Tunisian Foreign Investment Promotion Agency said May 19, one day after the tourist board said that tourist arrivals fell 41 percent over the same period.


Egypt’s budget deficit may widen to 11 percent of gross domestic product in the fiscal year that ends June 2012, the most in a decade, Finance Minister Samir Radwan said May 19.


Tunisian Finance Minister Jelloul Ayed said Tunisia wants to invest $5 billion a year over the next five years to create jobs for the country’s 700,000 unemployed. “We are looking for multiple types of aid: grants, long-term loans, direct investments,” Ayed said at a press conference. The program includes infrastructure projects as well as seed money for small companies, he said.


“We are very satisfied” with the G-8’s support, Ayed said.


Encourage Trade


Under the so-called Deauville Partnership, G-8 countries said they will consider improved market access for Arab Spring nations to encourage trade. They urged the IMF to “respond with the necessary support to help meet the external financing needs” of the countries of the region.


The World Bank earlier this week said it plans to provide as much as $6 billion for the two countries, where popular revolts toppled their leaders earlier this year.


The money announced is “not a blank check” and will be tied to “overall reform programs,” Michael Froman, Obama’s deputy national security adviser for international economic affairs, told reporters in Deauville.


“More important than any numerical figure, I think, is the vision that it lays out,” he said. “This is largely a case of trade not aid, investment not assistance over time. It’s really about establishing the conditions under which the private sectors in these economies can flourish and the benefits of growth are broadly shared.” (END)


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