Gaza war could push millions in the region into poverty, warns UN

According to another UN analysis released in early November, the West Bank and Gaza’s GDP shrank 4 percent in the war’s first month, sending more than 400,000 people into poverty. Reuters
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Updated 25 December 2023
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Gaza war could push millions in the region into poverty, warns UN

DUBAI: More than 230,000 people in countries neighboring Palestine and Israel could be pushed into poverty as the effects of the war ripples across the region, according to a UN-led assessment.

Countries in the Arab region, particularly those that form the “ring of fire” around Israel and Palestine, face a grave economic downturn thanks to the ongoing war in Gaza, according to a study carried out by the UN’s Development Program and Economic and Social Commission for Western Asia.

The report, titled “Expected socio-economic impacts of the Gaza Crisis on neighboring countries in the Arab states region,” states how Egypt, Jordan and Lebanon could see their economies regress by at least two to three years due to the ramifications of the war.

The analysis examines several possible regional spillover effects, based on lessons learned from previous conflicts in the region, including the 2003 invasion of Iraq, the 2008-2009 war in Gaza and the crisis in Syria that has been ongoing since 2011.

All these conflicts have contributed to changes in oil prices, pressures on public debt, influxes of refugees and effects on tourism and trade, among others.

These spillover effects may not have fully played out at present and there remain various risk factors to be monitored, states the UNDP report.

“The impact of the Israel-Hamas war will depend on the length and depth of the conflict as well as if it spills over into the wider region, thus drawing in other parties, resulting in international ramifications that would then have an effect on global supply chains,” Nasser Saidi, former Lebanese economy and trade minister and founder of economic and business advisory consultancy Nasser Saidi & Associates, told Arab News at the end of November.

According to the World Bank, the war has left Gaza’s economy almost at a standstill, and approximately 85 percent of workers are without jobs, says the organization.

In a recent analysis of the economic impact of the conflict, the Washington-based development organization said the Palestinian territory was operating at only 16 percent of its productive capacity and was experiencing a “deep recession.”

The economic cost of the Israel-Hamas war in Gaza on the neighboring countries of Egypt, Jordan and Lebanon in terms of loss of gross domestic product could rise to at least $10.3 billion this year and push more than 230,000 people into poverty, according to the study.

This amount could double if the conflict lasts for another six months, the UNDP report says.

“The crisis was a bomb in an already fragile regional situation ... It soured sentiment with fear of what could happen and where things are going,” Abdallah Al-Dardari, UN assistant secretary-general and UNDP’s director of the Regional Bureau for Arab States who led the study, told Reuters.

Al-Dardari, a former minister for economic affairs in the Syrian government, noted that the scale of destruction in Gaza within such a short time was unprecedented since World War II.

“To lose 45-50 percent of all housing in one month of fighting ... We have never seen anything like this ... the relationship between destruction level and time, it’s unique,” he told Reuters. 

According to another UN analysis released in early November, the West Bank and Gaza’s GDP shrank 4 percent in the war’s first month, sending more than 400,000 people into poverty — an economic impact unseen in the conflicts in Syria and Ukraine or any previous war between Israel and Hamas.

Al-Dardari told a news conference launching the November report that a loss of 12 percent of GDP for Palestinians by the end of the year would be “massive and unprecedented.”

By comparison, said Al-Dardari, the Syrian economy lost 1 percent of its GDP per month at the height of its conflict, and it took Ukraine a year and a half of fighting to lose 30 percent of its GDP — an average of about 1.6 per month.

The war arrived just as Egypt, Lebanon and Jordan were already facing severe and mounting struggles from high unemployment, fiscal pressures, impacted investment flows and slow growth. 

These countries were in the throes of recovering from the coronavirus pandemic, and Lebanon in particular remains in a dire state thanks to one of its worst economic crises and the aftermath of the Aug. 4 2020 Beirut explosion.

In an interview with Arab News earlier this month, the chairman of business giant Al-Habtoor Group admitted he is prepared to pull out of Lebanon entirely, such is the concern over the country’s economic future.

Khalaf Al-Habtoor said the value of his group’s $1.5 billion direct and indirect investments in Lebanon is now close to zero thanks to the downturn.

The country is already mired in an ongoing financial crisis and deep political instability, and the conflict at its border is threatening to further destabilize the economy. 

Across Jordan and Egypt, one area already experiencing ramifications because of the war is the tourism sector, which is now seeing a downturn reminiscent of the COVID-19-era.

In Jordan, tourism accounts for 10 percent of GDP, but since the war began, hotels and cultural tours have witnessed numerous cancellations, almost overnight.

In Egypt, the travel industry is still behind pre-pandemic figures when it comes to GDP contribution, posting 7.7 percent in 2022 compared to 8.5 percent in 2019.

The war has seen the sector take another hit, with numerous tourism bookings to popular destinations in the Sinai Peninsula, which borders Gaza, such as Taba, Nuweibeh, Dahab and Sharm El-Sheikh, canceled.

The future remains dire for the entire region, a Lebanese Beirut-based businessman told Arab News on the condition of anonymity.

“We have been at breaking point for so long,” he said, adding: “The current war, or an expanded war in the country, only exacerbates our situation. We have been living in a state of collapse for the past four years. We have gotten used to it. There is no financial sector, no government and no hope for young startups.”

The businessman added: “If Israel engages in a greater war with Hezbollah, the economic costs are worse for Israel.

“We have already been living in economic and social despair.”


Citi gets license for regional headquarters in Saudi Arabia, memo shows

Updated 22 November 2024
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Citi gets license for regional headquarters in Saudi Arabia, memo shows

  • Wall Street giant received the approval from the Ministry of Investment Saudi Arabia

RIYADH: US bank Citigroup has received approval to establish its regional headquarters in Saudi Arabia’s Riyadh, according to an internal memo seen by Reuters on Friday.
The Wall Street giant received the approval from the Ministry of Investment Saudi Arabia (MISA), according to the memo.
“This marks a significant leap forward for our franchise in Saudi Arabia and we look forward to our continued growth in the kingdom,” Citi Saudi Arabia CEO Fahad Aldeweesh said in the memo.
Bloomberg News reported the development earlier in the day.
Wall Street titan Goldman Sachs also received a license in May to set up its regional headquarters in Saudi Arabia’s Riyadh.


Saudi Arabia joins global hydrogen fuel partnership

Updated 22 November 2024
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Saudi Arabia joins global hydrogen fuel partnership

RIYADH: Saudi Arabia has joined a key international alliance designed to enhance cooperation around the development and deployment of hydrogen and fuel cell technologies.

The International Partnership for the Hydrogen and Fuel Cell Economy works to deliver a balanced and effective global transition to cleaner and more efficient energy systems.

The Kingdom’s Ministry of Energy announced Saudi Arabia had signed up to the organization, with a press release saying the move represents a new step that confirms the “pioneering role” that the Kingdom is playing in international efforts aimed at enhancing sustainability and “innovating advanced solutions” in the fields of clean power.

Saudi Arabia has pledged to achieve zero neutrality in terms of carbon emissions by 2060, as well as becoming one of the world’s most important producers and exporters of clean hydrogen.

The press release added: “The Kingdom’s accession to this partnership confirms its firm vision regarding the role of international cooperation and its importance in achieving a more sustainable energy future.”

The IPHE was originally launched in 2003 by the US, and has two active working groups covering Education & Outreach, and Regulations, Codes, Standards, & Safety.


COP29 enters final hours amid key negotiations on climate finance and carbon markets

Updated 22 November 2024
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COP29 enters final hours amid key negotiations on climate finance and carbon markets

BAKU: As COP29 nears its conclusion, negotiators are working intensively to finalize agreements that could significantly advance global climate action. 

Hosted in Baku, Azerbaijan, the conference has focused on critical issues such as climate finance, adaptation strategies, and the operationalization of carbon markets under the 2015 Paris Agreement. 

Although decisions remain in draft form, the discussions signal progress on aligning global efforts with the urgent need to combat the climate crisis.

Saudi Arabia has emerged as a key player, leveraging its growing diplomatic influence and domestic climate initiatives to shape the outcomes.

Push for equitable climate finance

One of the most pressing topics at COP29 has been the New Collective Quantified Goal on climate finance. 

Negotiators are seeking to establish a framework that mobilizes $1.3 trillion annually by 2035 to support developing nations in addressing climate change. 

This new goal reflects the escalating financial demands of both mitigation and adaptation efforts, with developing countries requiring $215 billion to 387 billion annually for adaptation alone through 2030.

Saudi Arabia has been a vocal advocate for equitable financing mechanisms, emphasizing the need for practical pathways to unlock funds for countries that bear the brunt of climate impacts yet have limited resources. 

The Kingdom has supported calls for reforming global financial institutions to reduce barriers such as high borrowing costs and restrictive conditions. This aligns with Saudi Arabia’s broader position that climate finance must be accessible and targeted to the most vulnerable nations.

Domestically, Saudi Arabia has backed its advocacy with action. The Kingdom has committed significant investments to its Saudi Green Initiative, which includes billions of dollars for renewable energy projects, reforestation, and environmental restoration. 

These initiatives underscore Saudi Arabia’s dual focus on addressing domestic climate challenges and contributing to global solutions, according to the draft resolution. 

“Through initiatives like the Saudi Green Initiative, the Kingdom has committed to reducing regional emissions by more than 10 percent and leading the planting of 50 billion trees across the Middle East to combat desertification and foster environmental sustainability,” the document stated.

Speeches came to an end as negotiations at COP29 in Baku reached their final hours. AN Photo/Abdulrahman Bin Shulhub

Carbon Markets: A Saudi priority

Discussions on Article 6 of the Paris Agreement, which governs international carbon trading, have been another focal point of COP29. 

Saudi Arabia has taken a prominent role in shaping the rules for carbon markets, advocating for frameworks that promote transparency and equitable participation.

Under Article 6.2, which covers bilateral cooperation, and Article 6.4, which establishes a centralized mechanism for trading carbon credits, Saudi negotiators emphasized the importance of avoiding double-counting emissions reductions and ensuring environmental integrity. 

These safeguards are essential for building trust in the carbon market as a tool for accelerating emissions reductions.

In the draft resolution on financing released by the UN Framework Convention on Climate Change it is outlined that “Saudi Arabia emphasizes the importance of transparency and equitable participation in Article 6 mechanisms, ensuring that developing nations can benefit from international carbon trading frameworks.”

The Kingdom’s engagement in these discussions reflects its broader ambition to become a regional hub for carbon trading. The Kingdom is advancing projects in carbon capture, utilization, and storage, positioning itself as a leader in leveraging market-based solutions to achieve climate goals. 

These efforts align with the Saudi Green Initiative’s targets for emissions reductions and renewable energy expansion.

A commitment to adaptation

While mitigation often dominates global climate discussions, COP29 has seen renewed attention to adaptation – an area where Saudi Arabia has also contributed actively.

Negotiators are working to refine the Global Goal on Adaptation by developing measurable indicators to track progress.

These metrics aim to ensure that adaptation efforts are effective and responsive to the needs of vulnerable communities.

“Saudi Arabia continues its focus on promoting energy efficiency, a critical pillar of its sustainability agenda, as highlighted by top officials during COP29 discussions,” reads the draft resolution.​

The Kingdom has supported these efforts, emphasizing the importance of integrating local knowledge and traditional practices into adaptation strategies. The Kingdom’s approach aligns with its domestic priorities, which include enhancing resilience to desertification and water scarcity, challenges exacerbated by its arid climate, the document added.

Inclusivity and collaboration

Inclusivity has been a central theme at COP29, and Saudi Arabia has demonstrated its commitment to ensuring diverse voices are part of the climate conversation. The Kingdom supported the draft Baku Workplan, which aims to elevate indigenous peoples and local communities in climate governance.

Domestically, Saudi Arabia has prioritized inclusivity through education and workforce development programs that prepare youth and women for leadership roles in green industries. 

These initiatives are part of broader reforms under Vision 2030, which aims to diversify the economy while ensuring equitable opportunities for all citizens.

COP29 began on Nov. 11. AN Photo/Abdulrahman Bin Shulhub

Regional leadership

Saudi Arabia’s influence extends beyond its national borders. Through the Middle East Green Initiative, the Kingdom is fostering regional cooperation to combat climate change.

The initiative includes ambitious goals to plant 50 billion trees across the Middle East and reduce regional emissions by more than 10 percent.

At COP29, these efforts were presented as examples of how regional action can amplify global progress.

By working closely with other Gulf Cooperation Council countries, Saudi Arabia is also driving investments in renewable energy projects that enhance energy security and sustainability. 

These partnerships underscore the Kingdom’s role as a regional leader in climate action, capable of catalyzing collective efforts to address shared challenges.

Challenges and opportunities ahead

As COP29 approaches its conclusion, much remains to be finalized. The draft decisions on climate finance, carbon markets, and adaptation reflect significant progress but also underscore the complexity of reaching consensus among diverse stakeholders.

Saudi Arabia’s contributions to these discussions demonstrate its ability to balance domestic priorities with international leadership. By advocating for equitable solutions, advancing regional cooperation, and showcasing its own climate successes, the Kingdom has positioned itself as a key player in shaping the global response to climate change.

The conference has marked an important step forward in the global fight against climate change. The agreements under discussion – particularly those on finance and carbon markets – highlight the growing recognition that collective action is essential to achieving the Paris Agreement’s goals.

Saudi Arabia’s active participation in these negotiations underscores its evolving role as a climate leader. 


Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive

Updated 22 November 2024
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Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive

RIYADH: Cement sales in Saudi Arabia saw an annual increase of 4.93 percent in the third quarter of 2024, reaching 12.84 million tonnes, according to recent data.

Figures released by Al-Yamama Cement showed that 96.18 percent of these sales were domestic, with only 3.82 percent being exported.  

The data covers 17 Saudi cement companies, with Al-Yamama Cement holding the largest share of domestic sales at 12.47 percent, amounting to 1.54 million tonnes, despite experiencing a 27.18 percent decline during the period.

With the successful acquisition of Hail Cement Company by Qassim Cement Company, QCC now leads the market with the highest share among its peers at 13.37 percent, or 1.65 million tonnes, moving Al-Yamama Cement to second place.

Saudi Cement, Southern Cement and Yanbu Cement held 8.96 percent, 8.49 percent and 8.18 percent shares of the domestic market respectively.

The highest growth in domestic sales was recorded by Umm Al-Qura Cement, which saw a 69 percent increase to 372,000 tonnes during this period, despite holding a relatively small 3 percent market share.

City Cement’s local sales rose by 52.69 percent annually to 739,000 tonnes, while Tabuk Cement experienced a 27.3 percent increase, reaching 429,000 tonnes.  

In terms of cement exports, Saudi Cement dominated with 80.45 percent of total shipments, amounting to 395,000 tonnes this quarter.  This figure represents a 13.18 percent increase compared to the same quarter last year.   

Najran Cement accounted for 11 percent of exports for the quarter, totaling 54,000 tonnes, marking a 24 percent decline. Eastern Cement with 8.55 percent share saw a 133 percent rise in exports, reaching 42,000 tonnes. 

Saudi Arabia also exported 1.08 million tonnes of clinker during this period, marking a 41 percent decline compared to the same period last year.

Clinker, a crucial intermediate product in cement production, is commonly exported due to its cost-effectiveness. It is more economical to ship it to other countries for final processing into cement than to produce the finished product and then export.

According to a report by AlJazira Capital, the total utilization rate of the cement sector in Saudi Arabia stood at 72.8 percent in September. 

This figure represents the proportion of the cement production capacity that is actively being used to meet demand.

A utilization rate of 72.8 percent indicates that, on average, the cement industry in Saudi Arabia is using just over two-thirds of its available production capacity.

Saudi Arabia is a prominent player in the global cement industry, ranking among the top 10 producers worldwide. The Kingdom’s production capacity has been bolstered by significant investments to meet both domestic demand and export opportunities.

Key factors driving Saudi Arabia’s cement industry include its robust infrastructure development, housing projects, and initiatives under Vision 2030, which aim to diversify the economy and reduce reliance on oil revenues.

Saudi Arabia’s path to decarbonization

In October, Saudi Arabia’s cement sector took a significant leap towards decarbonization with the announcement of a joint venture between the UK’s Next Generation SCM and Nizak Mining Co., a subsidiary of City Cement.

The collaboration is focused on producing supplementary cementitious materials locally, utilizing an innovative, energy-efficient technology.

This new method requires only one-sixth of the fuel compared to conventional cement production and operates at lower temperatures, significantly reducing operational costs and carbon emissions.

The technology already demonstrates a 99 percent reduction in emissions, producing just 8 kg of CO2 per tonne of calcined clay, compared to the global average of 600 kg per tonne.

The joint venture is part of the Kingdom’s broader decarbonization strategy, which is aligned with Vision 2030 and the Saudi Green Initiative.

As part of these proposals, the Kingdom has set an ambitious goal of cutting carbon emissions by 278 million tonnes annually by 2030.

This venture, which will have its first production plant in Riyadh, is expected to produce up to 700,000 tonnes of low-carbon supplementary cementitious materials in its second year of operations, starting in 2025.

The project is also crucial for the domestic production of low-carbon concrete, as traditional SCM alternatives, like fly ash and slag, are not readily available in Saudi Arabia.

The venture will not only help Saudi Arabia meet its sustainability targets but also strengthen its position as a regional hub for low-carbon materials, generating both economic and environmental benefits.

Speaking in October, Majed Al-Osailan, CEO of City Cement, emphasized the long-term impact of the project, stating that it will create jobs, improve access to sustainable building materials, and create export opportunities for the Kingdom.

According to a study by the Boston Consulting Group in September, Saudi Arabia stands to gain a significant competitive advantage in the global cement industry as the sector moves toward decarbonization through carbon capture and storage.

The competitive dynamics of the industry are shifting due to the high costs associated with CCS, which is essential for achieving net-zero emissions by 2050.

One of the primary factors influencing future competitiveness is a plant’s proximity to CO2 storage sites.

Cement plants located within 200 km of CCS hubs could see abatement costs reduced by half compared to those located farther away.

This geographical advantage will be crucial in determining cost competitiveness on a global scale.

Saudi Arabia, with its lower energy costs, is well-positioned to capitalize on this advantage according to the study. The Middle East, in general, benefits from cheaper energy, which could give Saudi plants a $20 per tonne cost advantage in CCS over the global median.

This would allow Saudi Arabia to emerge as a key export hub in the global cement market. 

Plants in the Kingdom that can minimize their CCS abatement costs will be internationally competitive, particularly as global trade dynamics shift and demand grows for low-carbon cement.

Moreover, Saudi Arabia’s energy infrastructure and strategic location near key shipping routes bolster its potential as a regional and global supplier of cement.

With substantial investments in CCS technology and renewables, the Kingdom could not only meet domestic demand but also serve international markets more efficiently, securing its position in the evolving global cement trade.

As the cost of CCS implementation rises, the global competitive landscape will be reshaped, with plants closer to CO2 storage hubs and renewable energy sources becoming more attractive.

Saudi Arabia’s competitive edge, therefore, lies in its ability to leverage its energy resources and strategic location, potentially making it a leader in the export of low-carbon cement solutions.


Oil Updates – crude heads for weekly gains as Ukraine war intensifies

Updated 22 November 2024
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Oil Updates – crude heads for weekly gains as Ukraine war intensifies

LONDON: Oil prices inched lower on Friday, but were on track for a weekly rise of nearly 4 percent, as an intensifying war in Ukraine returned a geopolitical risk premium to oil markets.

Brent crude futures fell 65 cents, or 0.88 percent, to $73.58 a barrel by 4:12 p.m. Saudi time. US West Texas Intermediate crude futures fell by 66 cents, or 0.94 percent, to $69.44 per barrel.

Pressuring prices on Friday, eurozone business activity took a surprisingly sharp turn for the worse this month as the bloc’s dominant services industry contracted and manufacturing sank deeper into recession.

Kazakhstan’s largest oilfield, Tengiz, is scheduled to return to full production in early December, Russian news agency Interfax reported on Friday, while elsewhere Kazakhstan’s energy ministry said it plans to produce 90 million tonnes of oil in 2025, up from 88 million tonnes in 2024.

Both contracts are set for gains of nearly 4 percent this week, as Moscow steps up its Ukraine offensive after Britain and the United States allowed Kyiv to strike deeper into Russia with their missiles.

“The Russia-Ukraine escalation has raised geopolitical tensions beyond levels seen during the year-long conflict between Israel and Iran-backed militants,” Saxo Bank analyst Ole Hansen said on Friday.

He added that rising refinery margins and an incoming cold snap had also supported distillate refinery profit margins, and wider oil prices, this week.

The Kremlin said on Friday that a strike on Ukraine using a newly developed hypersonic ballistic missile was a message to the West that Moscow will respond harshly to any “reckless” Western actions in support of Ukraine.

Ukraine has used drones to target Russian oil infrastructure, for instance in June, when it used long-range attack drones to strike four Russian refineries.

“What the market fears is accidental destruction in any part of oil, gas and refining that not only causes long-term damage but accelerates a war spiral,” said PVM analyst John Evans.

Also supporting prices this week, China announced policy measures on Thursday to boost trade, including support for energy product imports, amid worries over US President-elect Donald Trump’s threats to impose tariffs.

China’s crude oil imports are set to rebound in November, according to analysts, traders and ship tracking data.