Mazen Dajani, chief executive of Jordan's CTI Group, says the Arab Spring accomplished what the global financial crisis of 2008-9 did not: it pushed his company, one of the world's largest shippers of cement, into the red.
CTI's shipments to Egypt plunged during the uprising against Hosni Mubarak early last year and have yet to recover, he says, while deliveries to Yemen were disrupted by unrest there. Trade with Libya is still suspended despite the end of last year's civil war. The company is projecting only about 12 to 14 percent of its business will come from the Arab world in 2012, compared with at least 30 percent in normal times.
"The Arab Spring turned the company from profit to loss for the first time in almost 10 years," said Dajani, 46, a member of an influential Jordanian-Palestinian merchant family.
Dajani's frustration is felt across the region. A year after the ouster of Tunisian ruler Zine al-Abidine Ben Ali triggered pro-democracy protests in more than a dozen Arab countries, trading links remain damaged, billions of dollars in investments are frozen, and tens of thousands of people have lost their jobs. That risks compounding the economic problems that helped spur the uprisings.
But the gloom is far from universal. Many Arab businessmen are convinced the turmoil has unlocked new opportunities for private companies, overturning entrenched interests and opening the field for new entrants. Thomas Mirow, president of the European Bank for Reconstruction and Development (EBRD), has compared the Arab Spring to the fall of Communism in the former Soviet bloc two decades ago, saying it could help bring North African economies into the global supply chain. That could set the Arab world up for unprecedented growth.
"The Arab Spring accelerated a trend which was already happening: the levelling of the landscape in a very dramatic way," says Mustafa Abdel-Wadood, chief executive of Dubai-based Abraaj Capital, the Middle East's largest private equity firm with over $6 billion under management. "It triggered a sense of accountability. People don't accept the use of political influence as they used to."
'BREEZE OF CHANGE'
Adnan Ahmed Yousif agrees. The chief executive of Bahrain-based Al Baraka Banking Group, an Islamic banking conglomerate with operations across North Africa, says the Arab Spring had only a "marginal" impact on his firm's earnings last year. He detects a new dynamism in many economies in the Arab world, where about 60 percent of the 350 million people are under 25.
"I see it and feel the breeze of change when I talk to fellow bankers and businessmen," said Yousif, also chairman of the Beirut-based Union of Arab Banks, a regional association.
In Tunisia, a new government elected in October is spending to create jobs and opening areas of the economy to fresh investment, Yousif said. Last month, Tunisia's parliament approved a 7.5 percent rise in spending in the government's 2012 budget from the previous year. Ben Ali's extended family owned big interests in sectors such as telecoms, news media and banking, crowding out potential competitors; that network is now being dismantled, which may create new opportunities.
Yousif said Baraka has applied to open two new branches in Tunisia, which would bring its total number of branches there to 12.
In Egypt and other countries, bankers have become freer to lend without political interference, Yousif said. Libya is moving towards easing curbs on privately owned banks, after years of tight restrictions. New opportunities for Islamic banking are opening up in countries including Morocco and Oman.
"I expect the role of a private sector which was once stifled by governments to grow in the years to come, as change brings more competition and openness," Yousif said.
In many countries, such potential future gains are obscured by heavy costs in the present. Estimates from the International Monetary Fund, analysed by Reuters, suggest the six Arab countries which experienced the most serious unrest - Bahrain, Egypt, Libya, Syria, Tunisia and Yemen - lost around $50 billion in output last year, or 11 percent of their combined 2010 output. Egypt may have lost some $10 billion, while the IMF estimates Libya's economic output halved to $35 billion. Every other Arab economy in North Africa and the eastern Mediterranean was affected to some degree.
The figures probably understate the damage. Many governments struggling to contain social unrest have increased spending on wages, food and energy subsidies. That undermines finances which were already shaky, and runs down foreign currency reserves. Egypt risks both a sovereign debt crisis and a balance of payments crisis this year. The government's borrowing costs have been climbing as foreign investors pull out, forcing it to rely on local banks to finance its budget deficit.
Even Qatar, a wealthy Gulf emirate which avoided political upheaval, was affected. Dajani said Qatar had planned to use his firm to import at least 400,000 tonnes of cement clinker, a material used to make cement, last year. The deals, nearly a third of Qatar's projected imports of the material in 2011, fell through after unrest in Bahrain and smaller protests across the border in eastern Saudi Arabia prompted Qatari businesses to slow their plans.
Grim conditions in the eastern Mediterranean have prompted CTI to send some of its cement carriers to work in Indonesia.
"The Arab world is our traditional market - it's not Indonesia or anywhere else, because we are Arabs. Our traditional customers are here; we have been doing business here for 20 years. We hope for the better, but the turmoil has hit us," said Dajani. As a private company, CTI does not disclose financial details.
Insecurity and political uncertainty are continuing to deter investment. Countries such as Egypt and Libya may see an entirely new set of economic policymakers brought in, including Islamic parties previously kept out of government.
"In Egypt, at the level of adding a room to their homes, people are saying, 'I will wait and see what will happen,'" said Dajani. "This slows everything."
51 MILLION JOBS
There won't be any quick solutions. Two of the Arab world's biggest economic problems - high youth unemployment and an unequal distribution of wealth - sparked the protests and have not improved.
Arab countries would need to generate 51 million new jobs by 2020 to absorb new entrants to the labour force, according to a United Nations report published in 2009. Youth unemployment in the region averages more than 23 per cent, the International Labour Organisation says.
Erik Berglof, chief economist at the EBRD, says the need to generate huge numbers of jobs makes the Arab world's situation more difficult in some ways than the challenges which the former Soviet bloc faced two decades ago.
"There was a more even distribution of wealth in Soviet economies and unemployment was not so high," said Berglof, whose bank was set up to help finance and advise ex-Soviet economies and is now expanding its mission to aid Arab states. "They never faced such problems to the same degree."
Arab governments are now talking of the need for an "inclusive" model of economic growth that would create jobs and allow more people to share in prosperity. This might include better education, greater state investment in transport and health care, and more progressive tax systems. But Berglof said this would remain empty talk until political and economic stability returned.