The Tech - Online EditionMIT's oldest and largest
newspaper & the first
newspaper published
on the web
Boston Weather: 39.0°F | Mostly Cloudy

Concerns Over War in Iraq Continue To Cause Global Economic Troubles

By David Lamb
LOS ANGELES TIMES -- CAIRO, Egypt

Ramadan Ibrahim counts himself among the casualties of the Iraq war as he looks out at the Great Pyramids of Giza. The surrounding parking lots are empty, the tourist shops deserted. In his stable, all 45 of his Arabian horses are idling away the day in their stalls.

“Where are the tourists?” he asks, before answering himself: “Far away. In their homes. The war makes everyone think of nothing but war. We are not Iraq, but people think they will get shot if they come to Egypt. Will they ever come back? Only God knows.”

Usually in March and April, the height of Egypt’s tourist season, Ibrahim’s guides would be leading 15 or 20 riders through the desert on a sunny, cool morning like this. Hotels from Cairo to Luxor would be operating at full capacity. Restaurants along the Nile would be turning away customers. Flights in and out of Cairo would be over-sold.

But these days one of the world’s great tourist destinations has been all but forgotten, and economists estimate the war could cost Egypt up to $8 billion in lost revenue from several sources, including tourism, the Suez Canal and exports.

Egypt’s troubles reflect economic concerns facing the Arab world overall. A United Nations’ agency previously estimated that the 17 Arab countries could see $400 billion in lost productivity and the loss of 2 million “job opportunities” in the next decade because of war.

Most estimates projecting the war’s catastrophic impact, including the U.N. one, were made before the U.S.-led invasion was launched March 20. Because the war ended up being of short duration, did not spill over Iraq’s borders and resulted in a regime change, economists believe the losses may have been overstated. They say it will be impossible to accurately tally up the costs and assess the long-term economic effect until Iraq’s future is clearer and the implications of Saddam Hussein’s overthrow on regional balances is apparent.

“There is an enormous amount of uncertainty as to what institutions, what form of governance, is going to emerge from the post-war situation,” Jean-Louis Sarbib, a World Bank vice president, said in Washington two days after Baghdad’s fall on April 9. “The situation is too unclear for us to say which way the chips are going to fall.”

While reconstruction of Iraq could give an economic boost to the region, in the short term analysts expect declining tourism, investment, trade and transport.

Iraq was Jordan’s major export market, and it was one of Egypt’s largest trading partners. Iraqi oil, some of it smuggled, was an underpinning of the Syrian economy.