Business | Analysis

Recovery of looted funds in “Arab Spring” countries

The curtain has been brought down on foreign investments of former regimes in Egypt, Tunisia and Libya

  • By Mohammed Al Asoomi; Special to Gulf News
  • Published: 12:30 February 6, 2013
  • Gulf News

It has been over two years since the eruption of the so-called “Arab Spring” although this spring has not blossomed yet. And it seems that it will never bloom as things are going from bad to worst. This is clearly manifested in the drastic deterioration in economic conditions and people’s living standards, which have reached rock bottom.

On the political front, the growing differences and clashes between the society’s components in Arab Spring countries make the picture even look more dark and gloomy.

In the midst of this chaos and deteriorating economic conditions, there is an important need for stability, otherwise losses will be doubled. The curtain has been brought down on foreign investments of former regimes in Egypt, Tunisia and Libya, which are estimated at more than $250 billion (Dh917.5 billion), according to preliminary data. This despite the fact that it would not be possible to determine the actual volume of these investments and deposits, noting that estimates have varied about the volume and the geographic range of the Yemeni and Syrian funds.

A state of uncertainty has shrouded this issue, which also lacks information. For investments by former Libyan regime, European and North American countries require the adoption of legal procedures for the recovery of these investments. Needless to say, these legal measures are so complicated, long and costly because of the high cost of legal consultancy offices there.

Confidential accounts

Regarding unannounced and unknown investments, they are deposited in confidential accounts in non-code names, what makes the follow-up process very complicated if not impossible, whereas “Shylock” will be laughing in his secret saying, “do whatever you like, these funds will never be recovered!!

Despite nonstop calls for recovering these funds, such as the Doha Forum on the stolen asset recovery-which was held in 2012, the governments and people of Arab Spring countries are engaged in settling scores, revenge and counter-revenge, ignoring that there are more important things to be pursued and utilised in the service of development.

This happens at a time when the “spring” countries are seeking financial assistance from other countries and UN institutions, such as the International Monetary Fund (IMF), where Egypt is trying to secure a $4.8 billion IMF loan.

Although the Doha forum called for developing an international mechanism to recover Arab funds, the response by Western countries — where these funds are invested-was weak. This poor response is attributed to their urgent need for these invested funds, as the outflow of these funds may contribute to additional complications to their monetary and financial crises. The Western countries believe that the time was not appropriate for money recovery at present at least.

The previous experiences indicate that the largest proportion of the “Arab Spring” money will not be recovered neither now nor in the future. The Philippines, for instance, was hardly able to recover only $4 billion of the total 40 billion of the funds invested by former president Ferdinand Marcos, after more than 30 years after toppling him. This is also the case with the funds of former Indonesian President Suharto.

Transparency

Fortunately, the “spring” countries invested some money in other Arab countries, especially in the Gulf. These funds are reserved and refundable at any time, as financial systems in the GCC countries are characterised by transparency and clarity and does not deal with confidential accounts that all go through central banks, which exercise tight control over the flow of capital, investment and remittances.

In view of the difficult economic and financial situations in the countries of the “Arab Spring”, the vanishing of most of these funds will further complicate things and lead to a further deterioration in economic and people’s living conditions.

But, the recovery of these funds may lead to the setting up of significant development projects and providing job opportunities — just if these assets are utilised and used in a proper way — but this is a questionable matter.

If these countries managed to invest the recovered assets in development projects that create more jobs for the youth, they will be able to restore stability. Yet, this would not be possible unless these countries overcome their domestic differences and worked to develop their societies in a professional manner. But, this is not in sight yet.

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