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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
P.E.S.T.E.L. Analysis:
A Look at the Macroeconomic Environment
Of the MENA Region
Courtney Fenwick, Carl Schacter, Eric Rodriguez
Florida Atlantic University
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Table of Contents
Introduction to the MENA Region....................................................................................................3
Executive Summary............................................................................................................................4
Politics ..............................................................................................................................................5
Economic..........................................................................................................................................9
Socio-Culture..................................................................................................................................12
Technology .....................................................................................................................................15
Environment...................................................................................................................................17
Legal...............................................................................................................................................20
Going Forward ...............................................................................................................................23
Appendix (Graphs).........................................................................................................................24
Economics..............................................................................................................................................24
Sociocultural..........................................................................................................................................27
Environmental.......................................................................................................................................31
Technology.............................................................................................................................................43
Bibliography...................................................................................................................................45
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Introduction to the MENA Region
Country Population (Millions) Size
(Sq. Miles)
Leadership
Middle East
Iran 77.45 636,400 Supreme Leader,
Ali Khamenei
President,
Hassan Rouhani
Turkey 74.93 302,535 President,
Recep Tayyip Erdoğan
Iraq 33.42 168,754 President, Fuad Masum
Saudi Arabia 28.83 830,000 King Abdullah
Yemen 24.41 203,850 President,
Abd Rabbuh Mansur
Hadi
Syria 17.95 71,998 President,
Bashar al-Assad
Palestine 10.7 2,402 President,
Mahmoud Abbas
UAE 9.34 32,278 President,
Khalifa bin Zayed Al
Nahyan
Israel 8.05 8,019 President,
Reuven Rivlin
Jordan 6.45 34,495 King,
Abdullah II ibn al-
Hussein
Lebanon 4.46 4,036 Interim President,
Tammam Salam
Oman 3.63 119,499 Sultan,
Qaboos bin Said Al Said
Kuwait 3.36 6,880 Emir,
Sabah Al-Sabah
Qatar 2.16 4,468 Sheikh,
Tamim bin Hamad Al
Thani
Bahrain 1.33 295.5 Sheikh Hamad ibn Isa
Al Khalifa
North Africa
Egypt 82.06 386,700 President,
Abdel Fattah el-Sisi
Algeria 39.21 919,600 President,
Abdelaziz Bouteflika
Sudan 37.96 728,200 President,
Omar al-Bashir
Morocco 33.01 172,414 King Mohamed VI
Tunisia 10.89 63,170 President,
Moncef Marzouki.
Libya 6.2 679,400 Council of
Representatives (CoR)
Western Sahara .554 102,703 President,
Mohamed Abdelaziz
*All stats are current circa 2013; Palestine circa 2009
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Executive Summary
This paper is a macroeconomic analysis of the Middle East and North African (MENA) region.
It examines the Political, Economic, Socio-cultural, Technological, Environmental, and Legal
(P.E.S.T.E.L.) aspects of the MENA region. It will begin with the Political section and proceed
through the acronym in order. This paper will examine the ‘Arab Spring’ and its impacts on the
region, the role of NATO, corruption among governments, the role of the military, and the Iran
nuclear debate. Economics will examine the history of fossil fuels, foreign direct investment
(FDI), the availability of capital and credit, and the effects of national policy on wages & growth.
Socio-Cultural delves into age disparity for the youth of the MENA, religion and its influence on
government structure, the effects of emigration to escape violence, and the lack of transparency
and accountability from leaders in the region. The Technology section will discuss nuclear
development for energy security, the acceptance of popular technology into the mainstream
culture of the MENA, how the Global North is perceived, infrastructure for E-Governance, and
investments in technology. The environment is under attack from the effects of industrialization
of the MENA, pollution problems, water scarcity, and energy security through the development
of clean renewable sources. Finally, the legal section touches on the role of culture in law,
religion in law, the prolific black market and drug trade, as well as trade reform & policy.
Constant real time inflows of information from the MENA region render traditional forecasting
models unreliable. This paper will compile historic trends in an effort to establish mid to long
term outlooks for the different aspects of the PESTEL analysis. Due to the volatility of the region
this analysis will utilize verified information from peer reviewed sources at least six months or
older in order to grasp the facts and remove any speculatory journalistic bias or misinformation.
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Politics
The ‘Arab Spring’ is a movement that occurred throughout the MENA. It is a cultural
awakening that began in early 2011. Protestors spoke out for human rights and ushered in an era
of ‘significant optimism’ for reformation and the proliferation of stable democracies in the
MENA region. The context of ‘Arab Spring’ mainly encompasses the predominantly peaceful
protests which influenced regime changes in Libya, Egypt, and Yemen. It also includes
incidences of military intervention (NATO in Libya), armed sectarian warfare (Syria, Yemen,
Libya) and mass mobilization of protestors. This is represented by an abundance of power
struggles with causes ranging from civil war, religious sectarian conflicts, and unstable power
transitions. Instances such as:
 The regime changes in Tunisia, Egypt, and Libya
 War in Syria, Iraq, and on the borders of Turkey and Iran
 The ever-present conflict between Israel and Hamas in Palestine which has escalated to
missile fire and tunneling beneath the Gaza Strip
 Many smaller sectarian power struggles between the population of a nation and the
struggle against their oppressive governments tenuous hold on power
The volatility of MENA has changed the security needs of visitors to the region as foreign
nationals are being abducted and beheaded with alarming frequency by terrorist organizations.
The North American Treaty Organization (NATO) has established a policy of ‘strengthening and
deepening’ its partnerships in the region to tackle these concerns head on through the shared
goals of security, stability, and peace throughout the MENA. These countries are looking to
NATO to provide direction and leadership towards practical answers to security challenges,
guarantees of security from internal and external forces that threaten the regimes currently in
power, and pro-active steps to stabilize the volatile climate that is pervasive throughout the
region. NATO’s track record has been exceptionally deficient. These areas are supposed to be
its core of expertise. Their ability to defend the MENA region is presently questionable at best
and will continue to deteriorate as financial crisis in Europe and the U.S. force spending cuts,
military shrinkage, and take NATO’s focus away from MENA and back towards domestic
issues.
It has been stated that NATO needs to begin by establishing clear and attainable goals in the
region, to send a transparent message of its partnership expectations and to define what the
phrase ‘strengthening and development’ actually means. Next, NATO must appeal to what the
MENA regions policymakers’ desires in order to establish partnerships that are more attractive
and to focus on the creation of common interests within the individual countries of MENA. The
results of its past ‘top-down’ approach have been limited at best. Most Arabs see NATO as a
powerful and aggressive alliance devoted to the political interests and security of the west.
Nations such as Israel, Egypt, and Turkey have begun to pursue their own independent policies
which are increasingly divergent from the interests of their NATO allies.
Corruption plays a major role in the politics of the MENA region. Transparency
International’s (TI) Corruptions Perceptions Index (CPI) routinely ranks MENA countries below
the world-wide average median. These findings are further bolstered by the Global Integrity
Index (GII) in which the MENA region scores very low in integrity systems and accountability
indicators. The Bartelsman Transformation Index (BTI) lends further credibility to these
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
negative trends. It states that all MENA countries performance regarding democratization and
market liberalization fall well below the world median. Political Transformation scores are even
lower than economic transformation rankings. The Management Index (MI) is a gauge of the
quality of the political management systems currently in use. The MI uses five major categories:
Reliable pursuit of goals by government; Effective use of resources; Governance capability;
Consensus building capacity; International cooperation. All MENA countries scored
exceptionally low in the corruption category with a rating range of 2 (Yemen, Algeria, Lebanon)
to 4 (Egypt, Jordan, Tunisia). Attributing reasons for poor performance in the Governance and
Anti-Corruption categories are:
 Lack of transparency
 Little or no access to information
 Weak internal accountability
 Few to no checks and balances in the system
 Restricted freedom of the press
 Elitist social classes
 Excessive regulation
 Significant barriers to entry
This prevalent corruption impacts many factors of government and is directly correlated to
governance indicators like: Economic growth rate; GDP per capita; Foreign Direct Investment;
Human development index; Poverty index; Health & Education spending. Corruption greatly
increases the risk of government confiscation, expropriation, and domestication due to the self
centric stance of the ruling parties in power who have little interest in social responsibility or in
serving their citizens.
A large contributor to the resistance of the adoption of democratic forms of government in
MENA is the ‘robustness’ of regime security. Robustness is the culmination of four main
factors: A countries fiscal health; international support and assistance to a nation and its military;
mobilization for popular political reform; Degree of security systems embedded in the state
policy. This leads to the role of the military in the government. There are several irregular
forms of government native to the MENA region, such as:
 Oil monarchy
 Civic-myth monarchy
 Mukhabarat states (Syria, Tunisia, Egypt, Yemen; also known as policy/intelligence
states)
 Military states
 Dual military (Iran, Iraq, and Libya who have private guards and security to offset the
country’s national army)
 Military democracy
Military’s in the MENA region are usually used to quell large uprisings that the police are ill
equipped to handle. When the army is summoned, it may or may not respond, as the military has
the status of autonomy with its own independent political decision maker. This further lends to
an overall un-cohesiveness and to security fears of for the different ruling governments in the
region.
Presently, the ‘X Factor’ that has grown into a significant driver of fear and change in the
MENA region is the Islamic State of Iraq and Syria (ISIS). The ISIS conflict in Syria, Iraq,
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Turkey, and Iran has become the frontrunner in a host of issues ranging from the ongoing war
between Israel & Palestine to the Iran nuclear debate. Syria is now ‘ground zero’ in the war for
power and influence in the MENA region. Every country in the region has a direct stake, as well
as the outside interest of many other nations, all directly or indirectly supporting a particular
side. The underlying reasons for conflict are about the balance of power between Iran and Saudi
Arabia in addition to the overall power struggle between Iran and the U.S. & Israeli alliance.
Some key terrorism trends in 2013 include:
 Evolving terrorist groups with tighter local and regional focuses from both Al- Queda
(AQ) and its partners
 The rise of autonomous like-minded groups who take advantage of weak and corrupt
governments
 Ayman al-Zawahi, the head of AQ, has been frequently disobeyed through AQ partners
upgrading the level of violence and attacks on the populations at large
 Thousands of foreign fighters flocking to Syria to battle Assad
 Meanwhile, Iran, Hizballah, and other Shia militia provide support and supplies to the
Syrian regime
 Terrorism is increasingly trending to escalations of violence spurred by
sectarianmotivations in Lebanon, Pakistan, and Syria
 Increased criminal activity from terrorist groups, such as kidnapping for ransom, in order
to generate capital
 ‘Lone Wolf’ attacks in foreign nations are escalating, an example being the Boston
Marathon bombing
The issue of Iran’s right to nuclear power versus their ability to weaponize under the pretext of
peaceful applications for the citizens of the nation is of paramount concern in the MENA region.
Fears began to escalate in 1995 at the Nuclear Non-Proliferation Treaty (NPT) convention where
the Arab League pushed for a Weapons of Mass Destruction (WMD) free zone to be established
in the middle-east. This led to over 15 years of inaction and no progress on the issue from a
disinterested NATO (mainly U.S., Britain, and Russia) who perpetually issued extensions for the
forum. The NPT conference scheduled for 2015 promises more of the same. The Arabs most
recent show of frustration on the issue came in April of 2013 when the Egyptian representatives
walked out of the NPT conference talks due to ‘unacceptable and continuous failure’. The
primary countries involved disagree on several aspects that are essential to achieving arms
control. Egypt and a few other states view the root problem as Israel, not Iran. This is not to say
that Israel is an imminent threat, but a major choke point on the path to an NPT. Not only on a
regional, but on an international level, the MENA nations are feeling pressured and threatened by
the advances in the Iranian nuclear program. Tehran is close to achieving a bomb relatively
quickly if it chooses. Iran insists that its nuclear proliferation is of a peaceful nature, but many
countries are deeply suspicious. The Iranian government states that enrichment of uranium is at
3.5% for power production and roughly 20% for medical research purposes. This is considerably
below the 95% threshold needed for a nuclear weapon. The continuous uncertainty centered on
their nuclear program and Iran’s threatening stance towards many nations, across a multitude of
issues, has led the U.S. and the gulf monarchies to closer and more correlated interdependent
relationships in an effort to curtail Iran’s ambitions. Israel is not inclined to release its nuclear
stockpile. It sees this as the major deterrent against its hostile neighbors, some of which refuse
to recognize Israel’s very existence as a sovereign nation. The recent use of chemical WMD’s
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
by Syria on its own population has dealt a ‘major blow’ to the NPT conference. There are many
reasons for Iran to want to prevent WMD’s in the MENA region, contrary to popular belief,
these include:
 Loss of conventional superiority
 WMD terrorism
 The institutionalization of American presence in the region
 Risk of offensive, rather than defensive, perceptions from other nations
 Production vulnerability and maintenance costs
 Risks inherent in weak communication and command structures
 Damaging Iranian ties with regional and international allies
 Religious prohibitions against WMD’s
Iran’s support of a WMD free zone would help boost other nations’ confidence in them and
allow Tehran to build trust in the greater Arab world. It would also benefit Iran by making the
region more secure and by helping to solidify their power base. Israel is in possession of
anywhere from as few as 60 to as many as 400 nuclear weapons. Jerusalem is of the mindset that
comprehensive security and peace must come before any NPT. Israel denies responsibility for
its nuclear arsenal citing that it has been empowered by the west. It seems to be a zero sum
game being played out which is un-resolvable with one side focused on WMD’s and the other on
overall regional relations between neighboring countries. This conflict is trending to continue in
its current incarnation for the foreseeable future.
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Economic
Historically, the MENA region has been a fossil fuel commodity driven economy. Analyzing
both the historical and current trends in the oil industry, impacts of GDP, imports & exports,
fiscal policies, levels of foreign investment, and employment rates will allow for an effective
forecast of the region’s economic outlook.
MENA economies were prosperous in 1970’s, due in large part to the expansion of oil markets.
Initial revenues produced from oil markets in the 1970’s were largely responsible for the creation
of interventionist-redistributive economic models for oil and non-oil producing countries. These
revenues were a product of a 10 percent increase in global demand from 1976 to 1979. Welfare
structures were implemented to issue excess revenue to the citizens of the oil producing regions.
Non-oil producing countries supplied the labor force necessary to operate the drilling, wells, and
on-site machinery of the oil producing countries.
Expansion within the public sector was an effect of the booming economic progress from the
oil industry. Unemployment throughout the 1970’s was low, literacy rates increased, and life
expectancy rates were on the rise. Trends would drastically change as some countries of MENA
would become members of OPEC (Organization of the Petroleum Exporting Countries). Price
stabilization would arrive with OPEC’s output restriction enforcement in the 1980’s and oil
revenues would decline. As oil revenues declined, the economy of the MENA region would take
a downward trend as public debt increased with the various governments’ inability to answer the
public sector demands for wages and entrenched social programs. The remittance of revenues
associated with migrant labor from non-oil producing countries would decline and international
competition would intensify causing an economic crisis to the MENA region. Various
governments are undertaking initiatives to restructure their economic policies during this time to
stabilize their respective economies.
These trends show that a thriving economy which is trailed by major declines in growth and
development in the public sector are associated with countries that draw their wealth from the
exploitation natural resources. Emphasis on a natural resource like oil pulls experienced labor
from other industrial sectors and entrepreneurial endeavors which creates a pronounced
opportunity cost. Diminished growth rates in employment and investment in the public sector
are attributed to these patterns.
During the 1990’s MENA would lag in both foreign direct investment (FDI) and foreign trade
from a global perspective due to protectionist trade policies. Such policies included restrictions
on foreign majority ownership in both the public and private sectors. Oil exporting countries
were not diversified in their GDP imports and exports due to the implementation of these
policies. MENA was also a laggard globally in both foreign direct investment and foreign trade
because of these closed economic systems. For example, Saudi Arabian fuels made 90 percent of
their export base during this time. (Figure 2.1)
Since the beginning of the 2000’s the Gulf States have developed some of the most attractive
private sectors outside of oil exports among the MENA region. During this time United Arab
Emirates (UAE) developed growth rates in non-oil producing sectors that represented 70 percent
of their GDP:
● Manufacturing (12.6 percent)
● Commerce and hotels (11.4 percent)
● Real estate (9.1 percent)
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
● Construction (8.6 percent)
● Transportation (10.9 percent)
● Finance and insurance (6.4 percent)
● Government services (11 percent)
Unfortunately these economic models are not easy to duplicate in other regions of the MENA.
Some areas have business environments that do not support entrepreneurship and often have
restrictions on attaining startup capital. Public banks govern financial systems that often show
favoritism towards businesses that are state owned and operated instead of inviting investment
from offshore firms. (Figure 2.2)
As of 2010 the MENA region falls at the bottom of the list in regards to percentage of firms
with credit lines from financial institutions (25.07%). One of the main underlying reasons why
firms have difficulty securing credit is due to insufficient collateral provided to banks. More
often than not, financial institutions have a preference towards land as collateral. Availability of
sufficient collateral isn’t the only issue as there is an inability prevalent throughout MENA firms
to make productive use of their valuable assets, such as receivables and equipment. (Figure 2.3)
FDI in the MENA region is restricted due to barriers to trade and political instability. In 2002
the Arab Development Report (UNDP) revealed that from 1975 to 1998 global FDI levels
decreased in the Middle East. From 1975 to 1980 FDI in MENA was at 2.6 percent and from
1990 to 1998 FDI declined to 0.7 percent of the global foreign investment levels. Since the end
of the 1980’s, MENA would attract the least amount of FDI inflows globally. Though FDI
inflows have been increasing as of late, the MENA still continues to lag behind other developing
countries globally.
Beginning in 2000 the Arab region received 1.9 percent of global FDI for developing countries
and was barely elevated above developing European countries that had the least FDI percentage
with .8 percent of global FDI. During this time the FDI deficiencies were attributed to both
internal and external issues. These issues can be comprised of the slow development of
entrepreneurship, political instability, restricted control of foreign ownership to below 50% to
prevent non-domestic control, and limitations on which sectors FDI can be allocated towards.
MENA countries are striving to change investment environments to realize greater inflows of
capital from FDI. New reforms are being developed toward implementing restructured
investment legislation, tax & custom incentives, and reduced foreign ownership restraints.
Enabling foreign investors to achieve majority ownership in profitable industrial sectors will
increase the amount of investment to the MENA region and achieve levels that have been
historically unreachable.
Non-oil producing economies will continue to be buoyed by rising amounts of public capital
spending and credit inflows from the private sector. The long-term challenge of decreasing
dependence on oil is on the horizon for energy producing countries of MENA. Growth in energy
efficient technology, increases in renewable energy projects, and oil supplies from alternative
sources (shale and fracking) are causing prices to decline. Last year’s tepid growth in MENA oil
exports is expected to improve as oil production and exports respond to the global economic
recovery. High levels of public capital spending and accelerating private sector credit continue
to support the non-oil economy. (Figure 2.4)
The outlook for MENA oil importing countries is modest growth and it is anticipated to
continue, but the drivers may begin to change. Resource consumption financed by industry and
large public sector wage spending, will continue to buoy growth. Planned investments in the
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
pipeline could start stimulating economic activity as a result of increased public spending on
infrastructure.
Going forward, generating jobs within the private sector for expanding populations will be a
pivotal challenge for the MENA region. A few member countries in MENA have begun taking
the appropriate measures to expand job markets as some sectors remain fragmented from the lack
of need for skilled labor. Countries can solve this issue by improving education throughout the
public sector, which would improve the need for a quality labor force. (Figure 2.5)
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Socio-Culture
The age bracket of 15 to 24 represents 20% of the population in the MENA region. It is
estimated by the United Nations that over 90 million individuals in this peer group exist in the
MENA. This demographic has faced a tough job market over the past 10 years. Unemployment
levels are consistently low. Jordan has dealt with unemployment levels as high as 14% and it is
estimated that over 75% of these individuals are under the age of 30. In the nation of Egypt, it is
projected that 80% of the unemployed population is under the age of 30 and 82% of those
currently out of work have never been employed. This specific peer group in the MENA has the
highest unemployment percentage in comparison to the rest of the world. It is estimated that in
the next three decades Iraq will experience a surge in population in the 15-24 age bracket leading
to a net gain of 6 million. The “youth bulge” dilemma continues to be detrimental to the young
educated population, as their ability to find work is also on a decline. “Youth bulge” can be
attributed to those MENA countries were fertility was on a receding trend in the mid to late
1990’s. If we compare the estimated 5.6 births per woman in the 1980’s to the currenttwo births
per woman average(less than half) in 2000 in Iran, we can identify the source of the discrepancy.
This discrepancy is caused by the decrease in fertility rates during the mid to late 1990’s. Due to
this age brackets’ failed attempts to enter the workforce, the results have been:
 Poverty as well as inequality,
 It magnifies generational inequalities.
 Leads to higher violence and mortality rates.
The youth unemployment rate is high when compared to other regions of the world, but the
labor participation rate among the youth (ages 15-24) has dropped. (Figure 3.1,B,C)
The separation of church and state is institutionalized in the western world. Within MENA, the
church and state go hand in hand. Based on table 5.2 we can determine that Islam is not the sole
decider on whether a relationship exists between the state and its dominant religion. There are a
number of states that do not consider Islam as their primary religion. These states are undeterred
by the fact that Islam is the dominant religion; this includes countries such as Turkey and
Lebanon. The Government in Religion Index (GIR) has scores ranging from 0 (low religious
influence) to 100 (high influence) and considers fivefactors to determine numerical rankings
within MENA. (Figure 3.2) Those roles consist of
 State restrictions on religion
 Restrictions on minority religions
 Regulations on all religion
 If the state legislation delegates the religion of choice
 Official role of religion within the given state
A large portion of the countries have a small differential gap within their GRI rating. For
example, the UAE and Kuwait exhibit only an 8 point differential between them. Though the
scores are nearly identical the underlying values are quite far apart. In Northern Africa, Tunisia
has championed a movement to prevent religious ideals from taking over daily life. Tunisia has
looked into managing the practice of religion in the region. Their perspective contrasts to that of
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
the Persian Gulf which has traditionally accepted religion and law uniformly. Religion has
played a major role in the groundwork legislation of the Persian Gulf.
The fact that Syria, Israel, and Lebanon are on the bottom of the GRI does not correlate with a
decline or the acceptance of religion within politics. The reason we see this trend is, for example
in Syria, political power has belonged to the one of the Islamic religions’ larger groups (the
Sunni sect) as well as the largest religious minority, known as the Alawi (Shiite-aligned). The
state tries not to influence the practice of the different religions within its borders but religion
does not affect how political positions are distributed. A clear example if this is in Israel.
Religion showcases its influence through the country’s political parties and through the leverage
that Orthodox Judaism provides to the church as the established national religion. Israel openly
refers to itself as a Jewish state. Citizens of the region have most recently used religion as a force
to pursue political and social gains in ways that the previous generation would have not
considered. This ultimately affects the character of religion within the region.
Emigration is on a continued rise in MENA as a consequence of the Arab Spring. Egyptian
people have fled according to the International Organization for Migration (IOM) due to protests
and riots within their countries’ borders. Over 66% of individuals surveyed by the IOM who
contemplated migration were affected by events manifesting from the Arab Spring:
 20% were asked to leave their employment without compensation
 26% lost their jobs
 19% saw working hours reduced
Libya has been host to over 1.5 million workers from other nations mainly from the Tunisian
and Egyptian regions. It is expected that these individuals will have a negative effect on the
Libyan economy once they flee the region due to consistent Arab Spring demonstrations. Over
100,000 Tunisians have returned to their home country due to ongoing threats to their personal
security within the nation of Libya. Even though the Arab Springs brought about actions
detrimental to Libya, the Libyan National Transition Council (LNTC) has allowed the UN and
other regional neighbors to have hope for the stabilization of emigration and reconstruction of
the country.
Some forces behind the Arab Springs have been high unemployment rates and low economic
opportunities. Other instigators include lack of democratic representation and the continued
corruption within governments. Even though these variables are politically sound, they
ultimately affect the economic and investment opportunities for a nation. According to the World
Economic Forum (WEF) the biggest deterrent in conducting business in the MENA region is
corruption. The concurrent abuse of political influence and increasing levels of corruption has
resulted in a 3.1 score (entire MENA region) given buy the Transparency International (TI)
Corruption Perception Index (CPI). Even though Arab Spring demonstrations have caused a
reduction in works hours, reduced compensation, and lost jobs it has brought forth some positive
changes. It has led to reforms in several MENA countries. This builds a foundation for the
chance to fight corruption and to promote the proper rule of law. Groups like the MENA-OECD
Working Group on Corporate Governance is focused on encouraging state owned enterprises to
promote full disclosure and transparency in their business practices. These goals will help lead
the MENA region down a new path. This will take time, given the amount of deep rooted
corruption that is entrenched in governments & corporations within the MENA.
The investment in basic education within MENA is on a decline. School enrollment for the age
bracket of 5-14 is expected to drop by the year 2015. In regions such as Jordan and Iraq the
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
school age cohort is expected to continue to grow in the next decade. (Figure 3.3) The necessity
for higher learning within these nations will continue to rise as lower percentages of individuals
have yet to attain vocational or secondary education.
The overall quality of the education has suffered due to a growing number of students in the
region. The percentage of secondary education teachers in Iran has doubled to help meet
demands, although the amount of teachers with university degrees has dropped from 84% to
77%. Further increasing the burden for these underprepared teachers with a lack of overall
compensation will continue to discourage entrants to the field. The ongoing trend of student to
teacher disparity and the establishment of schools in rural villages leaves room for improvements
in faculty deployment, resource allocation, and in the quality of education for countries such as
Jordan, Egypt, and Morocco.
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P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Technology
The current growth rate of nuclear energy development in the MENA region is on an
exponential rise. Nuclear development in the Middle East is entering a renaissance stage with the
proliferation of its acceptance as an alternative source of energy within the region. With
countries such as the United Arab Emirates (UAE) launching programs to initiate the
development of nuclear power, there is no indication of a decline in the quest for alternative
energy within the MENA region.
Turkey is close to acquiring the rights to develop its own nuclear energy reactor. The license is
expected by year end 2014. Egypt has announced plans to begin construction of its own nuclear
power plant by the 4th
quarter of 2014. Struggles with nuclear development over the years have
been hampered by incidents like Chernobyl in 1986 and the economic struggles in 2011
coinciding with the Arab Spring. The MENA is trending to become the most ‘up and coming’
region in the development of nuclear power plants worldwide. The current estimated investment
in nuclear power is at $400billion dollars (comsan25). Saudi Arabia is expected to deplete its
crude oil resource by 2030.
The demand for electricity in the region is expected to rise from 75 Giga Watts (GW) to 120
GW by the year 2030. To help address the ongoing trend of increased energy demands in Saudi
Arabia, the King Abdullah City for Atomic Research was founded. The purpose is to focus
solely on the production of alternative energy within the region. The creation of 16 nuclear
reactors will take place in the next two decades with estimated costs of $7 billion dollars. With
this initial investment, Saudi Arabia will become the largest electricity exporter in the region.
Jordan, one of the driest countries in the region, is modifying the use and application of treated
sewage water to help cool nuclear reactors. This technology will be applied all future nuclear
endeavors.
General acceptance of technology in the MENA region has been hindered due to a lack of trust
in the Global North (North America & Europe). (Figure 5.2) Privacy and trust are intertwined in
the culture of the MENA nations. It helps influence the reception of new technologies when the
source of the technology is an allied state. The continued advancement of technology is seen as a
direct threat to the social and cultural norms of the region. The rapid development of technology
like the internet has caused older generations to struggle with its acceptance. The knowledge that
is usually disseminated by the elderly to the younger generation is on a decline. A significant
factor that new technological trends must overcome in the region is the stranger in our midst
dilemma. Stranger in our midst refers to the imposition of spy and malware believed to be
ingrained into the programming of technology sourced from the Global North.
Having a figure that is trusted within the culture to sponsor and promote new technological
trends will allow for the proliferation of acceptance within the elderly population. The
governments in power within the MENA countries have a strong effect on positive technological
reception. A combination of influential factors determine technological adoption rates in the
region: Government encouragement of technological adoption, government sponsored trust
towards the Global North, or the trust that the Global North has in the use of its technology
within the MENA. Most MENA countries place significant barriers on the introduction of
technology from the Global North. This is due to the potential exposure to spyware and malware
believed to be in these systems. The slow adoption of internet access in Syria is an example of
government intervention. The market share is insufficient to lure tech companies into the MENA
region for fear of the empowerment of these nations and the militarization of their shared
16
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
technology. Continued trends in the MENA will focus on development of technology that will
not necessarily benefit the population in everyday functionality, but rather as force to help
control this specific region of the world.
A challenge faced over the last 10 years is the inconsistent growth and advancement within the
technological infrastructure. The only growth that has been present is factor accumulation labor:
land, capital, and entrepreneurship. Factor productivity, the workplace incorporation of
technology, has remained stagnant. Stagnation has resulted in slower technological growth and
acceptance within government structures. MENA is characterized as having large public sectors,
governments that are centralized, and a complex regulatory system. This is evidenced by the
lack of the modernization of public and governmental institutions. By introducing the
technological infrastructure to local governments, E-Governance is established. (Figure 5.1) E-
Governance has allowed for the removal of obstacles permitting a streamlined flow of
government information for local and central governmental institutions. E- Governance allows
for the optimization of small business through the ability to access services online 24 hours a day
while reducing the hindrances of distance and hours of operation. It will help reduce some causes
of corruption and potential bribery due to the transparency of governmental policies.
Though leaders in the Mena region have taken steps to achieve E-governance, it is up to the
citizens to embrace these new technologies to make E-Governance a viable source of
information. The implementation of E-Governance in MENA relies on a well versed customer
service approach to government amenities. The continued adoption is key in maintaining the
competitive edge in a global environment. E-Governance readiness in the MENA region is on a
constant rise (Exhibit 1). Governments can access global vendor marketplaces allowing the
procurements of products and services at the most competitive price. An established E-
Government will allow for the use of E-Commerce and global trade. To have a successful
implementation of E-Governance several factors must be considered:
 Is the existing government stable enough to develop this program
 Is the infrastructure ready
 Is the population open to adoption
Egypt enhanced its telecom infrastructure to support this advancement. Over $1 billion has
been invested and Egypt currently boasts an over 65% increase in internet user subscribers. It is
important to have awareness and education to understand and take advantage of these services.
With the continued trend of development, the implementation of a standardized E-Government
across the countries in the MENA region will be swift and successful. E-Governance application
will create fundamentals through accountability, transparency, and responsiveness to the needs
of its citizens leading to a more proactive and democratic system.
17
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Environment
The environment in the MENA has been at the bottom of the list of priorities for almost every
country in the region until recently. Industrialization, modernization, expansion of the electric
power grid, and population growth are some of the major factors garnering new attention from
the leaders and citizens of MENA alike. A significant increase in the regions renewable energy
market is being driven by a number of factors including energy security, demand growth due to
population expansion, urbanization, economic progress, and water scarcity. Hydroelectric power
is the major producer of renewable energy supplies currently in the MENA. In the middle-east
alone, hydroelectric power plants are producing 1,000 Terra Watt Hours (TWH) of power per
year. (Figure 4.1) Unfortunately these numbers are stagnate and projected to remain so through
2015 with only a small increase, due largely to upgrades in technology, through 2050. Non-
hydroelectric renewable power generation almost doubled from 2008-2011 to 3 TWH. This
growth has outpaced traditional carbon based energy sources. Within this category wind has
become the largest supplier of renewable energy (8 MENA countries with capacity totaling 1.2
Giga Watts as of 2012) after hydro. Solar power has seen rapid adoption as well through solar
farms called Concentrated Solar Power (CSP) plants. Algeria, Egypt, Iran, and Morocco have all
established CSP plants with the UAE recently completing construction of the world’s largest
CSP plant. (Figure 4.2, B, C)
There are 106 renewable energy projects planned for the region as of April 2013. These
projects will produce 7.5 GW of new capacity which is a 450% increase over existing non-hydro
renewable power generation current output, of which wind and solar constitute 85%. (Figure 4.4)
Just five MENA countries as of 2007 even had renewable energy goals. As of May 2013, all of
the countries in the region now have a target for renewable energy production. (Figure 4.4 B) If
attained, the effect would be 107 GW of increased capacity by 2030. The global economic crisis
appears to be absent from renewable energy investments in the MENA region. New investments
in renewable energy reached $2.9 billion dollars in 2012 (Figure 4.5 B), a 40% increase over
2011, and that is a 650% increase since 2004. (Figure 4.5 C)
The electric grid in the MENA region now reaches 99% or more of the population in over half
of the countries (11 out of 19) for which there is data available. There are 28 million people in
rural areas still without electricity, with 8% relying on alternative bio-fuels as their main source
of energy. The total Primary Energy Supply for the MENA region in 2010 was up 14.9% from
2007 and achieved an average annual growth of 4.7%. Increased consumption is attributed
largely to population growth through the use of electricity to power machinery, heating &
cooling, and water desalinization. In comparison, renewable energy supplies increased 27.6%, or
at almost double the rate of current primary energy supply sources. This trend is expected to
continue as increasing consumer and industrial demands for power show no signs of slowing.
(Figure 4.7)
For Net Oil Importing Countries (NOIC) adoption of renewable energy is attributed to energy
security and the avoidance of having to continue to import expensive oil in the future. (Figure
4.8) Net Oil Exporting Countries (NOEC) recognize that production capacity has peaked and
that there is an opportunity cost related to oil and gas in a domestic context. Rapid increases in
demand for energy from air conditioning, desalination, and technological adoption are caused by
rising GDP, urbanization, and expanding population levels that are not going to be sustainable
with the current dwindling carbon based fuel supply. Leaders and policymakers in MENA are
realizing the positives to be gained from renewable energy adoption. Greenhouse gas reduction,
18
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
improved health, urban rural development, job creation, manufacturing, and power independence
& security are some examples of areas of concentration by governments. Seven MENA
countries have adopted ‘Feed in Tariffs’ (FIT’s) as a way to help meet their lofty energy
expansion goals. (Figure 4.9) Qatar Airways has undertaken development of bio-fuels in
partnership with related industry companies such as Rolls Royce (jet engines) and Air Bus.
Government parliaments and publicly owned electric companies are also pioneering renewable
energy initiatives with financing and incentives from institutions such as the World Bank Group.
The presence of water in a region has determined the development of settlements for people in
the MENA since the beginnings of recorded history. According to the Maplecroft Waterstress
Index of 2011, the MENA region contains some of the highest ratings for ‘extreme risk’ of
insufficient and un-renewable water supplies versus the stresses of demand. These countries
include Bahrain, Libya, Qatar, Yemen, Kuwait, Saudi Arabia, Israel, Jordan, and the Western
Sahara. The index measures domestic, industrial, and agricultural uses of water against
renewable reservoirs in rivers, groundwater, and from precipitation. There are five main bodies
of fresh water in the MENA:
 Tigris and Euphrates basin
 Jordan River basin
 Arabian Peninsula basin
 Nubian Sandstone aquifer
 Nile basin
Average water availability per person globally is 7,000 𝑚3
/person/year. In MENA however,
that availability drops to 1,200 𝑚3
/person/year. A predicted increase in population from 300
million (2012) to 500 million (2025) would bring the availability of water per person to half of
the current amount by 2050. (Figure 4.10) MENA contains roughly 6.3% of the global
population and has access to only 1.4% of the world’s renewable fresh water. The UAE and
Libya receive their fresh water from ancient underground aquifers and from the desalinization of
seawater. The aquifers are referred to as paleo-ground-water and can be up to 30,000 years old.
They are practically non-renewable by natural means. Desalinization is a short term solution, but
it is costly to energy supplies to produce. Using fossil fuels to remove salt from seawater is
unsustainable in the long term.
Extreme heat, low precipitation, harsh geography, and massive dust storms have become an
accepted part of life to some residents of the MENA. The region is characterized by is arid and
hyper-arid climates which encompass more than 78% of the total land mass. Rainfall in the
region is seasonally erratic with much deviation in amounts from year to year, ranging from
50mm-500mm. The Arab region consists of 54.8% barren land, 26.8% rangelands, 10.3%
cultivated land, and 3.9% forested area. Drought negatively impacts a region in many ways:
 Reductions in productivity
 Degradation of natural resources
 Degraded humanitarian & social conditions
 Downgraded economy
 Decreased agricultural capacity
 Depletion of livestock
Significant adverse effects on economic activity include increased spending on food and water,
import/export imbalance, price volatility, market failure, depleted surpluses of commodities, and
19
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
lower income levels. Different socioeconomic factors for individuals determine the degree to
which they are affected by drought related famine situations.
Air pollution is becoming an ever worsening problem in the MENA region. High levels of
suspended particulates, sulfur dioxide, and increasingly violent dust storms are beginning to take
their toll. (Figure 4.11) Air quality is recognized as one of the most important factors affecting
sustained growth on a regional scale. In addition to economic limitations, air quality greatly
impacts human health leading to inefficiency and decreased productivity. Dust storms and acid
rain cause excessive deterioration of raw materials, assets, and may give rise to new degenerative
sicknesses. MENA countries must work together to combat ever increasing air and water quality
issues. Large scale gas and oil exploitation, processing, and reformulation coupled with
industries like power plants, petrochemicals, fertilizers, steel, and aluminum all represent large
contributions to pollution and are loosely regulated. The transportation sector accounts for 70-
80% of hydro carbon emissions. (Figure 4.12) The lead in gasoline accounts for 100% of lead
particulates in urban areas. The more developed gulf countries like the UAE account for
approximately 50% of CO2 emissions (254 million metric tons of carbon) in the MENA region.
While awareness of environmental issues is on the rise, with the exception of renewable energy,
not much progress is being made towards combating the accumulating environmental deficit the
MENA is currently experiencing.
20
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Legal
Cultures and traditions vary throughout MENA, the legal impact on the regions macro
environment effects governments and its citizensthrough multiple variables. Analyzing the
structures of:
 Judicial systems
 Impacts of religion on law
 Women’s civil rights
 International trade regulation
 Organized crime and the black markets
Understanding these variables will allow for accurate forecasting of the level of influence that
governments and their institutions have on the macro environment.
Developing an analysis of MENA’s legal systems is integral in understanding the political
atmosphere and its ability to influence and shape actions on human rights. The court system can
act either as an enforcer of human rights claims or abuse its power by ignoring them. Progress
can be made with more responsive behaviors or regress and transform towards more suppressive
conduct concerning advancement.
There are two kinds of judiciary structures, dual and unified, that are prevalent in the MENA
region. Countries with dual structured systems, like Tunisia and Lebanon, are split between the
civil and administrative courts. MENA countries like United Arab Emirates and Yemen believe
in unified judiciary systems. Both forms do accept appeals cases before the courts and in some
instances separate civil litigious pursuits from administrative ones.
Judiciary systems do have their share of issues as they face structural problems that often force
both defendants and prosecutors to avoid use of the courts. These issues are comprised of:
slowness in court settlements, increased costs of litigation, and the ineffectiveness of
implementing decisions. Lebanon and Tunisian judicial systems suffer from low numbers of
acting judges in relation to the amount of cases received throughout the courts. This scenario
creates a logjam of impending cases.
Continued inefficiencies throughout the courts create civil distrust in the judiciary system and its
litigants, who are forced to exercise the option of a tribal means for conflict resolution.
MENA’s legal systems have historically been intertwined with religious or tribal law, which can
often be qualified as outdated, though gender inequality is prevalent within legislation across the
region. In comparison to other nations across the globe, the MENA region has lagged in matters
of gender inequality. Cingranelli and Richards (CIRI) a Human Rights Dataset illustrates MENA
attaining the lowest global scores regarding both the values of economic, political, and women
rights.
Historically, religious fundamentalism has played a key deterrent in the improvement of female
participation within the legal system throughout the region. Another barrier to advancement is
the complexity of the legal system. Courts are divided by the various religious groups they have
jurisdiction over.
Interfaith marriage is a topic that comes into light under the context of religious involvement in
the courts. Multiple countries in MENA have made the act illegal. As a result of such
arrangements, religious segregation becomes embedded within the MENA state’s policies. Such
policies make forecasting the legal spectrum throughout the MENA region difficult, as there is
21
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
currently little to no separation between state and religion.
Exploring MENA’s trade policies will allow for an understanding of the region’s openness to
global exchange and their impacts relative to growth in the business environment. MENA’s
trade behaviors could historically be categorized as closed or protectionist based. Such policies
have been factors in MENA’s decline in both foreign investment and growth within the public
sector.
Traditionally, foreign ownership has been hedged substantially as regulations have been in place
since the 1990’s to reduce foreign majority ownership in business. Due to a downward trend in
local economies, member countries have developed political reform that encourages such
ownership structures. In 2000 Qatar approved legislation that allowed full ownership to foreign
investment groups in the industrial, agricultural, education, tourism, and health sectors. MENA
states like Bahrain, Egypt, United Arab Emirates, Jordan and Morocco incentivize foreign
investment with free trade zones.
International trade reform & policy, which spurs foreign direct investment (FDI), is integral to
the progress of MENA countries expansion of new businesses to create competition and new
employment opportunities. Continuing this trend throughout the MENA would allow for
increased FDI capital flows that would initiate expansion throughout the public sector and help
to institute long-term economic stability.
The MENA can be viewed as a region where the relationships between geography and political
structure heavily influence its economy. For the region to form a thriving economic environment
the judicial and legal components of authority need to be updated drastically. Lack of
implementation of enhanced corporate governance and anti-corruption laws will have a
pronounced negative fiscal effect on the business environment, which will continue to decline
without such vital measures in place.
Aside from of economic benefit, MENA must strengthen its authority over member countries
that partake in organized crime. The majority of organized crime revolves around drug
trafficking, arms dealing & transport, and money laundering. Recently, this type of activity has
become increasingly widespread throughout the region and will continue to trend this direction if
accountability measures are not enforced.
Of concern is the illicit and lucrative drug trade & trafficking routes that criss-cross the MENA
region. Due to the illegal nature of these substances, high profit margins, and the unquenchable
demand from the back market, terrorist organizations and governments alike via for their piece
of the multi-billion dollar industry. Irregardless if its opium & heroin (19 metric tons annually)
produced in Iran, poppy seed transport from neighboring Afghanistan & Pakistan, or cannabis
resin produced (38 metric tons annually) in Algeria, there is ample money to be made. Every
year thousands of tons of drugs are sized throughout the MENA, but hundreds of thousands of
tons get through U.N. dragnets. Large seizures of illegal narcotics are not rare and amount to a
small fraction of the true tonnage moving through or produced in an area. Examples such as:
 12.8 tons of amphetamines in Saudi Arabia
 936 tons of marijuana in Africa
 221.9 tons of marijuana in Morocco
 1 ton of marijuana in Israel
 561,272 kilograms of opiates in Iran
22
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
The financing from these illicit sources of fast cash are used for terrorism, private armies, and
personal gain. These relationships are easy to perpetuate throughout bureaucraciesdue to the
constant and pervasive corruption of the MENA countries as shown by the TI Corruption Index.
As long as there is a world-wide market willing to pay premium prices for banned substances,
this trend will continue to increase for the foreseeable future.
23
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Going Forward
Wars and infighting have been an institutionalized way of life in the MENA region for
thousands of years. From the first recorded clashes between the Israelites and the Egyptian
Pharos, the Carthaginians, Philistines, Hittites, Persians, etc, there has been generations of
mistrust, ingrained hatred, and bloodshed. This region has come a long way in the last 100 years
through the discovery of vast amounts of commodity wealth. To break the cycle of violence and
hatred prevalent in the MENA, these countries must achieve what has rarely been accomplished
in the annals of history. They must strive to put their differences aside and realize that each
country’s fate is intertwined with that of its neighbors. The MENA must look past religion and
language to ensure a secure future for everyone in the region. MENA countries must develop
socially through:
 Incorporation of youth and elimination of gender disparity
 Removal of barriers between rural and urban residents
 Transparency and accountability from government and leadership
 Upgraded infrastructure
 Energy security and independence for the future
 FDI and fair distribution of capital and credit
Some individual nations may make advancements in these areas, but until the people of the
MENA realize that everything they do affects everyone around them and learns to work together
towards common goals, then they are invariably entrenched in the unending cycle of war, death,
and misery that has plagued the region incrementally for thousands of years.
24
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Appendix (Graphs)
Economics
Figure 2.1
Table 1. MENA Countries: Selected Economic Indicators, 1995-2002
1995 1996 1997 1998 1999 2000 2001 2002
Real Non-Oil GDP (percent)
Bahrain 4.2 3.7 3.0 3.7 2.9 4.1 5.7 4.9
Kuwait 3.4 3.1 4.1 3.1 1.0 1.1 0.5 1.1
Oman 5.0 2.8 6.1 2.6 -0.6 5.5 8.8 2.4
Qatar -1.6 5.5 14.6 2.2 0.4 2.0 3.5 4.5
Saudi Arabia 0.5 1.0 4.5 2.6 2.8 3.9 2.5 2.9
United Arab Emirates 9.1 8.3 9.2 5.0 7.5 9.7 4.6 4.8
Algeria 4.0 3.8 -0.5 5.5 2.3 1.3 3.3 4.0
Egypt ... ... ... ... ... ... ... ...
Iran 3.5 6.2 7.1 3.8 2.5 4.9 6.7 7.4
Libya -0.3 4.4 8.0 -5.3 2.6 5.1 2.5 2.4
Yemen 9.4 4.6 9.1 7.2 1.8 3.9 3.9 4.5
Non-Oil Fiscal Balance (percent of GDP)
Bahrain -17.5 -16.9 -17.6 -17.6 -17.4 -16.8 -18.1 -20.6
Kuwait -39.2 -26.8 -22.2 -28.6 -23.9 -16.4 -20.2 -25.6
Oman -33.9 -29.1 -28.5 -28.9 -28.0 -27.8 -31.0 -29.5
Qatar -29.3 -37.0 -30.6 -31.9 -27.7 -18.0 -23.0 -14.2
Saudi Arabia -27.8 -26.4 -28.4 -23.6 -23.3 -27.1 -30.7 -29.5
United Arab Emirates -22.5 -26.1 -18.5 -20.1 -19.4 -15.4 -24.2 -26.3
Algeria -23.1 -22.9 -26.3 -24.3 -25.8 -33.1 -31.5 -33.1
Egypt ... ... ... ... ... ... ... ...
Iran -24.5 -21.1 -18.1 -15.1 -12.9 -16.8 -17.2 -23.7
Libya -25.2 -29.2 -35.3 -30.9 -16.6 -30.9 -51.0 -105.2
Yemen -17.0 -37.4 -31.8 -24.3 -23.3 -22.8 -24.2 -26.4
Oil Revenue (percent of total revenue)
Bahrain 56.8 62.1 59.9 46.8 56.1 73.0 68.6 69.9
Kuwait 68.9 66.6 63.8 58.7 64.0 69.6 68.2 66.4
Oman 73.5 77.3 77.4 65.3 73.7 82.9 80.3 76.7
Qatar 61.9 68.8 64.5 60.0 71.1 78.4 70.9 72.0
Saudi Arabia 72.2 76.1 77.8 56.6 70.8 83.1 80.6 78.0
United Arab Emirates 55.8 56.9 58.4 41.5 43.7 55.7 58.8 63.3
Algeria 59.7 63.0 63.9 55.0 61.9 76.9 68.7 64.6
Egypt ... ... ... ... ... ... ... ...
Iran 65.2 61.5 53.6 35.8 42.8 67.5 57.4 58.6
Libya 62.2 69.6 66.5 57.6 50.6 65.2 64.8 82.0
25
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Yemen 47.9 69.9 67.4 52.1 57.1 62.3 64.3 75.6
Oil and Gas Exports (percent of total exports)
Bahrain 59.7 67.3 62.3 54.0 66.5 73.6 70.9 69.8
Kuwait 93.9 94.6 94.3 88.1 89.8 93.2 92.6 92.4
Oman 78.4 80.2 75.9 67.4 76.4 82.9 80.2 77.2
Qatar 65.0 67.3 68.4 74.9 84.8 86.7 85.5 84.2
Saudi Arabia 81.1 85.2 81.8 74.6 79.8 85.9 81.7 81.7
United Arab Emirates 46.1 49.2 44.6 37.5 45.2 54.6 48.4 45.7
Algeria 87.9 89.3 87.0 86.8 89.8 91.8 88.9 89.2
Egypt 48.3 48.2 33.7 22.5 35.6 37.2 28.7 31.0
Iran 78.4 75.0 67.7 47.3 63.4 84.3 70.7 73.9
Libya ... ... ... ... ... ... ... ...
Yemen 89.6 87.3 85.5 81.9 86.5 90.0 87.7 88.3
Source: Country data files.
Figure 2.2
Figure 2.3
26
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 2.4
Figure 2.5
27
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Sociocultural
Figure 3.1
Figure 3.1B
28
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 3.1C
29
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 3.2
30
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 3.3
Figure 3.3B
31
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Environmental
Figure 4.1
Figure 4.2
32
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.2B
33
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.2C
34
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.3
35
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.4
36
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.4B
37
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.5
Figure 4.5B
38
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.5C
39
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.6
40
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.7
Figure 4.8
41
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.9
Figure 4.10
42
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 4.11
Figure 4.12
43
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Technology
Figure 5.1
44
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
Figure 5.2
45
P.E.S.T.E.L. ANALYSIS OF THE MENA REGION
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rica_

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MENA PROJECT MAN 6937

  • 1. 1 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION P.E.S.T.E.L. Analysis: A Look at the Macroeconomic Environment Of the MENA Region Courtney Fenwick, Carl Schacter, Eric Rodriguez Florida Atlantic University
  • 2. 2 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Table of Contents Introduction to the MENA Region....................................................................................................3 Executive Summary............................................................................................................................4 Politics ..............................................................................................................................................5 Economic..........................................................................................................................................9 Socio-Culture..................................................................................................................................12 Technology .....................................................................................................................................15 Environment...................................................................................................................................17 Legal...............................................................................................................................................20 Going Forward ...............................................................................................................................23 Appendix (Graphs).........................................................................................................................24 Economics..............................................................................................................................................24 Sociocultural..........................................................................................................................................27 Environmental.......................................................................................................................................31 Technology.............................................................................................................................................43 Bibliography...................................................................................................................................45
  • 3. 3 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Introduction to the MENA Region Country Population (Millions) Size (Sq. Miles) Leadership Middle East Iran 77.45 636,400 Supreme Leader, Ali Khamenei President, Hassan Rouhani Turkey 74.93 302,535 President, Recep Tayyip Erdoğan Iraq 33.42 168,754 President, Fuad Masum Saudi Arabia 28.83 830,000 King Abdullah Yemen 24.41 203,850 President, Abd Rabbuh Mansur Hadi Syria 17.95 71,998 President, Bashar al-Assad Palestine 10.7 2,402 President, Mahmoud Abbas UAE 9.34 32,278 President, Khalifa bin Zayed Al Nahyan Israel 8.05 8,019 President, Reuven Rivlin Jordan 6.45 34,495 King, Abdullah II ibn al- Hussein Lebanon 4.46 4,036 Interim President, Tammam Salam Oman 3.63 119,499 Sultan, Qaboos bin Said Al Said Kuwait 3.36 6,880 Emir, Sabah Al-Sabah Qatar 2.16 4,468 Sheikh, Tamim bin Hamad Al Thani Bahrain 1.33 295.5 Sheikh Hamad ibn Isa Al Khalifa North Africa Egypt 82.06 386,700 President, Abdel Fattah el-Sisi Algeria 39.21 919,600 President, Abdelaziz Bouteflika Sudan 37.96 728,200 President, Omar al-Bashir Morocco 33.01 172,414 King Mohamed VI Tunisia 10.89 63,170 President, Moncef Marzouki. Libya 6.2 679,400 Council of Representatives (CoR) Western Sahara .554 102,703 President, Mohamed Abdelaziz *All stats are current circa 2013; Palestine circa 2009
  • 4. 4 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Executive Summary This paper is a macroeconomic analysis of the Middle East and North African (MENA) region. It examines the Political, Economic, Socio-cultural, Technological, Environmental, and Legal (P.E.S.T.E.L.) aspects of the MENA region. It will begin with the Political section and proceed through the acronym in order. This paper will examine the ‘Arab Spring’ and its impacts on the region, the role of NATO, corruption among governments, the role of the military, and the Iran nuclear debate. Economics will examine the history of fossil fuels, foreign direct investment (FDI), the availability of capital and credit, and the effects of national policy on wages & growth. Socio-Cultural delves into age disparity for the youth of the MENA, religion and its influence on government structure, the effects of emigration to escape violence, and the lack of transparency and accountability from leaders in the region. The Technology section will discuss nuclear development for energy security, the acceptance of popular technology into the mainstream culture of the MENA, how the Global North is perceived, infrastructure for E-Governance, and investments in technology. The environment is under attack from the effects of industrialization of the MENA, pollution problems, water scarcity, and energy security through the development of clean renewable sources. Finally, the legal section touches on the role of culture in law, religion in law, the prolific black market and drug trade, as well as trade reform & policy. Constant real time inflows of information from the MENA region render traditional forecasting models unreliable. This paper will compile historic trends in an effort to establish mid to long term outlooks for the different aspects of the PESTEL analysis. Due to the volatility of the region this analysis will utilize verified information from peer reviewed sources at least six months or older in order to grasp the facts and remove any speculatory journalistic bias or misinformation.
  • 5. 5 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Politics The ‘Arab Spring’ is a movement that occurred throughout the MENA. It is a cultural awakening that began in early 2011. Protestors spoke out for human rights and ushered in an era of ‘significant optimism’ for reformation and the proliferation of stable democracies in the MENA region. The context of ‘Arab Spring’ mainly encompasses the predominantly peaceful protests which influenced regime changes in Libya, Egypt, and Yemen. It also includes incidences of military intervention (NATO in Libya), armed sectarian warfare (Syria, Yemen, Libya) and mass mobilization of protestors. This is represented by an abundance of power struggles with causes ranging from civil war, religious sectarian conflicts, and unstable power transitions. Instances such as:  The regime changes in Tunisia, Egypt, and Libya  War in Syria, Iraq, and on the borders of Turkey and Iran  The ever-present conflict between Israel and Hamas in Palestine which has escalated to missile fire and tunneling beneath the Gaza Strip  Many smaller sectarian power struggles between the population of a nation and the struggle against their oppressive governments tenuous hold on power The volatility of MENA has changed the security needs of visitors to the region as foreign nationals are being abducted and beheaded with alarming frequency by terrorist organizations. The North American Treaty Organization (NATO) has established a policy of ‘strengthening and deepening’ its partnerships in the region to tackle these concerns head on through the shared goals of security, stability, and peace throughout the MENA. These countries are looking to NATO to provide direction and leadership towards practical answers to security challenges, guarantees of security from internal and external forces that threaten the regimes currently in power, and pro-active steps to stabilize the volatile climate that is pervasive throughout the region. NATO’s track record has been exceptionally deficient. These areas are supposed to be its core of expertise. Their ability to defend the MENA region is presently questionable at best and will continue to deteriorate as financial crisis in Europe and the U.S. force spending cuts, military shrinkage, and take NATO’s focus away from MENA and back towards domestic issues. It has been stated that NATO needs to begin by establishing clear and attainable goals in the region, to send a transparent message of its partnership expectations and to define what the phrase ‘strengthening and development’ actually means. Next, NATO must appeal to what the MENA regions policymakers’ desires in order to establish partnerships that are more attractive and to focus on the creation of common interests within the individual countries of MENA. The results of its past ‘top-down’ approach have been limited at best. Most Arabs see NATO as a powerful and aggressive alliance devoted to the political interests and security of the west. Nations such as Israel, Egypt, and Turkey have begun to pursue their own independent policies which are increasingly divergent from the interests of their NATO allies. Corruption plays a major role in the politics of the MENA region. Transparency International’s (TI) Corruptions Perceptions Index (CPI) routinely ranks MENA countries below the world-wide average median. These findings are further bolstered by the Global Integrity Index (GII) in which the MENA region scores very low in integrity systems and accountability indicators. The Bartelsman Transformation Index (BTI) lends further credibility to these
  • 6. 6 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION negative trends. It states that all MENA countries performance regarding democratization and market liberalization fall well below the world median. Political Transformation scores are even lower than economic transformation rankings. The Management Index (MI) is a gauge of the quality of the political management systems currently in use. The MI uses five major categories: Reliable pursuit of goals by government; Effective use of resources; Governance capability; Consensus building capacity; International cooperation. All MENA countries scored exceptionally low in the corruption category with a rating range of 2 (Yemen, Algeria, Lebanon) to 4 (Egypt, Jordan, Tunisia). Attributing reasons for poor performance in the Governance and Anti-Corruption categories are:  Lack of transparency  Little or no access to information  Weak internal accountability  Few to no checks and balances in the system  Restricted freedom of the press  Elitist social classes  Excessive regulation  Significant barriers to entry This prevalent corruption impacts many factors of government and is directly correlated to governance indicators like: Economic growth rate; GDP per capita; Foreign Direct Investment; Human development index; Poverty index; Health & Education spending. Corruption greatly increases the risk of government confiscation, expropriation, and domestication due to the self centric stance of the ruling parties in power who have little interest in social responsibility or in serving their citizens. A large contributor to the resistance of the adoption of democratic forms of government in MENA is the ‘robustness’ of regime security. Robustness is the culmination of four main factors: A countries fiscal health; international support and assistance to a nation and its military; mobilization for popular political reform; Degree of security systems embedded in the state policy. This leads to the role of the military in the government. There are several irregular forms of government native to the MENA region, such as:  Oil monarchy  Civic-myth monarchy  Mukhabarat states (Syria, Tunisia, Egypt, Yemen; also known as policy/intelligence states)  Military states  Dual military (Iran, Iraq, and Libya who have private guards and security to offset the country’s national army)  Military democracy Military’s in the MENA region are usually used to quell large uprisings that the police are ill equipped to handle. When the army is summoned, it may or may not respond, as the military has the status of autonomy with its own independent political decision maker. This further lends to an overall un-cohesiveness and to security fears of for the different ruling governments in the region. Presently, the ‘X Factor’ that has grown into a significant driver of fear and change in the MENA region is the Islamic State of Iraq and Syria (ISIS). The ISIS conflict in Syria, Iraq,
  • 7. 7 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Turkey, and Iran has become the frontrunner in a host of issues ranging from the ongoing war between Israel & Palestine to the Iran nuclear debate. Syria is now ‘ground zero’ in the war for power and influence in the MENA region. Every country in the region has a direct stake, as well as the outside interest of many other nations, all directly or indirectly supporting a particular side. The underlying reasons for conflict are about the balance of power between Iran and Saudi Arabia in addition to the overall power struggle between Iran and the U.S. & Israeli alliance. Some key terrorism trends in 2013 include:  Evolving terrorist groups with tighter local and regional focuses from both Al- Queda (AQ) and its partners  The rise of autonomous like-minded groups who take advantage of weak and corrupt governments  Ayman al-Zawahi, the head of AQ, has been frequently disobeyed through AQ partners upgrading the level of violence and attacks on the populations at large  Thousands of foreign fighters flocking to Syria to battle Assad  Meanwhile, Iran, Hizballah, and other Shia militia provide support and supplies to the Syrian regime  Terrorism is increasingly trending to escalations of violence spurred by sectarianmotivations in Lebanon, Pakistan, and Syria  Increased criminal activity from terrorist groups, such as kidnapping for ransom, in order to generate capital  ‘Lone Wolf’ attacks in foreign nations are escalating, an example being the Boston Marathon bombing The issue of Iran’s right to nuclear power versus their ability to weaponize under the pretext of peaceful applications for the citizens of the nation is of paramount concern in the MENA region. Fears began to escalate in 1995 at the Nuclear Non-Proliferation Treaty (NPT) convention where the Arab League pushed for a Weapons of Mass Destruction (WMD) free zone to be established in the middle-east. This led to over 15 years of inaction and no progress on the issue from a disinterested NATO (mainly U.S., Britain, and Russia) who perpetually issued extensions for the forum. The NPT conference scheduled for 2015 promises more of the same. The Arabs most recent show of frustration on the issue came in April of 2013 when the Egyptian representatives walked out of the NPT conference talks due to ‘unacceptable and continuous failure’. The primary countries involved disagree on several aspects that are essential to achieving arms control. Egypt and a few other states view the root problem as Israel, not Iran. This is not to say that Israel is an imminent threat, but a major choke point on the path to an NPT. Not only on a regional, but on an international level, the MENA nations are feeling pressured and threatened by the advances in the Iranian nuclear program. Tehran is close to achieving a bomb relatively quickly if it chooses. Iran insists that its nuclear proliferation is of a peaceful nature, but many countries are deeply suspicious. The Iranian government states that enrichment of uranium is at 3.5% for power production and roughly 20% for medical research purposes. This is considerably below the 95% threshold needed for a nuclear weapon. The continuous uncertainty centered on their nuclear program and Iran’s threatening stance towards many nations, across a multitude of issues, has led the U.S. and the gulf monarchies to closer and more correlated interdependent relationships in an effort to curtail Iran’s ambitions. Israel is not inclined to release its nuclear stockpile. It sees this as the major deterrent against its hostile neighbors, some of which refuse to recognize Israel’s very existence as a sovereign nation. The recent use of chemical WMD’s
  • 8. 8 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION by Syria on its own population has dealt a ‘major blow’ to the NPT conference. There are many reasons for Iran to want to prevent WMD’s in the MENA region, contrary to popular belief, these include:  Loss of conventional superiority  WMD terrorism  The institutionalization of American presence in the region  Risk of offensive, rather than defensive, perceptions from other nations  Production vulnerability and maintenance costs  Risks inherent in weak communication and command structures  Damaging Iranian ties with regional and international allies  Religious prohibitions against WMD’s Iran’s support of a WMD free zone would help boost other nations’ confidence in them and allow Tehran to build trust in the greater Arab world. It would also benefit Iran by making the region more secure and by helping to solidify their power base. Israel is in possession of anywhere from as few as 60 to as many as 400 nuclear weapons. Jerusalem is of the mindset that comprehensive security and peace must come before any NPT. Israel denies responsibility for its nuclear arsenal citing that it has been empowered by the west. It seems to be a zero sum game being played out which is un-resolvable with one side focused on WMD’s and the other on overall regional relations between neighboring countries. This conflict is trending to continue in its current incarnation for the foreseeable future.
  • 9. 9 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Economic Historically, the MENA region has been a fossil fuel commodity driven economy. Analyzing both the historical and current trends in the oil industry, impacts of GDP, imports & exports, fiscal policies, levels of foreign investment, and employment rates will allow for an effective forecast of the region’s economic outlook. MENA economies were prosperous in 1970’s, due in large part to the expansion of oil markets. Initial revenues produced from oil markets in the 1970’s were largely responsible for the creation of interventionist-redistributive economic models for oil and non-oil producing countries. These revenues were a product of a 10 percent increase in global demand from 1976 to 1979. Welfare structures were implemented to issue excess revenue to the citizens of the oil producing regions. Non-oil producing countries supplied the labor force necessary to operate the drilling, wells, and on-site machinery of the oil producing countries. Expansion within the public sector was an effect of the booming economic progress from the oil industry. Unemployment throughout the 1970’s was low, literacy rates increased, and life expectancy rates were on the rise. Trends would drastically change as some countries of MENA would become members of OPEC (Organization of the Petroleum Exporting Countries). Price stabilization would arrive with OPEC’s output restriction enforcement in the 1980’s and oil revenues would decline. As oil revenues declined, the economy of the MENA region would take a downward trend as public debt increased with the various governments’ inability to answer the public sector demands for wages and entrenched social programs. The remittance of revenues associated with migrant labor from non-oil producing countries would decline and international competition would intensify causing an economic crisis to the MENA region. Various governments are undertaking initiatives to restructure their economic policies during this time to stabilize their respective economies. These trends show that a thriving economy which is trailed by major declines in growth and development in the public sector are associated with countries that draw their wealth from the exploitation natural resources. Emphasis on a natural resource like oil pulls experienced labor from other industrial sectors and entrepreneurial endeavors which creates a pronounced opportunity cost. Diminished growth rates in employment and investment in the public sector are attributed to these patterns. During the 1990’s MENA would lag in both foreign direct investment (FDI) and foreign trade from a global perspective due to protectionist trade policies. Such policies included restrictions on foreign majority ownership in both the public and private sectors. Oil exporting countries were not diversified in their GDP imports and exports due to the implementation of these policies. MENA was also a laggard globally in both foreign direct investment and foreign trade because of these closed economic systems. For example, Saudi Arabian fuels made 90 percent of their export base during this time. (Figure 2.1) Since the beginning of the 2000’s the Gulf States have developed some of the most attractive private sectors outside of oil exports among the MENA region. During this time United Arab Emirates (UAE) developed growth rates in non-oil producing sectors that represented 70 percent of their GDP: ● Manufacturing (12.6 percent) ● Commerce and hotels (11.4 percent) ● Real estate (9.1 percent)
  • 10. 10 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION ● Construction (8.6 percent) ● Transportation (10.9 percent) ● Finance and insurance (6.4 percent) ● Government services (11 percent) Unfortunately these economic models are not easy to duplicate in other regions of the MENA. Some areas have business environments that do not support entrepreneurship and often have restrictions on attaining startup capital. Public banks govern financial systems that often show favoritism towards businesses that are state owned and operated instead of inviting investment from offshore firms. (Figure 2.2) As of 2010 the MENA region falls at the bottom of the list in regards to percentage of firms with credit lines from financial institutions (25.07%). One of the main underlying reasons why firms have difficulty securing credit is due to insufficient collateral provided to banks. More often than not, financial institutions have a preference towards land as collateral. Availability of sufficient collateral isn’t the only issue as there is an inability prevalent throughout MENA firms to make productive use of their valuable assets, such as receivables and equipment. (Figure 2.3) FDI in the MENA region is restricted due to barriers to trade and political instability. In 2002 the Arab Development Report (UNDP) revealed that from 1975 to 1998 global FDI levels decreased in the Middle East. From 1975 to 1980 FDI in MENA was at 2.6 percent and from 1990 to 1998 FDI declined to 0.7 percent of the global foreign investment levels. Since the end of the 1980’s, MENA would attract the least amount of FDI inflows globally. Though FDI inflows have been increasing as of late, the MENA still continues to lag behind other developing countries globally. Beginning in 2000 the Arab region received 1.9 percent of global FDI for developing countries and was barely elevated above developing European countries that had the least FDI percentage with .8 percent of global FDI. During this time the FDI deficiencies were attributed to both internal and external issues. These issues can be comprised of the slow development of entrepreneurship, political instability, restricted control of foreign ownership to below 50% to prevent non-domestic control, and limitations on which sectors FDI can be allocated towards. MENA countries are striving to change investment environments to realize greater inflows of capital from FDI. New reforms are being developed toward implementing restructured investment legislation, tax & custom incentives, and reduced foreign ownership restraints. Enabling foreign investors to achieve majority ownership in profitable industrial sectors will increase the amount of investment to the MENA region and achieve levels that have been historically unreachable. Non-oil producing economies will continue to be buoyed by rising amounts of public capital spending and credit inflows from the private sector. The long-term challenge of decreasing dependence on oil is on the horizon for energy producing countries of MENA. Growth in energy efficient technology, increases in renewable energy projects, and oil supplies from alternative sources (shale and fracking) are causing prices to decline. Last year’s tepid growth in MENA oil exports is expected to improve as oil production and exports respond to the global economic recovery. High levels of public capital spending and accelerating private sector credit continue to support the non-oil economy. (Figure 2.4) The outlook for MENA oil importing countries is modest growth and it is anticipated to continue, but the drivers may begin to change. Resource consumption financed by industry and large public sector wage spending, will continue to buoy growth. Planned investments in the
  • 11. 11 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION pipeline could start stimulating economic activity as a result of increased public spending on infrastructure. Going forward, generating jobs within the private sector for expanding populations will be a pivotal challenge for the MENA region. A few member countries in MENA have begun taking the appropriate measures to expand job markets as some sectors remain fragmented from the lack of need for skilled labor. Countries can solve this issue by improving education throughout the public sector, which would improve the need for a quality labor force. (Figure 2.5)
  • 12. 12 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Socio-Culture The age bracket of 15 to 24 represents 20% of the population in the MENA region. It is estimated by the United Nations that over 90 million individuals in this peer group exist in the MENA. This demographic has faced a tough job market over the past 10 years. Unemployment levels are consistently low. Jordan has dealt with unemployment levels as high as 14% and it is estimated that over 75% of these individuals are under the age of 30. In the nation of Egypt, it is projected that 80% of the unemployed population is under the age of 30 and 82% of those currently out of work have never been employed. This specific peer group in the MENA has the highest unemployment percentage in comparison to the rest of the world. It is estimated that in the next three decades Iraq will experience a surge in population in the 15-24 age bracket leading to a net gain of 6 million. The “youth bulge” dilemma continues to be detrimental to the young educated population, as their ability to find work is also on a decline. “Youth bulge” can be attributed to those MENA countries were fertility was on a receding trend in the mid to late 1990’s. If we compare the estimated 5.6 births per woman in the 1980’s to the currenttwo births per woman average(less than half) in 2000 in Iran, we can identify the source of the discrepancy. This discrepancy is caused by the decrease in fertility rates during the mid to late 1990’s. Due to this age brackets’ failed attempts to enter the workforce, the results have been:  Poverty as well as inequality,  It magnifies generational inequalities.  Leads to higher violence and mortality rates. The youth unemployment rate is high when compared to other regions of the world, but the labor participation rate among the youth (ages 15-24) has dropped. (Figure 3.1,B,C) The separation of church and state is institutionalized in the western world. Within MENA, the church and state go hand in hand. Based on table 5.2 we can determine that Islam is not the sole decider on whether a relationship exists between the state and its dominant religion. There are a number of states that do not consider Islam as their primary religion. These states are undeterred by the fact that Islam is the dominant religion; this includes countries such as Turkey and Lebanon. The Government in Religion Index (GIR) has scores ranging from 0 (low religious influence) to 100 (high influence) and considers fivefactors to determine numerical rankings within MENA. (Figure 3.2) Those roles consist of  State restrictions on religion  Restrictions on minority religions  Regulations on all religion  If the state legislation delegates the religion of choice  Official role of religion within the given state A large portion of the countries have a small differential gap within their GRI rating. For example, the UAE and Kuwait exhibit only an 8 point differential between them. Though the scores are nearly identical the underlying values are quite far apart. In Northern Africa, Tunisia has championed a movement to prevent religious ideals from taking over daily life. Tunisia has looked into managing the practice of religion in the region. Their perspective contrasts to that of
  • 13. 13 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION the Persian Gulf which has traditionally accepted religion and law uniformly. Religion has played a major role in the groundwork legislation of the Persian Gulf. The fact that Syria, Israel, and Lebanon are on the bottom of the GRI does not correlate with a decline or the acceptance of religion within politics. The reason we see this trend is, for example in Syria, political power has belonged to the one of the Islamic religions’ larger groups (the Sunni sect) as well as the largest religious minority, known as the Alawi (Shiite-aligned). The state tries not to influence the practice of the different religions within its borders but religion does not affect how political positions are distributed. A clear example if this is in Israel. Religion showcases its influence through the country’s political parties and through the leverage that Orthodox Judaism provides to the church as the established national religion. Israel openly refers to itself as a Jewish state. Citizens of the region have most recently used religion as a force to pursue political and social gains in ways that the previous generation would have not considered. This ultimately affects the character of religion within the region. Emigration is on a continued rise in MENA as a consequence of the Arab Spring. Egyptian people have fled according to the International Organization for Migration (IOM) due to protests and riots within their countries’ borders. Over 66% of individuals surveyed by the IOM who contemplated migration were affected by events manifesting from the Arab Spring:  20% were asked to leave their employment without compensation  26% lost their jobs  19% saw working hours reduced Libya has been host to over 1.5 million workers from other nations mainly from the Tunisian and Egyptian regions. It is expected that these individuals will have a negative effect on the Libyan economy once they flee the region due to consistent Arab Spring demonstrations. Over 100,000 Tunisians have returned to their home country due to ongoing threats to their personal security within the nation of Libya. Even though the Arab Springs brought about actions detrimental to Libya, the Libyan National Transition Council (LNTC) has allowed the UN and other regional neighbors to have hope for the stabilization of emigration and reconstruction of the country. Some forces behind the Arab Springs have been high unemployment rates and low economic opportunities. Other instigators include lack of democratic representation and the continued corruption within governments. Even though these variables are politically sound, they ultimately affect the economic and investment opportunities for a nation. According to the World Economic Forum (WEF) the biggest deterrent in conducting business in the MENA region is corruption. The concurrent abuse of political influence and increasing levels of corruption has resulted in a 3.1 score (entire MENA region) given buy the Transparency International (TI) Corruption Perception Index (CPI). Even though Arab Spring demonstrations have caused a reduction in works hours, reduced compensation, and lost jobs it has brought forth some positive changes. It has led to reforms in several MENA countries. This builds a foundation for the chance to fight corruption and to promote the proper rule of law. Groups like the MENA-OECD Working Group on Corporate Governance is focused on encouraging state owned enterprises to promote full disclosure and transparency in their business practices. These goals will help lead the MENA region down a new path. This will take time, given the amount of deep rooted corruption that is entrenched in governments & corporations within the MENA. The investment in basic education within MENA is on a decline. School enrollment for the age bracket of 5-14 is expected to drop by the year 2015. In regions such as Jordan and Iraq the
  • 14. 14 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION school age cohort is expected to continue to grow in the next decade. (Figure 3.3) The necessity for higher learning within these nations will continue to rise as lower percentages of individuals have yet to attain vocational or secondary education. The overall quality of the education has suffered due to a growing number of students in the region. The percentage of secondary education teachers in Iran has doubled to help meet demands, although the amount of teachers with university degrees has dropped from 84% to 77%. Further increasing the burden for these underprepared teachers with a lack of overall compensation will continue to discourage entrants to the field. The ongoing trend of student to teacher disparity and the establishment of schools in rural villages leaves room for improvements in faculty deployment, resource allocation, and in the quality of education for countries such as Jordan, Egypt, and Morocco.
  • 15. 15 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Technology The current growth rate of nuclear energy development in the MENA region is on an exponential rise. Nuclear development in the Middle East is entering a renaissance stage with the proliferation of its acceptance as an alternative source of energy within the region. With countries such as the United Arab Emirates (UAE) launching programs to initiate the development of nuclear power, there is no indication of a decline in the quest for alternative energy within the MENA region. Turkey is close to acquiring the rights to develop its own nuclear energy reactor. The license is expected by year end 2014. Egypt has announced plans to begin construction of its own nuclear power plant by the 4th quarter of 2014. Struggles with nuclear development over the years have been hampered by incidents like Chernobyl in 1986 and the economic struggles in 2011 coinciding with the Arab Spring. The MENA is trending to become the most ‘up and coming’ region in the development of nuclear power plants worldwide. The current estimated investment in nuclear power is at $400billion dollars (comsan25). Saudi Arabia is expected to deplete its crude oil resource by 2030. The demand for electricity in the region is expected to rise from 75 Giga Watts (GW) to 120 GW by the year 2030. To help address the ongoing trend of increased energy demands in Saudi Arabia, the King Abdullah City for Atomic Research was founded. The purpose is to focus solely on the production of alternative energy within the region. The creation of 16 nuclear reactors will take place in the next two decades with estimated costs of $7 billion dollars. With this initial investment, Saudi Arabia will become the largest electricity exporter in the region. Jordan, one of the driest countries in the region, is modifying the use and application of treated sewage water to help cool nuclear reactors. This technology will be applied all future nuclear endeavors. General acceptance of technology in the MENA region has been hindered due to a lack of trust in the Global North (North America & Europe). (Figure 5.2) Privacy and trust are intertwined in the culture of the MENA nations. It helps influence the reception of new technologies when the source of the technology is an allied state. The continued advancement of technology is seen as a direct threat to the social and cultural norms of the region. The rapid development of technology like the internet has caused older generations to struggle with its acceptance. The knowledge that is usually disseminated by the elderly to the younger generation is on a decline. A significant factor that new technological trends must overcome in the region is the stranger in our midst dilemma. Stranger in our midst refers to the imposition of spy and malware believed to be ingrained into the programming of technology sourced from the Global North. Having a figure that is trusted within the culture to sponsor and promote new technological trends will allow for the proliferation of acceptance within the elderly population. The governments in power within the MENA countries have a strong effect on positive technological reception. A combination of influential factors determine technological adoption rates in the region: Government encouragement of technological adoption, government sponsored trust towards the Global North, or the trust that the Global North has in the use of its technology within the MENA. Most MENA countries place significant barriers on the introduction of technology from the Global North. This is due to the potential exposure to spyware and malware believed to be in these systems. The slow adoption of internet access in Syria is an example of government intervention. The market share is insufficient to lure tech companies into the MENA region for fear of the empowerment of these nations and the militarization of their shared
  • 16. 16 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION technology. Continued trends in the MENA will focus on development of technology that will not necessarily benefit the population in everyday functionality, but rather as force to help control this specific region of the world. A challenge faced over the last 10 years is the inconsistent growth and advancement within the technological infrastructure. The only growth that has been present is factor accumulation labor: land, capital, and entrepreneurship. Factor productivity, the workplace incorporation of technology, has remained stagnant. Stagnation has resulted in slower technological growth and acceptance within government structures. MENA is characterized as having large public sectors, governments that are centralized, and a complex regulatory system. This is evidenced by the lack of the modernization of public and governmental institutions. By introducing the technological infrastructure to local governments, E-Governance is established. (Figure 5.1) E- Governance has allowed for the removal of obstacles permitting a streamlined flow of government information for local and central governmental institutions. E- Governance allows for the optimization of small business through the ability to access services online 24 hours a day while reducing the hindrances of distance and hours of operation. It will help reduce some causes of corruption and potential bribery due to the transparency of governmental policies. Though leaders in the Mena region have taken steps to achieve E-governance, it is up to the citizens to embrace these new technologies to make E-Governance a viable source of information. The implementation of E-Governance in MENA relies on a well versed customer service approach to government amenities. The continued adoption is key in maintaining the competitive edge in a global environment. E-Governance readiness in the MENA region is on a constant rise (Exhibit 1). Governments can access global vendor marketplaces allowing the procurements of products and services at the most competitive price. An established E- Government will allow for the use of E-Commerce and global trade. To have a successful implementation of E-Governance several factors must be considered:  Is the existing government stable enough to develop this program  Is the infrastructure ready  Is the population open to adoption Egypt enhanced its telecom infrastructure to support this advancement. Over $1 billion has been invested and Egypt currently boasts an over 65% increase in internet user subscribers. It is important to have awareness and education to understand and take advantage of these services. With the continued trend of development, the implementation of a standardized E-Government across the countries in the MENA region will be swift and successful. E-Governance application will create fundamentals through accountability, transparency, and responsiveness to the needs of its citizens leading to a more proactive and democratic system.
  • 17. 17 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Environment The environment in the MENA has been at the bottom of the list of priorities for almost every country in the region until recently. Industrialization, modernization, expansion of the electric power grid, and population growth are some of the major factors garnering new attention from the leaders and citizens of MENA alike. A significant increase in the regions renewable energy market is being driven by a number of factors including energy security, demand growth due to population expansion, urbanization, economic progress, and water scarcity. Hydroelectric power is the major producer of renewable energy supplies currently in the MENA. In the middle-east alone, hydroelectric power plants are producing 1,000 Terra Watt Hours (TWH) of power per year. (Figure 4.1) Unfortunately these numbers are stagnate and projected to remain so through 2015 with only a small increase, due largely to upgrades in technology, through 2050. Non- hydroelectric renewable power generation almost doubled from 2008-2011 to 3 TWH. This growth has outpaced traditional carbon based energy sources. Within this category wind has become the largest supplier of renewable energy (8 MENA countries with capacity totaling 1.2 Giga Watts as of 2012) after hydro. Solar power has seen rapid adoption as well through solar farms called Concentrated Solar Power (CSP) plants. Algeria, Egypt, Iran, and Morocco have all established CSP plants with the UAE recently completing construction of the world’s largest CSP plant. (Figure 4.2, B, C) There are 106 renewable energy projects planned for the region as of April 2013. These projects will produce 7.5 GW of new capacity which is a 450% increase over existing non-hydro renewable power generation current output, of which wind and solar constitute 85%. (Figure 4.4) Just five MENA countries as of 2007 even had renewable energy goals. As of May 2013, all of the countries in the region now have a target for renewable energy production. (Figure 4.4 B) If attained, the effect would be 107 GW of increased capacity by 2030. The global economic crisis appears to be absent from renewable energy investments in the MENA region. New investments in renewable energy reached $2.9 billion dollars in 2012 (Figure 4.5 B), a 40% increase over 2011, and that is a 650% increase since 2004. (Figure 4.5 C) The electric grid in the MENA region now reaches 99% or more of the population in over half of the countries (11 out of 19) for which there is data available. There are 28 million people in rural areas still without electricity, with 8% relying on alternative bio-fuels as their main source of energy. The total Primary Energy Supply for the MENA region in 2010 was up 14.9% from 2007 and achieved an average annual growth of 4.7%. Increased consumption is attributed largely to population growth through the use of electricity to power machinery, heating & cooling, and water desalinization. In comparison, renewable energy supplies increased 27.6%, or at almost double the rate of current primary energy supply sources. This trend is expected to continue as increasing consumer and industrial demands for power show no signs of slowing. (Figure 4.7) For Net Oil Importing Countries (NOIC) adoption of renewable energy is attributed to energy security and the avoidance of having to continue to import expensive oil in the future. (Figure 4.8) Net Oil Exporting Countries (NOEC) recognize that production capacity has peaked and that there is an opportunity cost related to oil and gas in a domestic context. Rapid increases in demand for energy from air conditioning, desalination, and technological adoption are caused by rising GDP, urbanization, and expanding population levels that are not going to be sustainable with the current dwindling carbon based fuel supply. Leaders and policymakers in MENA are realizing the positives to be gained from renewable energy adoption. Greenhouse gas reduction,
  • 18. 18 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION improved health, urban rural development, job creation, manufacturing, and power independence & security are some examples of areas of concentration by governments. Seven MENA countries have adopted ‘Feed in Tariffs’ (FIT’s) as a way to help meet their lofty energy expansion goals. (Figure 4.9) Qatar Airways has undertaken development of bio-fuels in partnership with related industry companies such as Rolls Royce (jet engines) and Air Bus. Government parliaments and publicly owned electric companies are also pioneering renewable energy initiatives with financing and incentives from institutions such as the World Bank Group. The presence of water in a region has determined the development of settlements for people in the MENA since the beginnings of recorded history. According to the Maplecroft Waterstress Index of 2011, the MENA region contains some of the highest ratings for ‘extreme risk’ of insufficient and un-renewable water supplies versus the stresses of demand. These countries include Bahrain, Libya, Qatar, Yemen, Kuwait, Saudi Arabia, Israel, Jordan, and the Western Sahara. The index measures domestic, industrial, and agricultural uses of water against renewable reservoirs in rivers, groundwater, and from precipitation. There are five main bodies of fresh water in the MENA:  Tigris and Euphrates basin  Jordan River basin  Arabian Peninsula basin  Nubian Sandstone aquifer  Nile basin Average water availability per person globally is 7,000 𝑚3 /person/year. In MENA however, that availability drops to 1,200 𝑚3 /person/year. A predicted increase in population from 300 million (2012) to 500 million (2025) would bring the availability of water per person to half of the current amount by 2050. (Figure 4.10) MENA contains roughly 6.3% of the global population and has access to only 1.4% of the world’s renewable fresh water. The UAE and Libya receive their fresh water from ancient underground aquifers and from the desalinization of seawater. The aquifers are referred to as paleo-ground-water and can be up to 30,000 years old. They are practically non-renewable by natural means. Desalinization is a short term solution, but it is costly to energy supplies to produce. Using fossil fuels to remove salt from seawater is unsustainable in the long term. Extreme heat, low precipitation, harsh geography, and massive dust storms have become an accepted part of life to some residents of the MENA. The region is characterized by is arid and hyper-arid climates which encompass more than 78% of the total land mass. Rainfall in the region is seasonally erratic with much deviation in amounts from year to year, ranging from 50mm-500mm. The Arab region consists of 54.8% barren land, 26.8% rangelands, 10.3% cultivated land, and 3.9% forested area. Drought negatively impacts a region in many ways:  Reductions in productivity  Degradation of natural resources  Degraded humanitarian & social conditions  Downgraded economy  Decreased agricultural capacity  Depletion of livestock Significant adverse effects on economic activity include increased spending on food and water, import/export imbalance, price volatility, market failure, depleted surpluses of commodities, and
  • 19. 19 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION lower income levels. Different socioeconomic factors for individuals determine the degree to which they are affected by drought related famine situations. Air pollution is becoming an ever worsening problem in the MENA region. High levels of suspended particulates, sulfur dioxide, and increasingly violent dust storms are beginning to take their toll. (Figure 4.11) Air quality is recognized as one of the most important factors affecting sustained growth on a regional scale. In addition to economic limitations, air quality greatly impacts human health leading to inefficiency and decreased productivity. Dust storms and acid rain cause excessive deterioration of raw materials, assets, and may give rise to new degenerative sicknesses. MENA countries must work together to combat ever increasing air and water quality issues. Large scale gas and oil exploitation, processing, and reformulation coupled with industries like power plants, petrochemicals, fertilizers, steel, and aluminum all represent large contributions to pollution and are loosely regulated. The transportation sector accounts for 70- 80% of hydro carbon emissions. (Figure 4.12) The lead in gasoline accounts for 100% of lead particulates in urban areas. The more developed gulf countries like the UAE account for approximately 50% of CO2 emissions (254 million metric tons of carbon) in the MENA region. While awareness of environmental issues is on the rise, with the exception of renewable energy, not much progress is being made towards combating the accumulating environmental deficit the MENA is currently experiencing.
  • 20. 20 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Legal Cultures and traditions vary throughout MENA, the legal impact on the regions macro environment effects governments and its citizensthrough multiple variables. Analyzing the structures of:  Judicial systems  Impacts of religion on law  Women’s civil rights  International trade regulation  Organized crime and the black markets Understanding these variables will allow for accurate forecasting of the level of influence that governments and their institutions have on the macro environment. Developing an analysis of MENA’s legal systems is integral in understanding the political atmosphere and its ability to influence and shape actions on human rights. The court system can act either as an enforcer of human rights claims or abuse its power by ignoring them. Progress can be made with more responsive behaviors or regress and transform towards more suppressive conduct concerning advancement. There are two kinds of judiciary structures, dual and unified, that are prevalent in the MENA region. Countries with dual structured systems, like Tunisia and Lebanon, are split between the civil and administrative courts. MENA countries like United Arab Emirates and Yemen believe in unified judiciary systems. Both forms do accept appeals cases before the courts and in some instances separate civil litigious pursuits from administrative ones. Judiciary systems do have their share of issues as they face structural problems that often force both defendants and prosecutors to avoid use of the courts. These issues are comprised of: slowness in court settlements, increased costs of litigation, and the ineffectiveness of implementing decisions. Lebanon and Tunisian judicial systems suffer from low numbers of acting judges in relation to the amount of cases received throughout the courts. This scenario creates a logjam of impending cases. Continued inefficiencies throughout the courts create civil distrust in the judiciary system and its litigants, who are forced to exercise the option of a tribal means for conflict resolution. MENA’s legal systems have historically been intertwined with religious or tribal law, which can often be qualified as outdated, though gender inequality is prevalent within legislation across the region. In comparison to other nations across the globe, the MENA region has lagged in matters of gender inequality. Cingranelli and Richards (CIRI) a Human Rights Dataset illustrates MENA attaining the lowest global scores regarding both the values of economic, political, and women rights. Historically, religious fundamentalism has played a key deterrent in the improvement of female participation within the legal system throughout the region. Another barrier to advancement is the complexity of the legal system. Courts are divided by the various religious groups they have jurisdiction over. Interfaith marriage is a topic that comes into light under the context of religious involvement in the courts. Multiple countries in MENA have made the act illegal. As a result of such arrangements, religious segregation becomes embedded within the MENA state’s policies. Such policies make forecasting the legal spectrum throughout the MENA region difficult, as there is
  • 21. 21 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION currently little to no separation between state and religion. Exploring MENA’s trade policies will allow for an understanding of the region’s openness to global exchange and their impacts relative to growth in the business environment. MENA’s trade behaviors could historically be categorized as closed or protectionist based. Such policies have been factors in MENA’s decline in both foreign investment and growth within the public sector. Traditionally, foreign ownership has been hedged substantially as regulations have been in place since the 1990’s to reduce foreign majority ownership in business. Due to a downward trend in local economies, member countries have developed political reform that encourages such ownership structures. In 2000 Qatar approved legislation that allowed full ownership to foreign investment groups in the industrial, agricultural, education, tourism, and health sectors. MENA states like Bahrain, Egypt, United Arab Emirates, Jordan and Morocco incentivize foreign investment with free trade zones. International trade reform & policy, which spurs foreign direct investment (FDI), is integral to the progress of MENA countries expansion of new businesses to create competition and new employment opportunities. Continuing this trend throughout the MENA would allow for increased FDI capital flows that would initiate expansion throughout the public sector and help to institute long-term economic stability. The MENA can be viewed as a region where the relationships between geography and political structure heavily influence its economy. For the region to form a thriving economic environment the judicial and legal components of authority need to be updated drastically. Lack of implementation of enhanced corporate governance and anti-corruption laws will have a pronounced negative fiscal effect on the business environment, which will continue to decline without such vital measures in place. Aside from of economic benefit, MENA must strengthen its authority over member countries that partake in organized crime. The majority of organized crime revolves around drug trafficking, arms dealing & transport, and money laundering. Recently, this type of activity has become increasingly widespread throughout the region and will continue to trend this direction if accountability measures are not enforced. Of concern is the illicit and lucrative drug trade & trafficking routes that criss-cross the MENA region. Due to the illegal nature of these substances, high profit margins, and the unquenchable demand from the back market, terrorist organizations and governments alike via for their piece of the multi-billion dollar industry. Irregardless if its opium & heroin (19 metric tons annually) produced in Iran, poppy seed transport from neighboring Afghanistan & Pakistan, or cannabis resin produced (38 metric tons annually) in Algeria, there is ample money to be made. Every year thousands of tons of drugs are sized throughout the MENA, but hundreds of thousands of tons get through U.N. dragnets. Large seizures of illegal narcotics are not rare and amount to a small fraction of the true tonnage moving through or produced in an area. Examples such as:  12.8 tons of amphetamines in Saudi Arabia  936 tons of marijuana in Africa  221.9 tons of marijuana in Morocco  1 ton of marijuana in Israel  561,272 kilograms of opiates in Iran
  • 22. 22 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION The financing from these illicit sources of fast cash are used for terrorism, private armies, and personal gain. These relationships are easy to perpetuate throughout bureaucraciesdue to the constant and pervasive corruption of the MENA countries as shown by the TI Corruption Index. As long as there is a world-wide market willing to pay premium prices for banned substances, this trend will continue to increase for the foreseeable future.
  • 23. 23 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Going Forward Wars and infighting have been an institutionalized way of life in the MENA region for thousands of years. From the first recorded clashes between the Israelites and the Egyptian Pharos, the Carthaginians, Philistines, Hittites, Persians, etc, there has been generations of mistrust, ingrained hatred, and bloodshed. This region has come a long way in the last 100 years through the discovery of vast amounts of commodity wealth. To break the cycle of violence and hatred prevalent in the MENA, these countries must achieve what has rarely been accomplished in the annals of history. They must strive to put their differences aside and realize that each country’s fate is intertwined with that of its neighbors. The MENA must look past religion and language to ensure a secure future for everyone in the region. MENA countries must develop socially through:  Incorporation of youth and elimination of gender disparity  Removal of barriers between rural and urban residents  Transparency and accountability from government and leadership  Upgraded infrastructure  Energy security and independence for the future  FDI and fair distribution of capital and credit Some individual nations may make advancements in these areas, but until the people of the MENA realize that everything they do affects everyone around them and learns to work together towards common goals, then they are invariably entrenched in the unending cycle of war, death, and misery that has plagued the region incrementally for thousands of years.
  • 24. 24 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Appendix (Graphs) Economics Figure 2.1 Table 1. MENA Countries: Selected Economic Indicators, 1995-2002 1995 1996 1997 1998 1999 2000 2001 2002 Real Non-Oil GDP (percent) Bahrain 4.2 3.7 3.0 3.7 2.9 4.1 5.7 4.9 Kuwait 3.4 3.1 4.1 3.1 1.0 1.1 0.5 1.1 Oman 5.0 2.8 6.1 2.6 -0.6 5.5 8.8 2.4 Qatar -1.6 5.5 14.6 2.2 0.4 2.0 3.5 4.5 Saudi Arabia 0.5 1.0 4.5 2.6 2.8 3.9 2.5 2.9 United Arab Emirates 9.1 8.3 9.2 5.0 7.5 9.7 4.6 4.8 Algeria 4.0 3.8 -0.5 5.5 2.3 1.3 3.3 4.0 Egypt ... ... ... ... ... ... ... ... Iran 3.5 6.2 7.1 3.8 2.5 4.9 6.7 7.4 Libya -0.3 4.4 8.0 -5.3 2.6 5.1 2.5 2.4 Yemen 9.4 4.6 9.1 7.2 1.8 3.9 3.9 4.5 Non-Oil Fiscal Balance (percent of GDP) Bahrain -17.5 -16.9 -17.6 -17.6 -17.4 -16.8 -18.1 -20.6 Kuwait -39.2 -26.8 -22.2 -28.6 -23.9 -16.4 -20.2 -25.6 Oman -33.9 -29.1 -28.5 -28.9 -28.0 -27.8 -31.0 -29.5 Qatar -29.3 -37.0 -30.6 -31.9 -27.7 -18.0 -23.0 -14.2 Saudi Arabia -27.8 -26.4 -28.4 -23.6 -23.3 -27.1 -30.7 -29.5 United Arab Emirates -22.5 -26.1 -18.5 -20.1 -19.4 -15.4 -24.2 -26.3 Algeria -23.1 -22.9 -26.3 -24.3 -25.8 -33.1 -31.5 -33.1 Egypt ... ... ... ... ... ... ... ... Iran -24.5 -21.1 -18.1 -15.1 -12.9 -16.8 -17.2 -23.7 Libya -25.2 -29.2 -35.3 -30.9 -16.6 -30.9 -51.0 -105.2 Yemen -17.0 -37.4 -31.8 -24.3 -23.3 -22.8 -24.2 -26.4 Oil Revenue (percent of total revenue) Bahrain 56.8 62.1 59.9 46.8 56.1 73.0 68.6 69.9 Kuwait 68.9 66.6 63.8 58.7 64.0 69.6 68.2 66.4 Oman 73.5 77.3 77.4 65.3 73.7 82.9 80.3 76.7 Qatar 61.9 68.8 64.5 60.0 71.1 78.4 70.9 72.0 Saudi Arabia 72.2 76.1 77.8 56.6 70.8 83.1 80.6 78.0 United Arab Emirates 55.8 56.9 58.4 41.5 43.7 55.7 58.8 63.3 Algeria 59.7 63.0 63.9 55.0 61.9 76.9 68.7 64.6 Egypt ... ... ... ... ... ... ... ... Iran 65.2 61.5 53.6 35.8 42.8 67.5 57.4 58.6 Libya 62.2 69.6 66.5 57.6 50.6 65.2 64.8 82.0
  • 25. 25 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Yemen 47.9 69.9 67.4 52.1 57.1 62.3 64.3 75.6 Oil and Gas Exports (percent of total exports) Bahrain 59.7 67.3 62.3 54.0 66.5 73.6 70.9 69.8 Kuwait 93.9 94.6 94.3 88.1 89.8 93.2 92.6 92.4 Oman 78.4 80.2 75.9 67.4 76.4 82.9 80.2 77.2 Qatar 65.0 67.3 68.4 74.9 84.8 86.7 85.5 84.2 Saudi Arabia 81.1 85.2 81.8 74.6 79.8 85.9 81.7 81.7 United Arab Emirates 46.1 49.2 44.6 37.5 45.2 54.6 48.4 45.7 Algeria 87.9 89.3 87.0 86.8 89.8 91.8 88.9 89.2 Egypt 48.3 48.2 33.7 22.5 35.6 37.2 28.7 31.0 Iran 78.4 75.0 67.7 47.3 63.4 84.3 70.7 73.9 Libya ... ... ... ... ... ... ... ... Yemen 89.6 87.3 85.5 81.9 86.5 90.0 87.7 88.3 Source: Country data files. Figure 2.2 Figure 2.3
  • 26. 26 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 2.4 Figure 2.5
  • 27. 27 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Sociocultural Figure 3.1 Figure 3.1B
  • 28. 28 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 3.1C
  • 29. 29 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 3.2
  • 30. 30 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 3.3 Figure 3.3B
  • 31. 31 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Environmental Figure 4.1 Figure 4.2
  • 32. 32 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.2B
  • 33. 33 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.2C
  • 34. 34 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.3
  • 35. 35 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.4
  • 36. 36 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.4B
  • 37. 37 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.5 Figure 4.5B
  • 38. 38 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.5C
  • 39. 39 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.6
  • 40. 40 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.7 Figure 4.8
  • 41. 41 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.9 Figure 4.10
  • 42. 42 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 4.11 Figure 4.12
  • 43. 43 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Technology Figure 5.1
  • 44. 44 P.E.S.T.E.L. ANALYSIS OF THE MENA REGION Figure 5.2
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