Peace profits

The brief unrest in Egypt that began on 25 January 2011 caused an estimated drop in tourism of 210,000 tourists, with an estimated revenue loss of $178 million. The flow-on effect of the unrest could cost Egypt about $825 million in 2011. That’s only an estimation of the tourism sector losses; it’s difficult to estimate losses in other sectors such as trade, small business, and foreign investment.

The cost of unrest in Libya will be greater. Damage to buildings, infrastructure, social services, government services – and the movement of people across borders not only affects Libya but also neighbouring countries. Assistance by other governments – the expenditure of public funds for military interventions to protect the country’s citizens and to supply humanitarian aid, food, and medical supplies is increasing daily.

Unrest across the Middle East region has significant economic consequences for countries directly affected, and also for countries assisting, trading, importing, and receiving exports. Oil prices rise, the cost of food rises, and the cost of goods rise as goods and services are disrupted. Traders panic, they change the composition of their portfolios, they look to invest in other countries or regions or markets, thus pushing commodity prices even higher. Supply disruptions often lead to unrest – note the rice riots, the bread riots, and so on. It’s a cycle that creates distrust in the market, widespread poverty across communities or regions, and migration to locations that may potentially provide a better lifestyle. Migration puts pressure on the government of the receiving countries, thus often causing resentment of the local residents. And the knock-on effects continue …

Not only does democracy and peace have great social impacts for nations, but also economic consequences that are far-reaching. The advantages (and profits) of peace are infinite.

One example is Lebanon. The Lebanon and Gulf Bank (LGB) is developing new services to meet the needs of the Lebanese diaspora and to link them with their home country. "There are around 14 million Lebanese living abroad, and their estimated wealth is around $100 billion," says an LGB representative. So the inflow of money is actually increasing, not decreasing. Foreign investors are fickle – any hint of instability and they withdraw money. Early signs of peace and stability can bring money into the country, and into the region. Lebanon is not just gaining from foreign investment, but in the patriotism of their people. Confidence in the stability of their country brings in diaspora funding – even if they are not living in the country. As one resident of Lebanon said, “People want to build two or three houses, not the same house two or three times” (due to conflict or having to flee the country).

Democracy increases peace and peace increases trade and trade increases profit and profit increases employment and employment decreases poverty. And decreased poverty increases peace and …