Almost all six Arab Gulf countries have restricted gatherings, closed schools, shut down resorts, stopped the screening of movies and even public transport to contain the coronavirus spread.
Almost all six Arab Gulf countries have restricted gatherings, closed schools, shut down resorts, stopped the screening of movies and even public transport to contain the coronavirus spread.
Governance

Coronavirus In Gulf Could Hurt Kerala Economy

With Arab Gulf countries shutting down over coronavirus fears & falling crude prices, Indian migrants are staring at job losses

Rejimon Kuttappan

Rejimon Kuttappan

Sunil Nair, a Keralite construction businessman in UAE, is worried about whether they are going to see a financial crisis like in 2014-15 again or the recession of 2008 which forced the Arab Gulf countries to tighten their spending.

“Oil prices are on a free fall. It is like a 2014-15 situation or like what happened in 2008. We in the Arab Gulf are going to face a tough time and Kerala, which is dependent on remittances from the Gulf, is going to bleed,” Sunil said.

25 lakh Keralites are working in the Arab Gulf, which is nearly 8% of the total population of Kerala.

Coronavirus fear and failed talks between the Organization of Petroleum Exporting Countries (OPEC) and Russia on production control have pushed oil prices lower.

If the Crude Brent price was around USD 57 per barrel on February 14, when this report was filed on Saturday, the Crude Brent was trading at USD 35 per barrel. The Arab Gulf countries need crude price to be hovering around USD 70 per barrel to have a decent annual budget.

“Almost all the six Arab Gulf countries get 70% of their revenues from oil sale. So when that gets affected, the cash flow in the market will be hit badly,” Sunil said adding that when cash flow gets affected, then bills will not be cleared on time and eventually, the small companies will fail to pay their workers on time.

According to Sunil, he faced the same situation in 2014-15 when the crude price fell from USD 120 per barrel to USD 29 per barrel.

“Not only my company, many others, even big ones, faced trouble. Thousands of workers were laid off as projects were halted. It was a recession in the Arab Gulf. Many workers who left were not even given the end of service benefits. While some filed cases, others didn’t bother to do so,” Sunil added.

When the Arab Gulf countries faced a budget deficit, they had cut the perks for their citizens and had to bring in a localisation drive to pacify them. Localisation also led to a huge loss for Indian migrant workers, especially for the Keralites.

Meanwhile, sources and reports reveal that Arab Gulf countries are coming to a standstill due to coronavirus fears.

Almost all the six countries have restricted gatherings, closed schools, shut down resorts, stopped the screening of movies and even public transport to contain the coronavirus spread.

Additionally, the Arab Gulf countries have also put in place new restrictions on visa entry and also on airlines flying in and out from the countries.

International Air Transport Association’s (IATA) Vice President for Africa and the Middle East Muhammad Ali Albakri told reporters on March 02 that Middle East airlines have lost an estimated USD 100 million so far due to the coronavirus outbreak and governments should help the carriers through this “difficult period”.

“Ticket sales in the region for Middle Eastern airlines are expected to drop in coming weeks and revenues are at risk if travel restrictions in Asia are extended,” he had said then adding that at this stage, global airlines stand to lose USD 1.5 billion this year due to the virus, he said.

Jose C, a financial analyst in Oman, said that airlines losing money is a sign that Gulf countries are going to face a tough time.

“If people don’t fly down here, then tourism is going to be hit. And of course, conferences and meetings are not going to happen. So that means, revenue is going to be cut. If Gulf countries bleed then Kerala will also do the same,” Jose told The Lede over the phone from Oman.

The Keralites working in the Arab Gulf countries remit around Rs 2 lakh crores annually, which is some 30% of the state GDP.

Kerala survives on remittances, income from liquor sale and lottery and according to the 2020-21 budget document, the state is facing a revenue deficit of Rs 15,202 crore during the current financial year.

Meanwhile, Kerala Finance Minister Thomas Isaac on Tuesday said that if the coronavirus outbreak is not contained globally within three months it may lead to a worldwide economic crisis, the impact of which may be felt in the state.

"With the outbreak of the novel coronavirus, the global economy is facing a threat... if the outbreak is not contained within three months, " said Thomas Isaac in Kerala Assembly on Tuesday.

“If Gulf countries are affected, it will have its impact on Kerala as our economy is dependent on NRI remittances,” said Kerala Finance Minister.

Lateefh Thechy, an Indian social worker in Saudi Arabia for the last 30 years, said that he lost the job in OGER company in 2014-15.

“Around 11,000 Indians lost the job then. We are still fighting for compensation. While some got a job here, many had to return empty-handed. We are afraid whether that situation will return,” Lateefh said.

According to World Health Organisation data on March 13, there are 262 confirmed cases of coronavirus infection in Qatar, 195 in Bahrain, 85 in UAE, 80 in Kuwait, 21 in Oman and 18 in Saudi Arabia.

However, media reports claim that an outbreak in a labour camp in Qatar has pushed the numbers to 320.

Meanwhile, the regional director of the World Health Organisation (WHO) warned last Thursday said that governments in the Middle East are not providing enough information about coronavirus cases in their countries.

The director, Dr Ahmed al-Mandhari, reminded them of their duty under the International Health Regulations to share information about "suspected, probable and laboratory-confirmed cases" with WHO.

"Unfortunately, even today, as the situation is becoming critical, information on cases is insufficiently reported by countries to WHO," he said. "Less than 20% of all confirmed cases in the region have been officially communicated by countries to WHO."

Dr Mandhari continued: "Countries experiencing the outbreak need to contribute the global knowledge on prevention and control of COVID-19 by sharing information and lessons learned. We are all still students of this new virus, so we need to track its spread closely, document progress of managing patients and quickly apply the proven public health measures that can help us contain it."

Meanwhile, Lateefh said that as Kerala does not have a reintegration plan for the returnee migrants, it is likely to be a disaster.

“When a job is lost due to global financial conditions, we are not going to get end of service compensation. Most of them will be returning empty-handed. That is going to happen soon. Has the government planned anything for us? Nothing. It is going to be a tough time for us,” Lateefh added.

The Lede
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