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THE ROAD from CONFLICT to RECONSTRUCTION, RECOVERY and RESILIENCE in the MENA REGION November 2020

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THE ROAD FROM CONFLICT TO RECONSTRUCTION, RECOVERY AND RESILIENCE IN THE MENA REGION November 2020 01 - INTRODUCTION 01 FOREWORD 05 ACKNOWLEDGEMENTS 06 EXECUTIVE SUMMARY 08 1. INTRODUCTION 12 2. UNDERSTANDING FRAGILITY AND RESILIENCE IN MENA 16 3 DRIVERS AND IMPACT OF CONFLICT IN MENA 24 3.1 Case studies: Conflicts in Iraq, Syria, Yemen and Libya 25 3.2 Conflict and Forced Displacement in MENA (Refugees, IDBs and Migrants) 37 3.3 The COVID-19 Pandemic in MENA 52 4. TOWARDS RECOVERY AND RESILIENCE IN MENA 56 4.1 Investing in Human and Social Capital 57 4.2 Role of Private Sector in Reconstruction and Recovery in MENA 80 5. CONCLUSIONS AND RECOMMENDATIONS 102 ENDNOTES 110 BIBLIOGRAPHY 120 TABLE OF CONTENTS 03 ACRONYMS AND BBB BUILD bacK better DNA DamaGE NEEDS assessment EBRD EUROPEAN BANK FOR RECONSTRUction AND Development EU EUROPEAN UNION FCS FRAGILE AND conflict-affected sitUations FDI FOREIGN direct investment GDP GROSS DOMESTIC PRODUct IDP Internally displaced PERSON ILO International LABOUR ORGANIZation IMF International Monetary FUND IPA Investment promotion AGENCY IsDB Islamic Development BANK KPI KEY performance indicator M&E MonitorinG AND evalUation MC MEMBER COUntry MENA MIDDLE EAST AND North AFRICA MSME MICRO, small AND MEDIUM-SIZED enterprise NGO NON-Governmental ORGANIZation OCHA ORGANIZation FOR THE Coordination OF HUmanitarian Affairs OECD ORGanisation FOR ECONOMIC CO-operation AND Development PPP PUBLIC–private partnership PSD Private-sector development SEZ Special ECONOMIC Zone SME Small AND MEDIUM-SIZED enterprise SDG SUstainable Development Goal UN United Nations UNDP United Nations Development PROGRAMME UNHCR United Nations HIGH COMMISSIONER FOR REFUGEES WHO WORLD Health ORGANIZation 04 THE ROAD FROM CONFLICT TO RECONSTRUCTION, RECOVERY AND RESILIENCE IN THE MENA REGION situations. It links these lessons to the four conflict-affected countries’ specific experiences and the two refugee-hosting countries to provide a series of recommended next steps for donor interventions. Tackling fragility requires a multidimensional approach to building resilience by investing in human, social, physical, and financial capital. During recovery and reconstruction, infrastructure and institutions should be built back better to adapt positively and respond to risks such as climate change and natural disasters which could compound the development challenges facing some IsDB Member Countries. IsDB has therefore supported member countries by investing in climate change resilience and supporting people affected by natural Fragility and conflict are radical development challenges disasters. facing the Islamic Development Bank member countries International development partners should pursue a (MCs). Years of violent conflict have had a devastating human, joined-up and complementary approach. No single actor economic, political, environmental, and social impact, leaving can perform all the required tasks. International partner hundreds of thousands of people dead and much more forcibly institutions – including multilateral development banks displaced. Violent conflicts have devastated economies and such as IsDB – should focus on specific tasks in which they essential infrastructure, hollowing out state institutions and have a comparative advantage. Besides being effectively fraying social fabric. Many IsDB MCs in the MENA region are coordinated, international development partners’ efforts to affected by fragility and conflict; four countries currently suffer support reconstruction, recovery, and resilience must also be from active conflicts. adequately phased according to each country’s place on the The Bank’s Ten-Year Strategy and the President’s Five-Year fragility-resilience continuum. Program (P5P) envisage the IsDB as proactive and responsive The report calls upon international development partners to to MCs’ challenges, including fragility and conflict. To address commit themselves to support MENA countries’ transition the challenge of fragility, the Bank has developed its first- from violence and fragility to resilience. At the same time, it is ever Fragility and Resilience Policy to set the standards and essential to emphasize that recovery and resilience-building strategic direction of IsDB to strengthen institutions, build are, and should always be, nationally owned processes led by resilience, and contribute to recovery, social cohesion, and member countries. sustainable development in member countries. I am confident that this report’s recommendations and This report is an initial step towards operationalizing the IsDB outcomes will help support MENA countries’ transition policy and building on that policy to develop a conceptual away from fragility and conflict towards peace, resilience, framework to understand how countries can move towards and recovery. The report’s findings will feed into IsDB’s greater resilience. This transition can be achieved through Member Country Partnership Strategy and global value chain investments in the soft part of reconstruction and recovery development programs and projects to address the region’s and bringing new dimensions and narratives to contribute to drivers of fragility and conflict. recovery and resilience-building efforts. The report analyzes the challenges and opportunities related to reconstruction, recovery, and resilience in MENA, focusing on the four conflict-affected states: Iraq, Libya, Syria, Yemen, and the two refugee-hosting countries: Jordan and Lebanon. It also analyzes lessons learned to support reconstruction, Dr. Bandar M.H. Hajjar recovery, and resilience in fragile- and conflict-affected President, Islamic Development Bank FOREWORD 05 The Road from Conflict to Reconstruction, Recovery UNDP team, including Miki Takahashi, for their technical and Resilience in the MENA Region was produced by the input and expertise. Human Development (HD) Division of the Resilience and Insightful feedback was provided by the members of Social Development Department and Country Strategy the OECD MENA Economic Resilience Task Force during and Market Integration Division (CSMI) of the Country their Third Annual Regional Meeting in Berlin, Germany, Strategy and Cooperation Department. I would like and also by participants of the workshop organized by to thank Abdi Moalin Abdullahi, Manager, HD Division, IsDB on ‘Managing Risks and Building Resilience in and Syed Quadri, Manager, CSMI Division, for their Fragile Environments’ in Rabat, Morocco. leadership and guidance in producing this important regional report. The core team of Morooj Safdar (HD), We are grateful for the excellent facilitation and support Mohamed Alamin Mohamed Alhadi (HD), Mohammed of the IsDB Regional Hub, Ankara, for successfully Kamal Mahmoud (CSMI) and Mohammed Bukhari conducting the validation meeting. Ahmed (CSMI) has developed and finalized the report. We acknowledge the contribution of Green Ink for We acknowledge with thanks the IsDB staff from the editing and proofreading the report, and Impakt Adv. for Global Practice Complex, Country Relations and Service designing the layout. Complex, the Islamic Trade Finance Cooperation Entity Finally, we owe special thanks to the consultancy (ITFC), the Islamic Cooperation for the Development firm Adam Smith International, which worked on the of the Private Sector (ICD), the Islamic Cooperation development of this report. for the Insurance of Investment and Export Credit (ICIEC) as well as the peer reviewers who attended the validation meeting in Istanbul and extensively reviewed and contributed to the report, including representatives from the World Bank, Institute for Economics and Peace, African Development Bank (AfDB), United Nations Dr. Mansur Muhtar Development Programme (UNDP), INJAZ Lebanon, Vice President, Country Programs Complex, University of Jordan and the Humanitarian Academy for Islamic Development Bank Development. Special thanks are also extended to the 06 THE ROAD FROM CONFLICT TO RECONSTRUCTION, RECOVERY AND RESILIENCE IN THE MENA REGION EXECUTIVE Fragility and violent conflict are complex phenomena with multiple, interlocking causes. In the Middle East and North Africa (MENA) region, years of conflict threaten to trap countries in a cycle of fragility and violence. The challenges facing the region necessitate different narratives and approaches to address the drivers of fragility and violence. It is, therefore, incumbent on the development actors and donors to develop a comprehensive strategy that addresses the underlying drivers of fragility, across its various social, political, economic, security and environmental dimensions, and which builds greater resilience. This report presents chapters on investment in human and social capital, refugees and internally displaced persons (IDPs), private-sector development (PSD) and foreign direct investment (FDI), as they play crucial roles in the reconstruction and recovery of conflict-affected nations. 08 THE ROAD FROM CONFLICT TO RECONSTRUCTION, RECOVERY AND RESILIENCE IN THE MENA REGION This report represents an initial step towards developing forcibly displaced by conflict across all donor interventions, that strategy and bringing new dimensions and narratives and the need for aid effectiveness through donor coordination to contribute to recovery and resilience-building efforts. and cooperation, both with other donors and with host It analyses the challenges and opportunities related to governments. The report stresses the need for a new narrative reconstruction, recovery and resilience in MENA,
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