The United Nations estimates that the war will extract one trillion dollars in lost productivity on the economies of the Arab world, on top of the 600 billion dollars lost due to the last Gulf war 12 years ago.

"A dark cloud is covering the whole world, and the Arab region in particular," said Mervat Tallawi, executive secretary of the UN's Economic and Social Commission for West Asia (ESCWA), at a regional conference in Beirut earlier this week.

Between four and five million jobs had been lost following the 1991 Gulf War over Kuwait and that was expected to rise to between six and seven million as a result of the latest conflict, according to Tallawi.

She catalogued the region's woes as: "a fall in interest rates, an increase in military spending, which reached double the international average, a fall in tourist and transport income, particularly among airlines, a rise in the cost of insurance and reinsurance as well as a decrease in trade between Arab countries.

Egypt has already estimated before the start of the war in Iraq on March 20 that the war would cost it between six and eight billion dollars, mainly from a fall in airline traffic and a drop in tourism revenue, the country's main source of hard currency.

Morocco took more proactive measures this week to prop up the expected fall in tourism revenue by offering heavy discounts on travel by nationals and foreign residents inside the country.

The North African country's tourism revenue is estimated at about two billion dollars a year.

"In the past 10 years, average per capita income in the Arab region has been the lowest in the world, largely because of the fall in the price of oil," said Tallawi of the ESCWA, which groups Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria and Yemen and the United Arab Emirates as well as the Palestinian territories.

The United States has already promised financial aid to several countries in the region and the European Union announced on April 13 that it would release 35 million euros (38 million dollars) in emergency funds to Jordan, which has suffered the most from the economic fallout of the war in Iraq.

Jordan's economy was expected to grow by five to six percent this year before the war but economists now predict flat or negative growth, according to the World Bank.

"Jordan is the most impacted because it is closest to the theater of the activities of war," said Mustapha Nabli, the World Bank's chief economist for the region.

Jordan had significant trade ties with neighbouring Iraq. Its tourism industry was hurt, subsidised oil imports from Iraq halted and foreign direct investment took a hit.

SPACE.WIRE