CTI's shipments to Egypt plunged during the uprising against Hosni Mubarak early last year and have yet to recover, he says, while deliveries to Yemen were disrupted by unrest there. Trade with Libya is still suspended despite the end of last year's civil war. The company is projecting only about 12 to 14 percent of its business will come from the Arab world in 2012, compared with at least 30 percent in normal times.

"The Arab Spring turned the company from profit to loss for the first time in almost 10 years," said Dajani, 46, a member of an influential Jordanian-Palestinian merchant family.

Dajani's frustration is felt across the region. A year after the ouster of Tunisian ruler Zine al-Abidine Ben Ali triggered pro-democracy protests in more than a dozen Arab countries, trading links remain damaged, billions of dollars in investments are frozen, and tens of thousands of people have lost their jobs. That risks compounding the economic problems that helped spur the uprisings.

But the gloom is far from universal. Many Arab businessmen are convinced the turmoil has unlocked new opportunities for private companies, overturning entrenched interests and opening the field for new entrants. Thomas Mirow, president of the European Bank for Reconstruction and Development (EBRD), has compared the Arab Spring to the fall of Communism in the former Soviet bloc two decades ago, saying it could help bring North African economies into the global supply chain. That could set the Arab world up for unprecedented growth.

"The Arab Spring accelerated a trend which was already happening: the leveling of the landscape in a very dramatic way," says Mustafa Abdel-Wadood, chief executive of Dubai-based Abraaj Capital, the Middle East's largest private equity firm with over $6 billion under management. "It triggered a sense of accountability. People don't accept the use of political influence as they used to."

'BREEZE OF CHANGE'

Adnan Ahmed Yousif agrees. The chief executive of Bahrain-based Al Baraka Banking Group, an Islamic banking conglomerate with operations across North Africa, says the Arab Spring had only a "marginal" impact on his firm's earnings last year. He detects a new dynamism in many economies in the Arab world, where about 60 percent of the 350 million people are under 25.

"I see it and feel the breeze of change when I talk to fellow bankers and businessmen," said Yousif, also chairman of the Beirut-based Union of Arab Banks, a regional association.

In Tunisia, a new government elected in October is spending to create jobs and opening areas of the economy to fresh investment, Yousif said. Last month, Tunisia's parliament approved a 7.5 percent rise in spending in the government's 2012 budget from the previous year. Ben Ali's extended family owned big interests in sectors such as telecoms, news media and banking, crowding out potential competitors; that network is now being dismantled, which may create new opportunities.

Yousif said Baraka has applied to open two new branches in Tunisia, which would bring its total number of branches there to 12.

In Egypt and other countries, bankers have become freer to lend without political interference, Yousif said. Libya is moving towards easing curbs on privately owned banks, after years of tight restrictions. New opportunities for Islamic banking are opening up in countries including Morocco and Oman.

"I expect the role of a private sector which was once stifled by governments to grow in the years to come, as change brings more competition and openness," Yousif said.

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Interactive on the Middle East economy: r.reuters.com/hyc95s

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COSTS

In many countries, such potential future gains are obscured by heavy costs in the present. Estimates from the International Monetary Fund, analyzed by Reuters, suggest the six Arab countries which experienced the most serious unrest - Bahrain, Egypt, Libya, Syria, Tunisia and Yemen - lost around $50 billion in output last year, or 11 percent of their combined 2010 output. Egypt may have lost some $10 billion, while the IMF estimates Libya's economic output halved to $35 billion. Every other Arab economy in North Africa and the eastern Mediterranean was affected to some degree.

The figures probably understate the damage. Many governments struggling to contain social unrest have increased spending on wages, food and energy subsidies. That undermines finances which were already shaky, and runs down foreign currency reserves. Egypt risks both a sovereign debt crisis and a balance of payments crisis this year. The government's borrowing costs have been climbing as foreign investors pull out, forcing it to rely on local banks to finance its budget deficit.

Even Qatar, a wealthy Gulf emirate which avoided political upheaval, was affected. Dajani said Qatar had planned to use his firm to import at least 400,000 tonnes of cement clinker, a material used to make cement, last year. The deals, nearly a third of Qatar's projected imports of the material in 2011, fell through after unrest in Bahrain and smaller protests across the border in eastern Saudi Arabia prompted Qatari businesses to slow their plans.

Grim conditions in the eastern Mediterranean have prompted CTI to send some of its cement carriers to work in Indonesia.

"The Arab world is our traditional market - it's not Indonesia or anywhere else, because we are Arabs. Our traditional customers are here; we have been doing business here for 20 years. We hope for the better, but the turmoil has hit us," said Dajani. As a private company, CTI does not disclose financial details.

Insecurity and political uncertainty are continuing to deter investment. Countries such as Egypt and Libya may see an entirely new set of economic policymakers brought in, including Islamic parties previously kept out of government.

"In Egypt, at the level of adding a room to their homes, people are saying, 'I will wait and see what will happen,'" said Dajani. "This slows everything."

51 MILLION JOBS

There won't be any quick solutions. Two of the Arab world's biggest economic problems - high youth unemployment and an unequal distribution of wealth - sparked the protests and have not improved.

Arab countries would need to generate 51 million new jobs by 2020 to absorb new entrants to the labor force, according to a United Nations report published in 2009. Youth unemployment in the region averages more than 23 per cent, the International Labour Organisation says.

Erik Berglof, chief economist at the EBRD, says the need to generate huge numbers of jobs makes the Arab world's situation more difficult in some ways than the challenges which the former Soviet bloc faced two decades ago.

"There was a more even distribution of wealth in Soviet economies and unemployment was not so high," said Berglof, whose bank was set up to help finance and advise ex-Soviet economies and is now expanding its mission to aid Arab states. "They never faced such problems to the same degree."

Arab governments are now talking of the need for an "inclusive" model of economic growth that would create jobs and allow more people to share in prosperity. This might include better education, greater state investment in transport and health care, and more progressive tax systems. But Berglof said this would remain empty talk until political and economic stability returned.

"Governments are trying to plug all the holes and somehow to stop the bleeding. It's all about stabilization right now."

STABILISERS

High oil prices, however, are maintaining a strong economic core in the Arab world. In the Gulf last year, oil producers spent heavily to buy social stability through welfare schemes and infrastructure projects. Saudi Arabia, for example, promised $67 billion to build 500,000 homes. Kuwait, Qatar and the United Arab Emirates are now so flush with cash they are likely to be able to continue spending even if a weak global economy depresses oil prices this year.

That may trickle down to the weaker countries. Keen to keep neighbors afloat, rich states have pledged $10 billion in aid to Bahrain and the same to Oman over coming years; they are assisting Jordan and Morocco. Saudi Arabia is giving diesel fuel to Yemen. Egypt may receive billions of dollars from the Gulf, although it has received little concrete aid so far.

The IMF forecasts economic growth in the Middle East and North Africa of 3.6 percent in 2012, down only moderately from 4.0 percent last year, although those figures mask big differences between countries. Egypt is expected to expand just 1.8 percent this year, for instance; growth in Syria and Libya could be stifled if unrest continues.

Abdel-Wadood at Abraaj is among those who see opportunity. Over the past 30 years, he said, business across the Arab world has been dominated by two groups: large government-owned firms, and old family conglomerates with webs of contacts that often included government officials and politicians.

The main problem wasn't corruption, though petty corruption was rampant. It was that the business landscape didn't offer equal opportunities to new firms.

Even before last year, he said, global competition was putting pressure on old patronage networks. The region's political upheaval has now swept away many of these, promising an era of more open business. "It's less whom you know and more about what you know."

Yousif, the Bahrain-based banker, agrees. In his own bank and others, he said, he had noticed boards of directors scrutinizing senior appointments more actively and carefully. "Arab institutions used to buy loyalty, now they buy professionalism," he said.

By showing how easily information can be shared through modern media, and how dramatic the public backlash can be, the Arab Spring has made officials and bureaucrats more circumspect in their dealings with companies.

"Let's take tendering for example," he said. "In the old days, nearly all companies came from certain established families, so work would go to such-and-such a firm. Now this has become a thing of the past, even in the Gulf.

"Previously if a minister phones me and tells me, 'Adnan, do this for me,' I might say, 'This is a minister who might harm me in the bank or create problems for me in so many other ways, and okay, I might turn a blind eye over some matters.

"But now if even the prime minister phones and tells me to do it, I tell him, 'Forgive me but I am not ready to do so.' Why? Because views have changed and there are now people asking, and any shred of information can no longer be hidden."

But things aren't changing fast enough for Yousif to give examples.

DOUBLE-EDGED

But business arrangements and deals dating back years are under challenge. Morocco's long-dormant antitrust authority is being strengthened. In Egypt last month, an administrative court annulled the state's sale in the late 1990s of Nile Cotton Ginning Co. because the shares were undervalued at the time. More decisions like that could cast doubt on the ownership of many firms in the stock market.

Trade unions are also on the rise. Restricted or co-opted under authoritarian governments, they have gained in confidence after the uprisings. Strikes won workers better wages across the region last year, from Morocco to Jordan. New unions have formed in Egypt and Tunisia.

Even in places where union activity is still limited, some governments are raising wages to reduce social discontent. Oman hiked the minimum wage for its citizens by 43 percent last year.

Higher wages could hurt competitiveness, of course. But by reducing inequality and stimulating consumer spending, they might also accelerate growth, lifting it to the annual levels of 6 percent or more that economists think are needed to solve the Arab world's unemployment problem. In theory, richer workers could trigger a surge in demand for consumer goods and, in turn, domestic production.

Some international companies are already betting on the region. Last month, Coca-Cola Co. finalized talks to buy a stake in Saudi Arabia-based beverage company Aujan Industries for $980 million, describing it as the largest investment by a multinational firm in the Middle East's consumer goods sector.

"For the future - including the near future - we remain strongly optimistic about the region's growth prospects and the promise of doing business here," said a Coca-Cola spokeswoman. "This region is experiencing a 'youth demographic bulge'."

Coca-Cola launched its talks with Aujan before the Arab Spring and is primarily interested in the firm for its non-Saudi business; 65 percent of the company's sales are outside Saudi Arabia.

As the unrest dies down and new governments become entrenched, it is possible they will form fresh patronage networks and new cliques, stifling economies again. But Abdel-Wadood, the private equity executive, thinks a return to the old system is unlikely.

"You've broken the fear factor," he said. "In today's world of communications one has the ability to speak, and expression is a powerful tool."

Dajani, the cement trader, remains optimistic. He said CTI was negotiating with Libya's new authorities to bring a ship back to the country, to cater to demand for reconstruction after the war. "Once the situation there is clarified, Libya is going to be huge," he said. "Everyone is looking at it."

(Additional reporting by Bradley Dorfman in Chicago; Edited by Sara Ledwith and Simon Robinson)

• A Permanent Economic Emergency