# **Introduction**

In 1991, with the evidence available at the time, experts estimated that by the year 2000, 1520 million adults and 5-10 million children cumulatively would become infected with HIV. By the end of 2001, The World Health Organization (WHO) reported 40 million people were living with HIV/AIDS and 5 million new infections had occurred during the year. The great difference between earlier projections and current estimates reflects both the unexpected spread of the virus and the inadequacy of statistics used to track the epidemic. HIV does not always spread rapidly, though it certainly can if conditions permit. Rapid social and economic changes underlie the virus's spread in most of Africa, Russia, Central Asia, Eastern Europe, China, and elsewhere. HIV epidemics have been particularly sensitive to large migrations of people, wars, economic downturns, and other drastic alterations in social stability. WHO estimates that 1.2% of all adults on earth are presently infected with HIV and all experts agree that the worst effects of the pandemic are yet to come.

This paper is a first attempt to evaluate the risks of an epidemic in 9 Middle East and North Africa (MENA) countries' and its potential economic costs, while at the same time assessing the welfare implications of two preventive interventions: expanding condom use and access to clean needles for Injecting Drug Users (IDUs). WHO estimated that approximately 80,000 persons were newly infected with HIV in the MENA region in the year 2001, and that about 0.2% of adults in the region are currently infected. These figures are relatively low, compared to Africa, South and SE Asia and the Caribbean, but do not assure safety for the region. Inadequate methods of surveillance, universal in the region, can easily miss outbreaks in hidden populations. Further, even in low prevalence nations, the situation can change rapidly, as has occurred in Indonesia and Nepal.

Unfortunately, in MENA countries, continued low levels of case detection through mostly mandatory screening, the lack of appropriate behavioral data, and over-confidence in the protective effects of social and cultural conservatism have dictated low priority for HIV/AIDS Yet, there is evidence that the necessary risk factors to the spread of the epidemic are present. The first group is comprised of those with known risky behaviors, such as prostitutes, their clients, IDUs, Men who have Sex with Men (MSM), and those who acquire Sexually Transmitted Diseases (STDs). These persons are immediately at-risk. While it is likely that they represent a minority in any country, our analysis shows that any such group can.become the core of spread into the rest of the population, depending upon the extent and nature of social linkages and networks. The next groups are those who may be considered vulnerable (i.e., could be at-risk if and when their life situation changes). For example, migrants going to work abroad, refugees, tourists traveling for fun and recreation, noninjecting drug users who may switch to injecting when the availability or price of the drug changes, and young people in general, in that some proportion will engage in non-marital sex under certain conditions. Further, structural factors, such as poor and dysfunctional health care systems, raising unemployment and poverty rates, and income and gender inequality create an environment that is suitable for the diffusion of the epidemic (see Over, 2000; and Jenkins and Robalino, 2002, Ch. 4, for econometric analysis of the socioeconomic determinants of IRV prevalence rates using cross-country data).

Clearly, there are methodological difficulties to predict the dynamics of the epidemic in different countries and to evaluate economic impacts. These difficulties are amplified by the lack of substantial IRV-related social or behavioral research in the region. Our analysis builds upon the large body of applied research on the economics of HIV/AIDS that has been conducted over the past 10 years. One tradition within this literature has focused on estimating econometrically, on the basis of The countries included in the analysis are: Algeria, Djibouti, Egypt, Iran, Jordan, Lebanon, Morocco, Tunisia, and Yemen.