The Ugly Economics of the Arab Spring

Five years later, an OECD report shows why the Middle East is in as much as economic distress as before, but by glossing over grim realities, it offers no solutions.

Members of the Higher Council for Civilian Community Organization inspect a destroyed funeral hall as they protest against a Saudi-led airstrike on a funeral hall six days before in Sanaa, Yemen, Thursday, Oct. 13, 2016.
Hani Mohammed, AP

You have to give the OECD credit for trying to make the best of a bad situation here in the Middle East. Its report “Better Policies for Inclusive Growth and Economic Integration in the MENA Region,” (we’ll call it the BPIGEIMR for short) features a gaggle of smiling Middle Easteners, many of them with a thumbs-up. None sport the scraggy beard of an ISIS fighter and the two women with headcovers leave their faces bare. They all look like the kind of people you’d meet at startup entrepreneurs’ conference or a freshman mixer.

But here is one case where you can judge a book by its cover: The disconnect between the reality and the report, which was released last week ahead of a conference on reform, extends on, into its analysis of the region’s woes and the solutions it proposes.

Building roads in failing states?

In case you haven’t noticed, three of the region’s countries (Libya, Syria and Yemen) are in a state of complete chaos. Another (Iraq) is just one step removed from it. With the exception of Tunisia, which is struggling, none has a government that would pass a good-governance smell test. The few countries that are prosperous by the crude measure of GDP per capita, such as  Saudi Arabia and Qatar owe that to oil profits and, with petroleum prices half of what they were three years ago, they’re also struggling.

The Organization for Economic Cooperation and Development admits the Middle East and North Africa faces “daunting challenges” and “pervasive” conflict and fragility. But it couches them in economic-policy terms. Its solutions, like a stronger private sector, removing barriers to trade and better infrastructure, are more appropriate for stable countries with the economic fundamentals ready to move up the prosperity ladder. 

The Middle Eastern economies of the region have been growing in the last two years at the same anemic pace as the OECD average, and well below that of the rest of the developed world. Drivers for growth are in poor shape. Foreign investment is down 50% from 2008 and the private sector is tiny compared to other developing economies. Youth unemployment is 29%, the highest for any region in the world.

Strangely, the Middle East strangely turns out relatively few high school graduates, but an unusually large proportion of them go on to university, even though the region’s low-tech economies don’t have jobs for them.

Under the circumstances, you would think another Arab Spring is poised to explode, perhaps even in the Gulf countries that that avoided it the last time. But is hasn’t happened and probably won’t. And, here’s a chance to be politically incorrect, as the OECD dare not be.

Like leaving half the oil in the ground

The Arab Spring was billed by the Western media as the natural consequence of pent-up demands for democracy and freedom that the region’s despots refused to meet. But anyone looking at the trajectory of the region’s revolutions sees a different story.

Most of people of the region are good Muslims. They do want an end to corruption and the worst of government oppression, but also want to preserve a society anchored in traditional mores, which makes little room for democracy and freedom as the West sees them.

That’s how the Egyptians and Tunisian voted in free and fair elections. Nowhere in the region did Western liberalism emerge a significant force.

One way this traditionalism is expressed is the prevailing attitude towards women and work.

While youth unemployment is higher, there’s a big difference in the proportion of males and females with nothing to do all day, that is, they are neither holding a job nor studying: In Egypt it's 17% among men versus 41% among women, and in the Palestinian Authority its 25% versus 38%.

The OECD ascribes this to discrimination and to sexist legislation, but the core of the problem is social attitudes. A survey in Morocco, one of the few that addressed the issue, found that women didn’t work because their parents and husbands wouldn’t let them. Economies without women in the work force can’t keep up with those who do; it would be like leaving half your oil in the ground.

The region’s despots can breathe a sigh of relief. Unlike young men, young women are unlikely to take to the streets or become ISIS fighters.  The fact that in 2011, a few did in Egypt and Tunisia, which is rare country in the Arab world that has made some progress on gender equality, was a fluke. The forces of traditionalism and Islam quickly reasserted themselves. The problem for them and the region is that in this day and age, the kind of society they aspire to will confine them to the backwaters of the world economy.