Opinion |

Wait for It: The Middle East Is About to Convulse Again

The region’s economic prospects look increasingly bleak and the governments are incapable of coping with them

David Rosenberg
David Rosenberg
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Anti-government protesters set fires and close a street during a demonstration in Baghdad, Iraq, Sunday, Oct. 6, 2019
Anti-government protesters set fires and close a street during a demonstration in Baghdad, Iraq, Sunday, Oct. 6, 2019Credit: Khalid Mohammed,AP
David Rosenberg
David Rosenberg

How serious is social unrest in the Middle East and North Africa, nine years after the so-called Arab Spring began? Let’s do a very rough calculation.

There is a trio of countries (Yemen, Syria and Libya) that aren't in a state of social unrest, they're in a state of collapse, so we can ignore them. Others have been quiet for the last year: Saudi Arabia, the United Arab Emirate and a handful of Gulf statelets. But the rest have been experiencing major protests over the lack of jobs and opportunity, and the problems of deep corruption and mismanagement: Algeria, Tunisia, Egypt, Sudan, Lebanon, Jordan and Iraq.

If you measure it by population, about three quarters of the region has experienced unrest over economic grievances over the last year. That’s no small thing in a part of the world where governments don’t take kindly to even the mildest public protests. The decision to take to the streets is a dangerous one, as the 100 or so Iraqis who have been killed in the last week show.

The International Monetary Fund’s Reported Social Unrest Index, which covers seven countries (Algeria, Egypt, Jordan, Lebanon, Morocco, Sudan and Tunisia) based on news reports, backs that up. It shows that unrest has been rising sharply since the start of 2017. True, the IMF hasn’t updated the index since last February, but given events in the last few months, we may guess that it has kept on climbing.

Not all the protests are explicitly over economic issues, but it’s a safe bet that behind that ones that call for democracy and freedom are the bread-and-butter issues of jobs, standard of living and government services, or lack thereof. The dictators and kings that rule the region aren’t providing them and that naturally brings calls for a change in leadership. Could it be the Arab Spring all over again?

Economic malaise as a norm

The argument against a new wave of mass protests, and maybe even violent conflict, is that economic malaise has been the regional norm for decades. The only exception is the countries fortunate enough to have a lot of oil and a small enough population to make them rich.

For the rest of the region, it’s been a sad history of corruption and mismanagement. The only Arab countries to make it into the top 50 of the World Economic Forum’s Global Competitiveness Index are the Gulf oil exporters, which invested their profits in world-class infrastructure. They haven’t been able to create real economies with real industry and real jobs, but they have built schools, fast internet and highways.

But there’s also a strong case to be made that the economic situation of the region is heading from bad to worse.

The short-term problem is that oil is not quite the engine of prosperity it once was. The world is swimming in petroleum and after the brief scare that followed the attack on Saudi Arabia last month prices are back to what they were before the to-do. The slowing world economy and slackening demand for oil means prices won’t be rising anytime soon, short of a major disruption in supply.

That’s not a problem just for oil exporters but for the rest of the region as well. Many countries depend on remittances from their nationals working in the oil-rich Gulf, but with oil prices down and the Saudis determined to create jobs for locals, hundreds of thousands of these expats are being sent home. There is less money for Gulf countries to invest or send aid.

But it's the long-term problem that's sparking the protests. The region is hamstrung by corruption, poor regulations, second-rate schools that don’t teach skills, insider dealing and a bloated public sector. The economies aren’t growing fast enough to create new jobs, nor do they provide a business-friendly environment to those who might opt to go into business.

The IMF projects GDP growth for the non-oil countries at just 3.5% this year and 3.8% in 2020, compared with 6.2% on average in 2000-15. And that was its forecast from last April before the world economy took a turn for the worse. Youth unemployment rates in the Middle East and North Africa region have been the highest in the world for years, reaching 30% in 2017. It’s not just an issue of squandered labor. Instead of entering adult society by marrying and starting their own households, they are bored and at risk of exploding in anger.

It seems those are the conditions that have sparked the protests in Iraq, where each year, no less than 800,000 young people reach the age to start work and find little or nothing on offer. The government has tried to buy them off with promises of jobs and job training, housing, but these are Band-Aid solutions that don’t address the fundamental problem.

But the Middle East and North Africa's woes go even deeper. Already desperately short of water, MENA may be the world’s most vulnerable region to the impact of climate change . Meanwhile, it is being left further and further behind as technology becomes the be-all and end-all of economic prosperity. Both challenges require government leadership in a region where in the words of Ronald Reagan, “government is the problem.”

It’s a pity that the takeaway of the region’s autocrats from the Arab Spring wasn’t “we need to reform” but “we need to crack heads without hesitation when anyone demands reform.” It’s just another Band-Aid solution.

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