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Economics in the post-Arab spring - ASHARQ AL-AWSAT English Archive
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A large part of the stories of the revolutions and uprisings that occurred in the Arab republics in 2011, starting from Tunisia, are economic stories relating to frustrations towards social and living conditions, and high unemployment figures that are not commensurate with the ambitions and aspirations of the citizens. What happened will not transform into a genuine “spring” unless the political changes that have occurred lead to tangible economic changes for the people. This is the critical point, because it will not be easy. Let’s take the story of Bouazizi, the street vendor who set himself on fire and sparked the Tunisian revolution that destroyed the Ben Ali regime. This was a protest against the economic situation first and foremost; it embodied the sentiments of injustice and marginalization that a large segment of society was feeling. In Tunisia there was also the conviction that the government was unable to meet the living aspirations of the citizens, or provide job opportunities for the unemployed who would resort to any means in order to secure an income. Thus it seems strange and surprising that a report was issued from the Arab Institute for Business Leaders in Tunisia a few days ago, in light of the economic situation that remains difficult there, talking about how farmers, entrepreneurs and manufacturers are facing a severe shortage of labor, and that agriculture, industry, construction, public works and tourism are the most important sectors affected by this phenomenon.

A labor shortage amidst a rise in unemployment seems strange at first glance, but it’s true and certainly not confined to Tunisia alone. It is likely that this phenomenon exists in many Arab countries in light of the fact that the concepts of development and community culture are similar despite the economic conditions that differ from one country to another. Often there is an insistence on adopting the wrong methods of development that do not focus on the respective and relative advantages of each country, and a tendency for populist economic policies that stems from a fear of negative public opinion, despite the realization that this road will not lead to anything. Evidence of this is that most Arab countries, even if some of them suffer from significant illiteracy rates, have a huge surplus of university graduates in various disciplines that they need and do not need. Over the past years, this surplus has accumulated and transformed into a sizeable unemployment statistic, as countries failed to continue their policy of guaranteeing jobs for new graduates. This policy was a misconception in the first place, and misconceptions are a fundamental part of the problem. If we move from Tunisia to Egypt, we will find another misconception, only this time in a case relating to an ongoing controversy about the exchange rate of the Egyptian pound. Officials in Egypt have warned that the World Bank may demand, as part of its lending criteria, a reduction in the exchange rate. However, official statements confirm that the Egyptian government totally rejects this.

It is strange that the same request [to reduce the exchange rate] was put forward in the eras of previous governments, and these governments strongly rejected it as well. Usually, in the end the government would accept the conditions after a period of intransigence, or attempt to circumvent them in one way or another. Or it would seek to increase the difference between the official exchange rate and the market price by establishing something like a black market. The problem is that for decades it has been propagandized that a high exchange rate is an issue of national prestige, meanwhile there are powerful countries (China and the US) fighting to make the price of their currency lower so that their goods are competitive and they are able to export. In fact it does not matter whether the price of a currency is high or low, it just depends on what is best for the interests of the country. Can any government, or even regime, resist the market?

To conclude, if there is to be genuine reform, then we must face the facts, acknowledge them, and then choose the most appropriate method of dealing with them. There are now elected governments with a popular mandate, and this gives them an advantage over previous governments when it comes to tough or unpopular decisions.

Ali Ibrahim

Ali Ibrahim

Ali Ibrahim is Asharq Al-Awsat's deputy editor-in-chief. He is based in London.

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