January 14, 2018

Economic woes fuel unrest, ratchet up political tensions across MENA region

The countries of North Africa and the Middle East must contend with a disproportionately high number of young adults clamouring for jobs.
Tunisian protesters confront security forces blocking access to the governorate’s offices in Tunis during a demonstration over price hikes and austerity measures, on January 12

Tunis - From Tunisia to Sudan and Iran, governments in the Middle East and North Africa region are facing waves of unrest triggered by economic, social and political factors.

Even oil-rich countries, such as Algeria and Saudi Arabia, have had to reckon with an inability to deliv­er customary entitlements, be they subsidised goods or free utilities.

The region’s unrest is occurring against a background of economic slowdown. A World Bank report noted that growth in the Middle East and North Africa region is es­timated to have declined to 1.8% in 2017 from 5.0% in the previous year.

The report mentioned “hydro­carbon sector-led growth decel­erations among regional oil export­ers” as factors contributing to the slump.

Slow economic growth is making it impossible for governments, such as Tunisia’s, to create enough jobs or to limit the appeal of the infor­mal economy and its social ramifi­cations.

The revenue shortfall is compli­cated by the security situation in many parts of the region but also by demographics. The countries of North Africa and the Middle East must contend with a disproportion­ately high number of young adults clamouring for jobs. The United Na­tions estimates that youth popula­tions, already more than 30%, are expected to grow another 20% in the next decade in the region.

In Tunisia, seven years — almost to the day — since the uprising that toppled the regime of President Zine el-Abidine Ben Ali in 2011 and ignited unrest across the Arab world, protests erupted over price hikes and tax increases that had been voted by parliament as part of the 2018 budget bill.

Despite the success of the coun­try’s democratic transition, succes­sive Tunisian governments have had a hard time ensuring economic recovery or meeting the socio-economic demands of a restless population. A poll by the US Inter­national Republican Institute indi­cated that no less than 83% of Tu­nisian respondents said the country was heading in the wrong direction, with most of the public stating a concern about the economy.

Coping with its own budget defi­cit, oil-rich Algeria announced a temporary ban on 900 imported products, including cell phones, as well as 30% hike in taxes and cus­toms duties on some imports.

In Khartoum and southern cit­ies of Sudan, authorities cracked down on demonstrators express­ing discontent over increases in bread prices after the government cut subsidies in an austerity meas­ure aimed at facing a hard currency deficit and high inflation rate.

Even in oil-rich countries, popu­lations have felt the effects of the fall in the price of hydrocarbons since mid-2014. Saudi Arabia hiked petrol and fuel prices and imposed a 5% value added tax on most goods and services, ending a decades-long, tax-free policy.

Saudi Arabia was among many Arab countries where an increase in gasoline and fuel prices was an­nounced at the start of the year. In Riyadh, Manama and Abu Dhabi, value added taxes were imposed for the first time. However, new hand­outs, estimated at more than $11 billion, were announced by Riyadh to offset the effects of the austerity measures.

Some reactions showed that old entitlements die hard. Saudi au­thorities announced that 11 princes staged a sit-in at Qasr Al-Hokm pal­ace, objecting to a royal order that halted payments by the state to members of the royal family to cov­er their electricity and water utility bills. The princes were arrested.

Unrest in the Arab world comes against the background of protests in neighbouring Iran where price hikes triggered nationwide demon­strations jolting the ruling mullahs into admitting that more than eco­nomic woes were at stake. “It would be a misrepresentation (of events) and an insult to Iranian people to say they only had economic de­mands,” Iranian President Hassan Rohani was quoted as saying.

Iran may be compelled to rethink its spending priorities. It is far from certain, however, whether the perks of Iran’s Islamic Revolution­ary Guard Corps or the billions Teh­ran spends on regional wars could be in jeopardy.

With elections this year in Leba­non, Tunisia, Egypt and Iraq, social unrest is likely to exert additional pressures on leaders in the region who are struggling with voter apa­thy and pervasive scepticism about political processes.

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