Syria Shows How The Middle East Is Not Stable

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(Bloomberg) – When the head of the International Monetary Fund visited Cairo last month, he found himself staring at Egypt in the form of a large woven wall map, the complexity of which could be a metaphor for his critical work across the Arab world.

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Kristalina Georgieva’s sudden and unusual mission underscored the Washington lender’s sense of urgency about maintaining stability in the Middle East, before events this week in Syria once again showed how weak its governments can be.

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With rebels now in control of Damascus, economic rulers who have seen precious few gains in living standards since the Arab Spring broke out 15 years ago are watching with dismay as another fire burns in an area already ravaged by conflict and unrest in Gaza. the Red Sea.

“Even before Syria, political risks were high in the Middle East,” Ziad Daoud, chief economist at Bloomberg Economics, wrote in a report this week. “The fall of Assad has intensified the threats.”

The sense of disenfranchisement in the world’s rich countries, combined with economic spillovers from the region’s crises, ongoing repression, and street rage over the plight of the Palestinian people, have all created a lingering sense of resentment hanging over the capital. Cairo to Amman.

Although the hopes that fueled the violent protests in Middle Eastern cities have long since faded, the failed promise of revolution has not been forgotten, and the conditions that created the riots that began in late 2010 are still everywhere.

“You can’t get rid of this, because we have seen what it did in the past,” said Shantayanan Devarajan, who was the World Bank’s chief economist for the Middle East and North Africa, in an interview last month. “We’ve seen this movie before.”

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The most populous country in the region, Egypt, played an important role during the Arab Spring. It is the main focus right now, as the government of President Adel-Fattah El-Sisi is now the biggest recipient of IMF loans after Argentina, following two financial crises.

Other countries, from Tunisia to Jordan, are also experiencing different combinations of economic stagnation and frustration.

The cost of food, one of the grievances that led to the Tunisian uprising in the first place, has become a major pressure in other countries in the Middle East. The most affected country is Egypt, which experienced 38% inflation last year and has yet to end.

Inflation is still felt, and Umm Youssef, whose previous job as a chef in Cairo brought her a steady monthly salary of 10,000 Egyptian pounds ($200), is one of the losers of the episode. Now he makes a living by parking cars for work.

“With the increase in prices, we only eat meat once a month or two,” he lamented in an interview in northern Cairo.

Past periods of inflation have not been reflected in wage gains either. Average per capita income in the Middle East and North Africa region has increased by just 62% over the past 50 years, according to the World Bank.

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Funding Issues

That compares to four times faster growth in emerging and developing economies and two times faster growth in developed countries.

For Basel, a 45-year-old resident of the Jordanian capital Amman, the impact has been crippling. Married with four children, he recently quit his job as an agricultural engineer because his salary did not keep up with inflation. He now makes a living by driving for Uber instead.

The squeeze on income reflects not only inflation, but also long-term stagnation in a world region that has struggled to generate any meaningful prosperity.

MENA economies will need to expand an average of 3.8% per year over the next three decades to reach even half the level of gross domestic product per capita in current frontier markets, according to World Bank estimates.

The region suffers from “persistently low growth,” Roberta Gatti, chief economist for the MENA lender, said in an interview.

Karen Young, a senior research fellow at Columbia University’s Center on Global Energy Policy, noted that many countries are facing “major economic problems.”

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“This is not new, but rather the focus is only on debt burdens and lack of productivity, and the capture of the industrial situation,” he said. “A deep pit.”

The region’s youth are suffering from the loss of success, fueling discontent among the people who led the Arab Spring protests in the past. Youth unemployment is higher than anywhere else in the world, with many dependent on informal jobs.

Even in Morocco – one of the strongest economies in the region – four out of ten young people are unemployed. Among people between the ages of 15 and 24, 1.5 million are out of work, and are not studying or training.

Another major frustration in the region is widespread corruption and restrictions on civil rights.

Egypt, for example, is rated only a few spots higher than Afghanistan and Venezuela, on the World-based World Justice Project’s scorecard, which evaluates countries by such metrics.

Whether another Arab Spring is on the way in such areas is difficult to judge, not least because the last one came out of the blue.

“In addition to the rebellion of many people, I see the near term of people being trapped in conflicts and debts without a government that can support and fulfill their basic needs,” said Young.

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Euphoria at the fall of Bashar Al-Assad’s regime may still be a cause for concern elsewhere. Then again, the Middle East has changed since 2011, when the revolution took hold.

The failed countries of Yemen and Libya stand as examples of how things can go wrong, while Egypt and Tunisia are firmly closing in on dissent. Wealthy Gulf neighbors may also step in to support their fractious neighbors – as they did after then-military chief El-Sisi led the Islamist president’s 2013 overthrow.

Meanwhile, Gatti at the World Bank is at least hopeful that the reforms promoted by international lenders, the large increase in employment, especially for women, and the improvement of productivity may change the game especially in Egypt.

That is the message Georgieva was keen to convey to journalists in Cairo.

“I would like to appreciate the efforts of the government and to appreciate the people of Egypt,” he said. “You will see the benefits of these changes in Egypt’s very strong, developing economy.”

—Courtesy of Zoe Schneeweiss and Thomas Hall.

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