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Bread and Freedom

Falafel for sale on the streets. A quotidian scene familiar to many across the Middle East
Falafel for sale on the streets. A quotidian scene familiar to many across the Middle East
Falafel for sale on the streets. A quotidian scene familiar to many across the Middle East

Despite the absence of an active civil society in most of North Africa and the Middle East, the collective action of Egypt’s textile workers in recent years not only predated the revolutions no one saw coming, but highlighted the very socio-economic grievances that would bring down some of the region’s longest-sitting presidents.

In 2008, for instance, textile workers from Misr Spinning and Weaving, known as Al-Mahalla, called for a national strike that led to militant demonstrations. Although the government met their demands and the strike was avoided, workers led mass protests against rising prices and the impact this had on their ability to subsist given their low wages and limited career opportunities. The government’s reaction was predictable. As Egyptian newspaper Al Ahram recalls, “Repression was brutal, during the three days of protests five people were killed, hundreds injured, and scores arrested.” Unable to sustain the repression, however, the government eventually conceded to the workers’ demands.

The Al-Mahalla protests were not an isolated incident. According to the Land Center for Human Rights, reports Al-Ahram, “between 2004 and 2008 1,741,870 [Egyptian] workers participated in demonstrations, sit-ins, strikes and other forms of collective action.” This excludes one of the more memorable instances of civic action, the 1977 Egyptian bread riots, which were replicated recently in 2007 and 2008 when the cost of food reached an all time high.

Indeed, Al-Mahalla’s success in obtaining concessions from the government was an important precursor to the revolution in Egypt. They not only voiced the grievances of many Egyptians, but they also provided them with a solution: collective action for government response. While much has been said about the role that social networking sites have played in the successes of the Arab Spring, in Egypt certainly, the precedent set by Al-Mahalla and their willingness to join calls for protests made on Facebook and Twitter were crucial to the revolution’s success.

As the case of Al-Mahalla demonstrated, grievances in Egypt and the region at large may have resulted in political change, but the underlying causes were fundamentally economic. The history of protests in Egypt particularly highlights the paramount role that economic opportunities, or lack thereof, had in motivating individuals to take on the state. Tunisia’s revolutionary martyr, Mohammed Bouazizi, who immolated himself after his vegetable cart was confiscated, is likewise indicative of the extent of the economic frustration felt throughout the region and how far people were willing to go to change the status quo.

Despite the occasional protest in response to severe economic frustration, the world was caught by surprise when on 14 January Tunisia’s former president, Ben Ali, was ousted and even more shocked when the rest of the region succumbed to this revolutionary contagion.

However, taking a look at North Africa’s economic performance in the past decade, it is easy to see why observers did not see the Arab Spring coming. After all, the region had maintained significant levels of growth even during the global financial crisis. The economies of North Africa boasted strong trends in tourism and trade. And in terms of the impact economic success had on individuals, North African countries were making impressive progress in terms of social development: In the last decade, literacy increased, school enrollment was at an all time high, gender inequality was declining, communities had more and more access to clean water, and life expectancy was increasing. To be sure, the region had reached nearly all eight of the Millennium Development Goals by 2010.

For all intents and purposes, the region was economically robust. What the protests made clear, however, was that rapid economic growth and even improvements in human development were insufficient if unemployment, income inequality, regional disparities in addition to limited government transparency and accountability, and food security were part of the deal.
MIDDLE EAST: Food prices
The persistent problem of youth unemployment was a crucial motivation behind the protests. Youth unemployment in the region ranged from 18 percent in Morocco to 30 percent in Tunisia in 2008, compared to the global average of 12 percent. As a recent report by the African Development Bank (AfDB) explains, changing demographics, particularly rising population aged between 15-29 years old, exacerbated the problem. In 2005, for example, the youth comprised 23 percent of the total population in Algeria, 18 percent in Morocco and 21 percent in Tunisia.

Youth unemployment was also aggravated by the mismatch between skills received in education and those in demand, as well as an overall shortage of jobs in the formal market. Frustratingly for the young population of North Africa, these trends implied that there were negative returns on education. Rather than improving your chances for employment by pursuing higher education, there is an inverse relationship between employment and education in the region. True, there is an oversupply of students focusing on “soft” subjects such as humanities, rather than the type of degrees like engineering and science, which are more popular in the robust economies of Asia. Nevertheless, that 40 percent of Tunisia’s university educated youth were unemployed in comparison to 24 percent of non-graduates points to a fundamental problem in the system. According to the AfDB, there is a similar problem in Morocco where over 60 percent of youth with a high school degree were unemployed in comparison to 8 percent of uneducated youth.

Given these statistics, it is clear why the youth in North Africa felt they had no future under the former regimes. Yet, beyond the shocking lack of opportunities young people have in the region, the existence of systematic inequality between rural areas and urban areas, and income inequality over all, helped to instill a sense of injustice in the minds of North African revolutionaries and ultimately motivated their taking to the streets.

With a population of over 80 million people, more than 40 percent of Egyptians are estimated to live on less than two dollars a day, and around 21 percent lives on less than one dollar a day. This indicates that despite economic growth, the benefits of Egypt’s successes in the global market, and those of North Africa more broadly, were not trickling down to the rest of the population. These types of disparities were evidently also at the heart of Tunisia’s revolution. It is no coincidence that the protests began in the disadvantaged regions like Sidi Bouzid. Add to these injustices, the stories of corruption and lavish lifestyles that characterized Mubarak, Ben Ali and Qadhafi, and the story of the protests, becomes more inevitable.

In addition to poverty, however, another form of economic pressure has driven the protests of the Middle East. Food security has been especially problematic for the region since the 2007-2008 food-price surge took the world by surprise. The Middle East, with growing populations accustomed to food subsidies that were dwindling and arid regions largely unable to provide consistent food supplies, was hit especially hard.

Take Syria for instance. Prior to 2008, cheap food was a cornerstone of the government’s economic policy, and for that matter, of the country’s political stability. The government had liberalized the agricultural sector, however, and between January and June of that year food prices had risen 20 percent according to the World Food Programme. Pressure on food prices increased further when fuel subsidies were cut that May causing the price of gas to triple overnight, as reported IRIN, the United Nations humanitarian news agency. The rise in fuel prices further affected the purchasing power of Syrians and many were forced to take drastic measures to make ends meet.

Mohammed Wardeh, an agricultural development consultant, spoke with IRIN on the issue of food prices in Syria and explained: “People have strategies to deal with price rises at this level—they sell commodities, reduce consumption, take on an extra job; they cope.” Syria’s experience was just one among many—in 2008 Egypt as well experienced food riots.

Given the extreme economic conditions the region faces, it is no wonder that so many have taken to the streets demanding change. And while poor governance had much to do with the many economic grievances that people faced in the Middle East and North Africa, the abrupt changes in regime will create additional economic obstacles for these countries at an already challenging time.
The existence of systematic inequality between rural areas and urban areas, and income inequality over all, helped to instill a sense of injustice in the minds of North African revolutionaries and ultimately motivated their taking to the streets.
Economic growth, although unable to guarantee equality, is necessary to quell political unrest. Problematically, however, although the Arab Spring may lead to important governmental adjustments that may support economic growth and equality, in the short term it will create the type of instabilities that hamper economic growth. The curse of the Arab revolutions is that while economic grievances motivated the political liberation of these countries, they also put these projects for reform at a severe risk of failure.

Broadly speaking, the unrest has already impacted investor confidence, tourism, and foreign direct investment. In Tunisia alone the revolution has already affected the country’s credit rating, which has been downgraded by Fitch Ratings to a notch above junk status in late January. Political demonstrations have also created pauses in the economic activities of the country and are estimated to have cost between 5 and 8 billion dollars, or 11 percent of the country’s GDP. According to The Financial Times, political turmoil combined with sluggish growth in Europe is expected to lead to a contraction of 1.5 percent in the real GDP for 2011. To make matters worse, two important sources of foreign currency have dropped significantly, tourism and remittances from Tunisian workers in Libya.

Egypt has fared no better. Government expenditure is rising steadily, “following a 15 percent hike in civil servants’ wages and a budget increase in food subsidies to soften the burden of high prices in global markets,” as reported in The LA Times. Moreover, the government deficit is expected to exceed 10 percent while available foreign exchange reserves at the Central Bank have declined by $8 billion since January and now stand at $28 billion.

Food prices remain an important concern for the region. In April, the World Bank’s Food Price Watch documented double0-digit inflation in food prices for Egypt, Syria and Iran. Because food price increases are linked to energy price increases, further unrest in an oil-producing region could be a particularly dangerous combination.

The Falafel Index, produced by The Majalla, provides a picture of the differences in purchasing power throughout the region. Ironically, it demonstrates that some of the wealthier Arab countries, namely, those with populations that on average earn the most per day, pay relatively less for food, or in this case, a falafel. Certainly these inequalities will need to be addressed not only at a national level but at a regional level if political and economic stability are to be maintained.

Cognizant of the economic sources of the turmoil, the interim governments have committed to creating jobs and addressing inequality. However, as Masood Ahmed explains in his article, “Middle East and North Africa: Protecting Social Cohesion and Economic Stability,” the immediate challenge for countries in transition “is to maintain social cohesion and macroeconomic stability.” In order to do so, governments have increased spending, allowing them to create a social safety net. They have expanded food and fuel subsidies, raised civil service wages and pensions, and approved tax deductions to alleviate the economic needs of the most vulnerable. However, increasing spending is not a long-term solution. Although the fiscal packages differ greatly and tend to be higher in oil exporting countries, this policy may strain public finances and result in increased debt levels, both of which will hamper macroeconomic stability.

Additionally, as Michele Dunne and Jeffrey Fedmin note in their article on Egypt, “Too Big to Fail,” “If Egypt manages to make it through the next 12 months without a severe crisis, there will still be many questions about whether it has the political will to adopt the policies needed to attract the foreign direct investment critical to generating 700,000 jobs per year for its burgeoning labor force.” In other words, newly elected governments will have to make important decisions regarding the types of economic policies they pursue and their goals of implementing socially just policies. While it is uncertain whether newly elected governments will approach the established income inequalities by increasing government spending in a financially responsible way, what is clear is that the regimes in flux must do whatever they can to prevent capital flight.

The Falafel Index

Although the revolutions in Tunisia and Egypt have been welcome for the political opportunities they offer, these revolutions will certainly be marked by challenges and setbacks, particularly in the economic realm. Egypt’s and Tunisia’s new leaders will need to manage the expectations of their constituents. Political reform is not a panacea that can address the underlying economic grievances that brought about the revolution over night. If anything, political unrest has placed North African economies in a precarious condition, the outcome of which will depend both on maintaining levels of growth and ensuring growth is inclusive. Creating thousands of jobs without straining the government’s budget is easier said than done, but at the end of the day this is what the revolutionaries are demanding.

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Paula Mejia
Paula Mejia is a contributing writer for The Majalla. As a freelance journalist and former consultant for the African Development Bank, her work has focused on the economic and social challenges in Africa, with a special focus on Egypt, Tunisia and Libya. She is a graduate of the London School of Economics, L’Institut d’Études Politiques de Paris (Science Po) and the University of Chicago.

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