Arab Spring back to economy

With both Tunisia and Egypt — the two leading countries in the Arab Spring — entering into a new phase of political settlement, the two will have the chance to look into the economic front, long neglected by the Arab Spring because of political turmoil and instability.
The popular uprising that had rocked most of the Middle East countries over the past three years could easily be attributed mainly to economic conditions. Not only because of rising unemployment and inflation that have fueled peoples’ anger against existing regimes, but even in countries that performed relatively well economically like Egypt, which has registered an annual GDP growth of 5 percent prior to the uprising, was seen as failing to have people taste the dividends of that economic growth.
Simply put, the benefits of economic improvement did not trickle down to the people at the bottom.
With the absence of clear political leadership and various groups jockeying for power, it was natural for the economy to take the back seat. However, the logical outcome for such uprisings is to opt for some kind of stability in any form so that people can go on with their daily lives and see how they can make ends meet.
That is the route both Tunisia and Egypt are taking in one way or the other and expected to be followed more or less in the rest of countries affected by the Arab Spring. Interesting enough those countries are not going to turn a new page and start a new chapter. Rather they are most likely going to revisit what is known as Washington Consensus that evolved during the 1990s and call, in effect, for dismantling of public sector control on the economy, speed up privatization of public companies and create conducive business environment in terms of regulations, transparency and fiscal reform.
That same recipe had been applied to Eastern European countries following the collapse of the Berlin Wall more than two decades ago and the main reason for the success of the recipe then was the existence of a successful model in terms of Western countries willing to help. That is not the case with the Arab Spring where countries affected did not have a guiding, inspiring model.
However, a tough job lies ahead in terms of rationalizing the subsidies if not removing them altogether. Available figures show that subsidies account for 14 percent of the GDP in Libya, 10 percent in Egypt, 9 percent in Yemen and 6 percent in Morocco. That is unsustainable situation.
Moreover, those countries need to face up to the real challenge of providing job opportunities. Unemployment was, and continues to pose, a serious threat to political establishment be it the existing one or the one being formulated and evolving out of the current turmoil.
One good point is that Arab Spring countries can have some helping hand from the international community. That community was in fact quick to intervene through what is known as the Deauville Partnership, which grouped the G8, the international financial institutions (IFI) and the four Gulf countries — Saudi Arabia, Kuwait, Qatar and the UAE — who will be contributing $10 billion, same as the $10 billion pledged into bilateral aid from the G-8 and the remaining $20 billion from the IFIs.
However, the bottom line in all this is that the recipient countries need to adopt sound economic and fiscal policies to qualify for help. That brings in some tough questions, whether the new emerging political systems following the Arab Spring will be able to forge ahead and accommodate such tough measures that will definitely involve in the beginning more layoffs and rising cost of living before some benefits could be reaped in the long run? That is the dilemma; how to strike a balance between short-term measures and long-term goals.
But that brings the issue back again to politics because going ahead with such measures requires a strong political will and ability to navigate between the people’s high expectations and the poor reality. The best way to address this is through legitimate leadership with strong constituency willing and able to carry out the necessary structural surgery that will ensure sustainable future development and improved life.