It looks like the old puzzle; which came first — the egg or the chicken. Is the turmoil engulfing the Middle East, code named Arab Spring, a result of bad politics or bad economies, or a combination of both.
A closer look shows that decades of mismanagement on the economic field have led to a wider discontent and inability to support the basic needs of the people, which provided enough motives for many to take it to the streets to air their grievances.
The cases of Egypt, Syria and Yemen show clearly how state-controlled economic policies not only failed in meeting the needs of growing population but also, more seriously, helped in creating structural problems. Moreover, with no alternative to fall back upon in terms of a good education or training that can produce skilled manpower and able to generate income, the problem is aggravated. Instead these countries are facing the burden of how to keep subsidies merely to help half of the population maintain their minimum food support.
Egypt is more or less producing half of what it consumes and the other half has to be subsidized. That subsidy amounts to around sixth of the country’s GDP. On the other hand, trade deficit that used to stand at $10 billion seven years ago ballooned to $25 billion in 2010, the last year for deposed President Hosni Mubarak in power.
By the time his successor President Muhammed Mursi was ousted earlier this month, Egypt had only two months of wheat supply instead of the six required. More seriously, out of only one third of those eligible to higher education who can make it to college and university only half of them actually graduate, which shows a widening gap between today's needs for skills and the growing inability for such a system to enable its graduate to compete in a globally driven labor market.
These problems were exacerbated by the continuous rise of food prices since 2007 and at the same time the decline of cotton prices that Egypt’s Mubarak was banking on to close the deficit gap.
Part of the problem is the low productivity that stems from decades of traditionally controlled economic policies on the one hand and the growing worry of water scarcity. That issue was highlighted recently with Ethiopia embarking on an ambitious dam construction projects to generate electricity from the Blue Nile that provides Egypt with the more than 85 percent of its water needs.
Syria on the other hand has suffered from bad water policies over the past years as it decided to divert more of this vital resource to produce cotton and wheat. Also with bad, centrally controlled management, production targets were not met. Years later a drought-hit Syria affected some three million people, driving hundreds of thousands of them to camps in cities, which provided a pool of potential fighters.
The water crisis in Yemen seems to reflect clearly what the region could face. Yemeni officials were quoted by the New York Times columnist Thomas Friedman back in May that in the 1980s one can dig up to 60 meters in Sanaa to find water. Today there is a need to dig deeper, between 850-1,000 meters, to find water. And out of the 15 aquifers known in Yemen, only two of them could be called self-sustaining, while the rest were depleting at a very high rate. That itself is an alarming development given the possibility of inciting communal strife due to scarcity of water.
Unlike what happened in East Europe, for instance, when the communist regimes were toppled, the European Union was willing and ready to extend a hand through the difficult transitional period. And it was helped to a large degree with the fact that there was somehow relative skilled labor force that was utilized to generate more income to their countries after adopting more efficient and less centrally controlled policies. All that paved the way for a somewhat political stability following the initial few years of turmoil.
The inherited economic conditions in these countries are really daunting. Egypt alone needs some
$20 billion annually to close the fiscal gap it faces. And with the growing unemployment in the region and all over the world, there is no clear alternative as happened before in the 1980s and 1990s, when the Gulf markets as well as those of European countries were welcoming migrant labors given their domestic needs.
Yemen on the other hand provides a different case. Unlike what happened in Tunisia, Egypt and Libya, its political change was carried out through an agreed upon formula spearheaded by the GCC and supported by the UN.
It was a deal that led to former President Ali Abdullah Saleh relinquishing power, though his party remains a recognized political force and represented in the government. It's time they move along a national dialogue involving political forces. Hope and national reconciliation is the only window of opportunity for the future.
