Yes, We’ve Been Here Before: Neoliberal Economics and the Arab World

Most observers agree that economic frustrations were at the root of Tunisia’s popular uprising. As such, since the protests began, much has been written about the shortcomings of the Tunisian economy: its nearly 15% unemployment rate, relatively high prices for basic goods, lack of job opportunities for university graduates, and concentration of wealth and privilege in the hands of the ruling family and its allies.

In many ways, Tunisia’s economy is typical of any neoliberal, secular Arab state. As a result of the economic privatization schemes followed in the 1980s and 90s, Tunisia, like Jordan, Egypt, Algeria, and Morocco, had witnessed an increase in the unemployed, part-time workers, street vendors and other groups marginalized by neoliberal economics. As public employment opportunities shrank, the ranks of the urban poor in Tunisia began to swell, as employees of the state were laid off and the young university graduates destined for public sector jobs remained unemployed. As in other regional countries, social safety nets, such as welfare, price subsidies, and other forms of state support, were scaled back, leaving many to battle rising prices and shrinking wages on their own.

The recent events in Tunisia are but the latest in a string of protests by people in the Middle East and North Africa against the harsh economic conditions brought on by neoliberal economic policies. Beginning in the early 1980s, demonstrations erupted across the region in response to government cutbacks in subsidies and other policies designed to roll back the state’s involvement in the economy.  By and large, regional countries adopted these measures in the form of Structured Adjustment Programs (SAPs) created by the International Monetary Fund (IMF) and World Bank. Beginning in the late 1970s, the IMF and the World Bank began making loans to developing countries contingent on adoption of SAPs. Among other things, these programs mandated that states scale back their involvement in the economy, encourage privatization, and otherwise “liberalize” their economies by focusing on export-oriented markets and natural resource extractions. Other adjustment policies included currency devaluation, increased interest rates, and the elimination of subsidies on goods, such as food.

As many economists have noted, SAPs extract a heavy price from poor countries. In order to pay off IMF/World Bank loans, SAP regimes require that countries export at high volumes, particularly with regards to raw materials and other natural resources. Due to the large number of SAP countries, this policy invariably leads to a flooding of the export market, reducing the price of goods and forcing countries to increase their exports in order to break even.  Meanwhile, as a result of these price drops, countries must tighten their purse strings, reducing their spending on initiatives such as social welfare programs and decreasing overall consumption. At the same time, in order to attract foreign capital, SAP countries are encouraged to remove financial, labor, and other regulations. This, in turn, decreases the value of labor, keeping wages low and increasing social unrest, which makes foreign corporations vary of investing in these nations and destabilizes capital flows into these countries.

Given the economic damage often done by SAPs, it is unsurprising to find that, beginning in the 1980s, the number of mass, street protests in the region exponentially increased.  In 1983, riots broke out in northern Morocco after the government scaled back consumer subsidies by 20 percent.  Similar protests took place in Sudan in 1982 and 1985. In 1987, steep currency devaluation and price hikes resulting from IMF and World Bank backed initiatives led to demonstrations in the Sudanese capital of Khartoum by about 15,000 individuals. Even an on-going civil war could not stave off demonstrations in Lebanon in 1987, in response to the drop in value of the Lebanese pound.

Jordan fell victim to rioting in April 1989, after implementing an IMF-sponsored economic liberalization and austerity plan. Known as the “bread riots”, demonstrations quickly spread throughout the country, ending only after King Hussein made several key concessions that ultimately resulted in a new Prime Minister and the beginning of democratic reforms. Seven years later, in August of 1996, riots broke out in southern Jordan after the government complied with IMF demands to remove subsidies, which tripled bread prices. This time the government’s reaction was less conciliatory. When the Jordanian Parliament refused to support the price increases, King Hussein suspended the institution and declared a state of emergency.

Perhaps the bloodiest of the region’s neoliberal protests took place in Algeria in 1988, when approximately 200 people were killed in demonstrations against austerity plans aimed at reducing food subsidies and cutting the number of workers employed by state-owned industries. Described by some as the “worst upheaval since [the country’s] independence”, the 1988 riots brought democratic reforms to Algeria, ending the country’s single-party political system, dominated by the Front de Liberation Nationale, and paving the way towards a multi-party framework.

Bread riots also hit Tunisia in 1984. Unlike the current protests, at the time the country’s labor force was well organized, had a concrete plan for socio-economic equity, and strong leadership. Nonetheless, the demonstrations were soon quashed when President Habib Bourguiba called in the army. The brutality of the government’s response ultimately weakened Bourguiba, who was removed three years later in a coup that installed Ben Ali as the country’s president. Perhaps foreshadowing the recent demonstrations, in 2008, thousands of unemployed Tunisians took to the streets in a southern mining town to demand jobs, an end to poverty and nepotism. In response, President Ben Ali promised to develop the region, though ultimately failed to deliver.

These are only a handful of the not insignificant number of economic and political demonstrations that have regularly occurred in the region over the last several decades. Despite the political and economic similarities between Tunisia and other regional countries, the Tunisian example stands alone in achieving anything even approximating wholesale political change. At the very least, history suggest that the spate of demonstrations in Algeria, Jordan, and Libya, which occurred during and shortly after the Tunisian demonstrations, exist within a wider context of socio-economic protests that have had varying degrees of success. At the same time, this latest round of regional unrest has undoubtedly been inspired by events in Tunisia, though this inspiration to the extent it is viewed as “imitation” by the greater public may in fact prevent these protests from leading to mass uprisings.

Conclusion

Tunisians have made the region’s autocratic leaders sit up and take notice. As headlines around the globe have noted, the actions of a single man ultimately ended the 23-year reign of one of the Arab world’s harshest dictators. Mohammad Bouazizi, like many in the region, was both economically and politically frustrated, resorting to relatively minor legal violations in order to eek out a living for himself and his family. His death set off waves of protests by Tunisians, many of whom engage in daily acts of legal subversion to survive and otherwise identified with his situation. As the government resorted to physical violence, the protests spread across the country, finally and irreparably breaking the tacit social contract between the Tunisian people and their ruler.

As Tunisia has made clear, the political and economic inequalities in the region have pushed people to the brink. Leaders who fail to appreciate this stand a strong chance of following Ben-Ali’s example. While social unrest has long been endemic in the region, governments that refuse to make concessions on issues of importance to their citizens, such as job creation and corruption, risk finding their tenure cut short by no more than the actions of one angry, frustrated person driven to the edge by the stifling circumstances they themselves have created.


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