Wealth, inequality crucial factors in Arab revolts

March 30, 2015
Protesters in Egypt in 2011.

In the more than four years since mass uprisings ousted dictatorial regimes in Tunisia and Egypt, it can seem that the initial hopes represented by these mass movements lie in tatters.

Libya, Syria, Yemen and Iraq remain mired in bloody armed conflicts that have led to the deaths of hundreds of thousands and displaced millions more within and across borders.

In the pivotal case of Egypt, military rule has returned through the violent crushing of protests, the arrests of an estimated 40,000 people and the rebuilding of the repressive structures of the Hosni Mubarak era.

Elsewhere, autocratic governments look more secure in their rule today than they have for years.

However, we need to look beyond the headline coverage of war, displacement and sectarianism. The Arab uprisings were not simply struggles against authoritarian rule; they were wrapped up with a decades-long stagnation in living conditions and profound inequalities in wealth and power.

Without addressing these socio-economic roots of the region's malaise, there is no way out of the impasse.

Even before the 2008-9 global economic crisis, the Arab world ranked near the bottom of the world in many development indicators.

Average unemployment rates for Egypt, Jordan, Lebanon, Morocco, Syria and Tunisia were higher than any other region in the world. Labour force participation rates were the lowest, at less than half the population.

For the Arab world as a whole, youth and female participation rates also ranked at the bottom of the globe. Those with employment tended to be in precarious, low-paid informal jobs. The countries of North Africa, for example, had one of the fastest-growing informal sectors anywhere on the planet.

Similar statistics could be recounted for poverty, malnutrition, illiteracy and other measures. These trends have remained virtually unchanged for more than two decades.

Key to explaining these outcomes are the International Monetary Fund and World Bank-sponsored economic policies pursued by Arab governments since the 1980s.

Virtually all Arab states moved to implement neoliberal policies such as cuts to social spending, privatising land and other state assets, labour market deregulation, and financial and trade liberalisation.

These policies were focused upon the promotion of private-sector growth, while shifting more and more people into a reliance on the market and simultaneously eroding forms of collective social support.

Western states applauded and drove these moves. Indeed, the poster-child of Arab neoliberalism, dictator Hosni Mubarak's Egypt, was anointed the world's “top reformer” by the World Bank in 2008.

Not everyone lost from these policies. Indeed, for several key countries, growing poverty levels occurred in tandem with high economic growth rates, demonstrating that wealth was flowing towards some and away from others.

In Morocco, Egypt, Tunisia and Jordan, for example, real GDP per capita rose consistently from 2003 up to the onset of the global crisis in 2008, while stock markets boomed.

With reference to Egypt, the United Nations has puzzled recently over the co-existence of these two trends — growing wealth on one side and growing poverty on the other. The UN calls this a “paradox” and an unexpected outcome of standard economic models.

The supposed paradox, however, disappears once we recognise that as social and economic life become more deeply embedded in market relations, those who hold the most power in those markets tend to benefit.

The result is polarisation and inequality. In this regard, the neoliberal experience in the Arab world has been completely unexceptional; the same pattern has been replicated across the globe.

This polarisation of wealth and power is critical to unpacking the social roots of autocracy in the Middle East. As the handmaidens of neoliberal reform, autocratic rulers not only enriched themselves and allied elites, but also quashed domestic opposition to these policies.

They also acted as dependable partners for Western policy in the region, receiving ample financial, political and military support in return.

The problem is therefore not simply “political” — that is, the existence of corrupt and nepotistic rulers. Rather, these forms of political rule reflect, protect and reinforce differences in socio-economic power. Politics and economics are fused.

Widening gaps of power and wealth are not only apparent within individual Arab states, but also at the regional level. This is most notable between the Gulf Cooperation Council (GCC) states on one hand, and other Arab countries on the other.

These regional hierarchies have grown larger in the wake of recent multiple political, social and economic crises, illustrating once again that the impact of crisis also needs to be broken down between winners and losers.

A report from last October by the Institute of International Finance found net foreign assets of the GCC states rose from US$878 billion in 2006 to a forecast $2.27 trillion by the end of last year.

This compares with a decline in the net foreign assets of Egypt, Syria, Jordan, Lebanon, Tunisia and Morocco, from a surplus of $11 billion in 2006 to a forecast deficit of $46.7 billion by the end of last year.

Within the GCC, privately held wealth grew by 17.5% each year from 2010 to last year, with the total dollar amount doubling from $1.1 trillion to $2.2 trillion over this period.

Up to 5100 Gulf families are estimated to hold more than $500 million a household in liquid assets; their combined total assets exceed $700 billion. This figure does not include so-called “illiquid” assets such as real estate holdings, business equity or collectable items like works of art.

The consequences of the recent drop in global oil prices on GCC economies remains to be seen. But the very real potential for further downturn in the core zones of the world economy — most notably in Europe — means that this regional polarisation is likely to remain.

These inequalities in power and wealth are essential to understanding the counter-revolutionary moment and have provided a fertile ground for the growth of sectarianism. Of course, various forms of foreign and regional intervention — political, economic and military — were always seeking to block any fundamental challenge to the regional order.

The predictable outcomes of the Western destruction of Iraq over the past two decades helped nurture the rise of sectarian groups and fundamentalist Islam. In Syria, the bloody hand of the Assad regime fomented these processes deliberately, and appears to have won tacit support from the West.

However, throughout all of these events, left and progressive voices have remained largely marginal and too easily swayed by a Manichean geopolitical world view or illusions in their own “patriotic bourgeoisie”.

Without addressing questions of social and economic justice and presenting an alternative to the market-led policies of recent decades, there is little hope of building a progressive pole opposed to both existing elites and sectarianism.

This is not simply an economic question but is in essence profoundly political. It must involve challenging the coterie of high-ranking political and military officials, wealthy businesspeople and large corporations who continue to benefit from the status quo.

[Abridged from Middle East Monitor. Adam Hanieh is a senior lecturer in the Department of Development Studies at the University of London.]

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