January 22, 2013 11:10 pm

Middle East: Political upheaval widens gaps in two-speed region

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A year of feast and famine is how one global bank described the fate of the Middle East and north Africa in 2013, as the oil-rich and largely autocratic Gulf spends its petrodollars while emerging democracies wrestle with political transitions and economic downturn.

True, the Middle East has always moved at two speeds, with a dramatic economic divide between oil importers and exporters. But the gaps are now even wider as a time of historic political upheaval.

Saudi Arabia, hardly touched by the Arab awakening, recently unveiled a massive budget with record spending, and Qatar’s dealmaking is as frantic as ever. North Africa, by contrast, remains blighted, even more than in the past, by low growth and a lack of jobs.

As the bank HSBC said in a recent research report, oil producers are looking at a year of plenty but for the rest of the Arab world, “intensified political risk adds to a catalogue of headwinds that have led to weak growth, widening external and fiscal imbalances and severe financial pressures”.

The political turmoil was always expected to take a heavy toll on the economy of North African states. But the transitions have been more turbulent than many Arabs had predicted. Popular (though unrealistic) expectations of a rapid return to normality and economic have been disappointed.

Perhaps the image that most starkly illustrates the frustrations is in Tunisia, the country where Arab revolutions started in 2011 after a young and desperate street vendor set himself aflame.

In recent months, protesters have been taking to the streets again (though in smaller numbers than during the uprising) demanding jobs that the Islamist government has not been able to provide yet.

The new Arab political order has been defined by an ideological struggle between Islamist parties that had been brutally repressed by dictatorships and liberal groups afraid of the intrusion of religion on their societies.

Nowhere has this struggle played out more intensely – and with devastating economic impact – than in Egypt, the Arab world’s most populous country and its traditional trendsetter.

Mohamed Morsi©AFP

Mohamed Morsi: tough line

The first democratically elected president, Mohamed Morsi from the Muslim Brotherhood, sent encouraging messages of inclusiveness and openness to the outside world when he took over in June.

But his handling of the constitutional crisis at the end of last year and his insistence on pushing a draft opposed by non-Islamist segments of society through to a referendum exacerbated divisions in Egyptian society and eroded confidence.

Mr Morsi’s attitude also confirmed the fears of the liberals who charge that Islamists have less than a genuine commitment to democracy.

For the past three weeks Egypt has been trying to stem the depletion of its foreign exchange reserves as pressures on the pound have escalated, raising the pressure for an agreement with the International Monetary Fund on a $4.8bn loan that has been twice delayed.

The unfolding crisis in Cairo has been closely watched by the western world, where governments see stability in Egypt as a priority given the country’s diplomatic and political weight in the region. It was in no small part Egypt’s active mediation that had helped secure a ceasefire between Israel and the Palestinian Hamas in November, bringing an end to a week-long Israeli offensive in the Gaza Strip.

Egypt’s troubles, of course, pale in comparison to the tragedy of Syria, where a popular revolt morphed into an insurgency that has attracted jihadis into a new war. With more than 60,000 people dead and Bashar al-Assad, the Syrian leader, refusing to step down, the prospects for a political solution appear remote, despite a fresh diplomatic push by UN envoy Lakhdar Brahimi.

The perception in Europe is that 2013 will bring the end of the minority Alawite regime. But even though Russia, the chief international backer of Mr Assad, is beginning to share the predictions of his demise, it is far from clear that civil war will end even after his departure.

And, despite steady gains by rebel groups and increased control over large swaths of Syrian territory, Mr Assad’s forces are still much better equipped and his Alawite-controlled officer corps has held firm.

The Syrian crisis, meanwhile, is already contaminating neighbouring states and concerns over a spill over of sectarian tensions into Lebanon and Iraq are likely to grow this year.

Western nations continue to be reluctant to throw their military weight behind the rebels who are supported by Gulf states. But they are also increasingly alarmed by Jabhat al-Nusra, a 7,000-strong jihadi group that has proved more disciplined and effective in its military operations against the regime but has been listed as a terrorist organisation by the US.

In the coming months western efforts will focus on trying to bolster the abilities of rival rebel groups – an objective, however, that is not easily achieved without direct military assistance.

While the UK and France are leaving their options open, and could push harder for a lifting of the European arms embargo on Syria, diplomats expect no change in the attitude of the US Obama administration, which is putting great emphasis on trying to reach a diplomatic understanding with Russia on Syria.

Policy analysts say the administration’s greater focus will be on trying to resolve the high-stakes nuclear dispute with Iran to avert what is likely to be renewed Israeli threats to attack the Islamic Republic’s nuclear facilities after Israel’s election this month.

Tehran’s leadership is now focused on domestic politics and the June presidential election, but the only way to alleviate the crippling impact of international sanctions will be a serious return to the negotiating table.

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