When young Arabs marched this year chanting “the people want the fall of the regime”, the slogan that has come to define the Arab spring, they demonstrated an extraordinary resolve to destroy the autocratic order in the Middle East.
Ridding the region of dictators would restore dignity, end the corruption of elites and pave the way for a happier, more prosperous future, they thought.
As old regimes are swept aside, the people are enjoying their new found freedom. But they are also finding, unsurprisingly, that the gap between their expectations and the economic reality is widening.
The people now want jobs – but jobs are hard to find.
The transitional authorities are finding themselves in an unenviable situation, trapped between pressures for populist measures which may deliver a quick boost and the need for sounder, longer-term economic management. Their biggest headache has been to persuade the excited young people to be patient.
The emerging economic dilemma is the result of the miserable failures of the past. A report issued earlier this year, commissioned by the International Finance Corporation and Islamic Development Bank, found that the Middle East has the highest youth unemployment rate in the world, at about 25 per cent, with female unemployment even worse, at 30 per cent.
The scarier part is this: keeping unemployment at this dismal level means countries in the region have to create at least 35m extra jobs by 2020; reducing it requires another 10-15m jobs; and reaching a more acceptable global average unemployment needs the creation of 85m jobs. “This is no mere scaremongering,” the report says, noting that the estimates are in line with other data regarding the scale of the challenge.
The trouble is that the year of revolution has battered the economies of several Arab countries – from Tunisia, to Egypt, to Libya, Syria and Yemen. According to a paper by the International Monetary Fund, (total) unemployment in Egypt has risen from 9 per cent at end 2010 to almost 12 per cent now; it has persisted at 13 per cent in Tunisia, and edged up by 0.5 per cent to more than 13 per cent in Jordan in the first half of this year.
The IMF projects that unemployment will further increase as the economic slowdown continues into 2012, amid concerns over security in countries still in conflict and long political transitions in post-revolution countries. Economists at the IMF are looking at a gloomy 18 months, with pressures coming from within but also from Europe’s debt crisis.
HSBC, meanwhile, says it could take two years or more before economic growth returns to trend in post-revolutionary economies.
The IMF recognises that more public spending is necessary – in both Tunisia and Egypt interim governments have been taunted by relentless strikes – but it is also cautious about measures which create long-term fiscal pressures and are difficult to reverse.
Foreign financial assistance can alleviate fiscal pressures but very little of the billions of dollars promised to Tunisia have materialised. In Egypt, meanwhile, political sensitivities have pushed the military authorities in charge of the transition to turn their back on IMF and World Bank funding.
If foreign aid is disbursed, it will buy time, but, as HSBC says, it also carries the danger of allowing political pressure to push economic reforms further down the agenda.
It is this new reality of conflicting pressures that makes the task of governing, whether on the political and economic front, so often confused, with decisions taken one day and withdrawn the next in the case of Egypt, the Arab world’s largest nation.
It is reasonable to expect that a steadier management and some vision will emerge with elected governments. More legitimate institutions might be able to restore hope by emphasising the long-term benefits of democratic change and the prospects of turning demographic pressures into opportunity.
The people need to believe in the future if they are to accept the economic pain of today.
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