Professional Documents
Culture Documents
GeopolicityInc.(2011) i
Contents:
RE-THINKING THE
ARAB SPRING
& ROADMAP FOR G20/UN SUPPORT?
Supporting Political, Security and Socio-economic Transition Across the Arab Realm
October 2011
geopol i ci t y
ExpertsinManagingComplexTransition
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) ii
CONTENTS:
CONTENTS: ................................................................................................................................. ii
TABLES: ................................................................................................................................. iii
CHARTS: ................................................................................................................................. iii
EXECUTIVESUMMARY................................................................................................................... v
-AboutThisReport ................................................................................................................ vi
-ReportHeadlines:................................................................................................................. vi
1: THEUPRISINGINCONTEXT...................................................................................................... 1
2: LEADINGDRIVERSOFCHANGE ................................................................................................. 3
3: COUNTRIESINTURMOIL ......................................................................................................... 8
-Egypt.................................................................................................................................... 11
-Algeria ................................................................................................................................. 12
-Libya .................................................................................................................................... 14
-Morocco .............................................................................................................................. 17
-Tunisia ................................................................................................................................. 19
-Jordan.................................................................................................................................. 20
-Syria..................................................................................................................................... 22
-Bahrain ................................................................................................................................ 24
-Oman................................................................................................................................... 26
-SaudiArabia ........................................................................................................................ 28
-Yemen.................................................................................................................................. 30
-ImpactonOtherRegionalHotspots.................................................................................... 32
Iraq ....................................................................................................................... 32
Lebanon................................................................................................................ 33
Sudan.................................................................................................................... 34
Israel/OccupiedPalestinianTerritories ................................................................ 35
4: COSTINGTHEARABSPRINGWINNERS&LOSERS..................................................................... 38
-Methodology....................................................................................................................... 38
-TheAccrualofCostsandBenefitsoftheArabSpring......................................................... 39
-CountriesLosingMostwithFewWinners........................................................................... 39
-CountriesLosingonAggregatewithManyWinners ........................................................... 39
-CountriesWinningonAggregatewithManyWinners........................................................ 40
5: LONG-TERMOPPORTUNITIES................................................................................................. 42
6: COUNTRYTRANSITIONPRIORITIES .......................................................................................... 45
7: STRATEGICROADMAPANDG20/UNSUPPORTOPTIONS ............................................................ 50
-SecuringtheMedium-TermPicture: ................................................................................... 50
-StrategicEntryPoints: ......................................................................................................... 50
-InstitutionalPartnerships.................................................................................................... 53
-FinancingOptions: .............................................................................................................. 54
8: CONCLUSION-THEVIEWFROMHERE ..................................................................................... 55
TABLES:
Table1CorruptionPerceptionsIndexRanking .......................................................................... 9
Table2EgyptNationalStatisticsataGlance.......................................................................... 12
Table3AlgeriaNationalStatisticsataGlance........................................................................ 13
Table4LibyaNationalStatisticsataGlance .......................................................................... 15
Table5MoroccoNationalStatisticsataGlance .................................................................... 17
Table6TunisiaNationalStatisticsataGlance ....................................................................... 19
Table7JordanNationalStatisticsataGlance........................................................................ 21
Table8SyriaNationalStatisticsataGlance........................................................................... 23
Table9BahrainNationalStatisticsataGlance ...................................................................... 25
Table10OmanNationalStatisticsataGlance......................................................................... 26
Table11SaudiArabiaNationalStatisticsataGlance .............................................................. 29
Table12YemenNationalStatisticsataGlance ....................................................................... 31
Table13EconomicImpact(%GDP) ............................................................................................ 40
Table14ImpactonGDP(BillionUS$,2011) ............................................................................... 41
Table15ImpactonFiscalBalance(billionUS$,2011) ................................................................ 41
Table16FrameworkofPossibleCountry-BasedCorrectiveMeasures....................................... 46
CHARTS:
Chart1Voice&Accountability.................................................................................................. 10
Chart2GovernmentEffectiveness ........................................................................................... 10
FrontCoverCredits:CourtesyofGigiIbrahim(http://theangryegyptian.wordpress.com),famous
EgyptianbloggerandWikipediaCommons.
MediaCoverage:
http://www.bbc.co.uk/news/world-middle-east-15303413
http://globalpublicsquare.blogs.cnn.com/2011/10/14/the-economic-winners-and-losers-of-the-arab-spring/
http://af.reuters.com/article/worldNews/idAFTRE79D2D420111014
http://twitter.com/#!/fareedzakaria
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) iv
EXECUTIVE SUMMARY
This is an independent report prepared by:
Peter Middlebrook (Co-Lead) - Claire Hajaj (Co-Lead) - Sharon Miller - Diana
Stellman - Hannah Stewart - Omar Bennamour - Fouzia Ahmed - James Lloyd
Geopolicity Offices:
UAE - BVI - USA IRELAND
info@geopolicity.com
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) v
EXECUTIVE SUMMARY
Overthecourseofthepasttenmonths,theArabworldhasbeenthrownintothegreatestpan-
regional turbulence than at any other time since the 1950s. At stake in this regional gamble is
thefateofmillionsofpeoplefromNorthAfricatotheLevant,aswellasthefortunesofseveral
key ruling dynasties and massive international interestspublic as well as private. We are
witnessing a critical and profound reshaping of the Arab world psyche, potentially including in
itsrelationswithIsrael.
Only one outcome is clear: the Arab realm has a narrow window
of opportunity to transform old un-representative political
structuresandclique-dominateddistributionofoilwealth.Itisan
enormous challenge. This report argues that nothing less than
major, meaningful change across government systems,
economies and society will provide the tools to chart a viable
course.
Where overthrow has occurred, new interest groups have captured what remains a partial
reform process with uncertain ends (except for Libya whose fate still hangs in the balance). In
countries not directly affected by the uprising, it has nonetheless catalyzed modest reforms as
leaders bid to forestall discontent and open their governments to greater broad-based
representation. In addition,the Palestinian bid for full state membership at the United Nations
has become a serious complicating factor for new leaders and their international supporters.
Whatever the outcome, it is likely to prove pivotal in shaping the Arab worlds internal and
externalrelationshipsatthisfragilemoment.
Given the scale of the challenge at hand, international support has fallen way short of
expectations. The support promised by G8 at the May 2011 Deauville summit has to a large
extent not materialized; and the impact of the now US$100 billion in support through the
Breton Woods organization will, from a grassroots perspective, be trickle down at best.
Assistance is loan-based, focused on macroeconomic stabilization and limited to Libya, Egypt,
Morocco and Jordan a carrot-and-stick approach to regional stabilization.
1
The slow pace of
broadEuropeanfinancialsupportfortherangeofArabcountriesinturmoilislargelyexplained
by the following three factors: 1) the entente cordial between France and the UK over
Libyawhich has tied up resources and strained strategic focus; 2) an unprecedented fiscal
1
The G7 meeting reported that the World Bank is putting up US$10.7bn, the African Development Bank US$7.6bn,
the Islamic Development Bank US$5.0bn with the rest coming from the European Bank for Reconstruction and
Developmentandotherlenders.
Thisreportidentifiesthe
majordriversofchange
andcostsincurredso
far,alongsidea
frameworkfor
strengtheningregional
andinternational
supporttowardsa
strategicshiftin
approach;whichwecall
changing-the-channel.
Moreover,movingaway
fromoildependency
demandsastrong
privatesectorandcivil
society,andoftena
substantialforeignwork
force,alldrivers,which
demandanew
institutionalframework.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
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crisissweepingEuropeonthebackofadecadeofexpensivemilitarycampaignsin Afghanistan
andIraq;and,3)theabsenceofaclearroadmaptofacilitateEUandU.S.engagement.
Giventhewidespreadandongoinglossoflife(3,000inSyriaaloneaccordingtotheUNHuman
Rights Commission), it should be deeply concerning to all stakeholders that the benefits of the
uprisingremainasintangibleastheindicativesupportprovidedbytheinternationalcommunity
sofar-contributingtoregionaldestabilization
Therisksareclear.Unlessthedriversofchangeineachcountryare
strategicallyengaged,andaregion-widesupportprogramconceived
and led by Arab states, the outcome of the uprisings will remain
unknown and could potentially be regressive. Moreover, the
international community currently needs smarter and more
regionally tailored instruments to expedite support or sufficient on-
the-groundinfluencetoleveragesustainablereforms.
ABOUTTHISREPORT
Thisreportoutlinestherationaleforrethinkingnational,regionalandinternationalArabSpring
support and suggests alternatives to be implemented over the short, medium and longer term
byArabstatesandtheirpartners.
REPORTHEADLINES:
1. Arab Spring Costs to GDP are projected to be US$15.873 Billion for 2011: The costing
exercise undertaken by Geopolicity, based on data from the International Monetary
Fund,showsthatGDPlossesinLibya,Egypt,Tunisia,Syria,YemenandBahrainwilltotal
some US$15.873 billion in 2011 alone. The costs to Public Finance for the same
countriestotalssomeUS$18.89billionoverthesameperiod:
Therisksareclear.
Unlessthedriversof
changeineachcountry
arestrategically
engagedandaregion-
widesupportprogram
conceived,theoutcome
oftheuprisingswillbe
unknownandcould
potentiallyberegressive.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
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Country CoststoGDP CosttoPublicFinances:
Libya US$7.67billion US$6.49billion
Syria US$1.39billion US$4.85billion
Egypt US$4.27billion US$5.52billion
Tunisia US$2.03billion US$0.49billion
Bahrain US$0.39billion US$0.69billion
Yemen US$0.12billion US$0.86billion
Sub-Totals2 US$15.87billion US$18.89billion
2. Emerging Winners Among Wealthy Oil Producers. The overall economic Impact of the
ArabSpringismixedwithwealthyoilexporterssuchastheUAE,SaudiArabia,Qatarand
KuwaitseeingsignificantincreasesinGDPoverthesameperiod.Thesecountrieshave
forestalledmajorinternalprotestandtheireconomiesaremoreprogressiveandgrowth
oriented;
3. Impact on Public Revenues Worst in Poorest Countries. Libya, Egypt and Syria have so
farpaidthehighestpricebothhumanandeconomic.Publicrevenueshavefallentoo,
by77percentinYemenand84percentinLibya,damagingabilitytodeliverbasicand
essential services. Wealthy countries able to avoid protest and afford large public
handouts have seen a positive impact on public coffers. Revenues in Saudi Arabia and
the UAE have increased with, outside of Yemen and Libya, oil exporters being winners
andoilimporterslosers;
4. Arab LeadershipEssentialforanArabRenaissance:AnyArabRenaissancemustbeled
by the leaders of the Arab realm directly, including through the League of Arab States,
and supported by the international community, with a focus on strengthening political
freedoms and transparency over the utilization of natural resources. Leadership by the
Arab League and Gulf Cooperation Council (GCC), as well as countries spearheading
regionalchangesuchastheUAEandQatar,arekeytodevelopingacarefully-sequenced
political,securityandeconomicroadmapfortheregionasawhole.Qatar,theUAEand
Kuwait are already playing central roles, with the strategic military alliance between
Saudi Arabia and the U.S. made complicated by the need for stability first and reforms
second;
5. A Regional Road Map for a Realistic Transition: Analysis in this report suggests three
essential outcomes are most likely to assure mutual benefits: (i) stable, inclusive and
sustainableeconomiesbasedonsolidregionalintegration;(ii)resilientandaccountable
governancesystemsbalancingrightsandresponsibilities;and(iii)homegrownandopen
socio-political frameworks creating an organic democratic process. Unless a regional
road map is established around which G20/G7 can provide financial support towards
thesegoals,country-basedloansthroughtheWorldBankandIMFwillhavelittleimpact
on the reform process. Further, international loans will do no more than support
macroeconomic stabilization objectives. It will also be essential to create mechanisms
forpolicy-basedlendinginsupportofsocialtransformationgoals;
2
Summingmaynotoccurduetorounding.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
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6. Minimizing the Risk of Regressive Political and Security Shifts: Increasing political
freedoms in the Arab world will necessarily increase freedom to criticize Western and
Israelipolicy.Shouldthisleadtoadramaticdeteriorationofpoliticalrelationshipsonce
stable, regional security would suffer. The challenges are particularly high in Egypt,
whereMubarakstightlidonexpressionofillfeelingtowardsIsraelhasnowbeenlifted.
It will be critical for both Israel and its international supporters to take a measured
approachanddifferentiatebetweenaperhapsnecessaryoutpouringofrepressedpublic
sentiment with a real increase in risk to regional security. Reactions to the outcome of
the Palestinian application for UN membership currently being discussed at the United
Nations Security Council (UNSC) and full state recognition will be key in this regard.
While nations have a responsibility to prevent violence towards international property
and persons, a return to repressive policies would be ill conceived from a longer-term
security perspective. Any road map towards regional stabilization and peace must,
therefore,alsoinvolveaprocessofreconciliation;
7. ChangingtheWaytheUNDoesBusinessintheArabRealm:TheUnitedNations,which
is organized on a country-by-country basis without synchronized regional hubs across
agencies (the Secretariat and World Bank), lacks the institutional framework for a
regional approach and this shortfall needs to be addressed urgently. Aligning strategic
UN investments and interests with the Arab League, in coordination with G7 would
appearalogicalstartingpoint;
16. KEYAGENTSOFCHANGE:Therangeof
actors in the Arab uprising is most usefully
divided into three typesmodernist,
recidivistandblocking:
In Tunisia, Egypt,
Libya and Yemen the initial groundswell of
youth protest was buoyed by key defectors
fromwithinthegovernmentandthearmed
forces. Whatever interplay of realpolitik
and ethnic loyalties factored in each
decision,theengagementofsuchkeypillars
of state in transition to a less authoritarian
form of government is encouraging. The
relationship between security forces,
government and population in the Arab
world has always been extremely fraught.
Indeed,armiesandpolicehavebeenlargely
viewed as instruments of state control,
ready to defend state apparatus with lethal
force. Determined resistance from Egypts
patrician army, for example, could easily
have turned Tarhir Square into Tiananmen.
Bysidingwithaprotestmovement,security
personnel not only enable it to grow but
offer a preview of a more just population-
state-securityequationpostfacto.
Akeydriverofallthesedifferentfactionsis
the potential for greater economic
integrationanddiversification,startingwith
a fairer transfer of public revenues. Many
Arab countriesincluding those relatively
untouched by the recent uprisingsare
characterized by high unemployment rates
and weak, unequal delivery of public
services. Economies are generally highly
centralized and commodity-based, and
where they are diversified (as with Syria),
special interest groups hold the revenue
purse strings. The dominant theories of
governance, whether Islamic monarchial or
Islamized socialism, have led to a public
sector squeeze-out of all but informal
family-sized enterprise. The poorest
members of society joining the middle
classes on the street are expressing their
exhaustion with this modus operandi and
demanding the chance to express more of
theirsocio-economicpotential.
EconomicAgency:Theharshrealityfor
much of the Arab world, particularly
countries that are heavily oil
dependent, is that economic
diversification demands strong foreign
direct investment, a more integrated
global economic approach, often-
significant non-national residents and
thereforeasofterforeignpolicy.
17. OLDWALLS-NEWPAINT:Whatwould
a viable future Arab agenda look like,
considering the different forces struggling
to shape it? The past may hold some
interesting lessons. Since Ottoman times,
Arab governance structures have moved in
ever-decreasing circlesresembling the
dynastic cycle
described by historian
Ibn Khaldoun of social
uprising, demand-based
governance,
complacency and
corruption and, finally,
regime overthrow
again.
27. ThesamecanbesaidofQatar.InSyria,
however, government crack-down against
the uprising is regressive in all regards,
either securing the eventual collapse of
Governmentasaresultoflostlegitimacyor
greater state controls, which undermine
liberalist ideals and equality. So what are
theheadlines:
Table1 CorruptionPerceptionsIndexRanking3
Country 2008 2009 2010 CorruptionTrend
Yemen 141 154 146
Morocco 80 89 85
Tunisia 62 65 59
Jordan 47 49 50
Saudi 80 63 50
Bahrain 43 46 48
Oman 41 39 41
Israel 33 32 30
UAE 35 30 28
France 23 24 25
UK 16 17 20
Qatar 28 22 19
Source:TransparencyInternational(2010)
3
TheCorruptionPerceptionsIndex(CPI)ranksmorethan150countriesintermsofperceivedlevelsofcorruption,as
determined by expert assessments and opinion surveys. Countries are ranked from 1 to 176 with 1 being the least
corruptand176beingthemostcorrupt.
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30. Chart 1 provides voice and
accountability rankings for all Arab Spring
Countries,withIsrael,FranceandtheUKas
useful comparators. Chart 2 provides a
similar ranking for Government
Effectiveness,whichmustbeseenasacore
measure of reform given the
unemployment and service delivery
requirements of many of the countries
highlighted by this study.
CHART1VOICE&ACCOUNTABILITY
CHART2GOVERNMENTEFFECTIVENESS
EGYPT
31. STATE OF PLAY: The attack on the Israeli
Embassy in Cairo by Egyptian protesters,
leadingtotheevacuationofembassy
staff, raised tensions and may
exacerbate divided opinion over
Israel within Egypt. Over the past
eight months, the Supreme Council
of the Armed Forces has focused
oninorderofpriority:(i)maintainingrule
of law and the basic functions of state; (ii)
overseeing a limited constitutional revision
processinpreparationforgeneralelections;
and (iii) holding previous regime members
accountable for crimes alleged during and
prior to the February uprising. However,
recurring episodes of popular unrest
indicate impatience with the pace and
direction of reforms. Former President
Mubaraks National Democratic Party has
been dissolved by court order, in parallel
with a reshuffle of ministerial posts. The
state of emergency introduced in 1967 and
extended every 3 years since 1981 is to be
lifted prior to parliamentary and
presidential elections controversially
scheduled for later this year. In August,
trials of senior government officials,
including former President Mubarak,
commencedfurther aggravating socio-
political divisions. With the interim
government and Army maintaining control,
further economic reform and liberalization
will be sacrificed in the short term, in favor
ofeconomicandpoliticalstabilization.
33. COSTSSOFAR:TheSpringstorm
resulted in severe disruption of economic
activities, closure of bank and stock
exchanges, currency depreciation, collapse
ofthevitaltourismsectorandastandstillin
foreign direct investment. As a result,
Egypts growth in 2011 is forecast at just
1.22 percent. An official reserve loss of
US$9billionandsocialspendingincreaseof
25 percent has widened the fiscal deficit.
Aftermonthsofrevoltsandregimechange,
the cost of the revolution to the Egyptian
economyishigharoundUS$4.27billionin
totalequating to approximately 4.2
percent of GDP. The cost to the fiscal
balance is also significant, at approximately
US$5.521bn.Increasedwageandsalariesof
civil servants and tax breaks have cost
between US$710-914 million (until April
2011) in a total increase of US$5.446bn of
public expenditures, compared to a
decrease of public revenues by US$75
millionfor2011.
Table2EgyptNationalStatisticsataGlance
ALGERIA
38. STATEOFPLAY:Eventsanddevelopments
across the border in neighboring
Libya have been a source of concern
for the Algerian leadership, but the
threat of uprising in Algeria remains
relatively low, despite public
discontent and political disaffection.
President Bouteflika successfully
discouraged the waves of violence, self-
immolationsandindustrialactionthrougha
large-scale, assertive but largely peaceful
deployment of the police force in urban
centres. Public opinion has been placated
by the promise of a democratic reform
process kicked off by a
Presidential decision on 15 April,
to include constitutional revision.
This process is moving slowly but
steadily. In July, President
Bouteflika was presented with
findings from a cross-party consultation
process on democratization. Following this,
the regime has pledged to develop an
online forum to promote public debate
(named the Nabni, to build) thatalong
with civil society and a series of regional
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 13
and local conferences for
developmentshould inform a full-scale
reform roadmap. A number of reports
suggestthatColonelMuammarGaddafihas
soughtrefugeinAlgeriabutanofficialoffer
ofsanctuaryfromtheAlgerianleadershipis
highly unlikely given Algerias strategic
political and economic ties to Europe, USA
and GCC. Nevertheless, Algeria has not yet
recognized Libyas National Transitional
Council.
Table3AlgeriaNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 170.228 139.763 160.270 192.384
GDPPerCapita(US$) 4,939 3,924 4,435 5,245
GeneralDebt(%GDP) 8.2 10.4 10.2 10.1
Population(million) 34.46 35.6 36.134 76.676
UrbanPopulation(%) 65.2 65.9 - -
UnemploymentRate(%) 11.295 10.21 10.034 10.0
CPIInflation(%) 4.9 5.7 4.3 5
HDIRank 0.667 0.671 0.677 -
GiniCoefficient 35.3 35.3 35.3 -
40. COSTSSOFAR:ThetotalcostoftheArab
Spring to the Algerian economy is
estimated at around US$1.4 bn for 2011,
constituting approximately 1.7 percent of
the initial GDP forecast for that year
(estimated in October 2010). As one of the
major OPEC members (around 1 300 tb/d
for oil), Algeria has benefited from the
growthofworldoilpricesandhasincreased
its revenues by US$9.6 bn. However, a
relative decrease in investments in non-oil
sectors, and inflation of imported
production has led to increased strain on
thepublicpurseincludingatemporarytax
exemption on basic food stuffs such as
sugar and oil, at a cost of around US$257
million (up to April 2011). Total
expenditures are, however, expected to
decrease by US$802 million, explained by
spending cuts and policy reform. Where
human costs are concerned, Algerias Arab
Spring has resulted in a total of 3 fatalities
and1,900injuries.
LIBYA
Table4LibyaNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 88.888 60.239 74.232 n/a
GDPPerCapita(US$) 14,114 9,371 11,314 n/a
GeneralDebt(%GDP) -73.104 -108.412 -94.908 -
Population(million) 6.298 6.428 6.561 -
UrbanPopulation(%) 77.54 77.72 - -
UnemploymentRate(%) - - - -
CPIInflation(%) 10.4 5 4.5 3.5
HDIRank 0.744 0.749 0.755 -
GiniCoefficient n/a n/a n/a n/a
4
WoodMackenzieEnergyConsultancyreferencedby
EconomistIntelligenceUnit,August22,2011
MOROCCO
Table5MoroccoNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 88.879 91.374 103.482 100.323
GDPPerCapita(US$) 2,850 2,899 3,248 3,116
GeneralDebt(%GDP) 48.2 47.7 49.9 52.8
Population(million)
31,177 31,514 31,851 32,187
UrbanPopulation(%) 56.02 56.36
UnemploymentRate(%) 9.6 9.1 9.o 9.1
CPIInflation(%) 4.2 1.8 2.2 2.6
HDIRank 0.556 0.562 0.567 -
GiniCoefficient 40.9 40.9 40.9 -
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55. COSTS SO FAR: The Moroccan uprising
hasbeenacomparativebargaininviewof
theongoingcalamityatothercornersofthe
Arab Realm. With political stability
relativelyunchallenged,MoroccosFDI-and
export-based economy (the phosphate,
textileandagriculturalsectors,inparticular)
has remained largely intact.The cost of the
protests to the Moroccan economy is nil,
with weak positive impact on GDP
estimatedatUS$18million,equaltoaround
0.02 percent of GDP. However, the
Moroccan government has increased its
expenditures (US$3,482 billion) despite a
lower rise of public revenues (US$282
million), inferring a total cost of
approximately US$3.2 billion to the fiscal
balance. Political and social uncertainties
inside Morocco have marginally affected
investments (through FDI inflows) and
tourism sector activity, and the impact of
higher oil prices on imported products,
which, unlike the cases of Jordan and
Lebanon, are not compensated for by
remittances from the Gulf, have been felt
across the country. A number of these
impacts have, however, been offset by
relatively high growth in the agriculture
sector, and while Morocco has experienced
a sharp increase in public expenditures
(US$1.588billion)thisspendinghasassisted
in maintaining social stability with the
introduction of subsidies on food and
petroleum products as well as social
transfers. Public and government restraint
havelimitedthehumancost:exceptingfour
self-immolations and a few injuries, no
casualtieshavebeenreported.
Table6TunisiaNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 44.878 43.523 44.290 46.623
GDPPerCapita(US$) 4,345 4,170 4,200 4,375
GeneralDebt(%GDP) 43.3 42.9 40.4 42.8
Population(million) 10.327 10.327 10.544 10.655
UrbanPopulation(%) 66.5 66.9 - -
UnemploymentRate(%) 12.6 13.3 13.0 13.0
CPIInflation(%) 5 3.7 4.8 5
HDIRank 0.671 0.677 0.683 -
GiniCoefficient 40.8 40.8 40.8 -
JORDAN
Table7JordanNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 22706 25.113 27.527 29.964
GDPPerCapita(US$) 3,881 4,199 4,449 4,788
GeneralDebt(%GDP) 58.4 61.8 61.4 62.8
Population(million) 5.85 5.98 6.117 6.258
UrbanPopulation(%) 78.42 78.46 - -
UnemploymentRate(%) 12.6 12.9 12.5 12.5
CPIInflation(%) 9.6 2.7 5.8 5.2
HDIRank 0.673 0.677 0.683 -
GiniCoefficient 37.7 37.7 37.7 -
SYRIA
Table8SyriaNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 52.573 53.908 59.330 68.336
GDPPerCapita(US$) 2,676 2,678 2,877 3,234
GeneralDebt(%GDP) 38.2 31.2 27.5 24.3
Population(million) 19.645 20.127 20.62 21.125
UrbanPopulation(%) 54.22 54.56 - -
UnemploymentRate(%) 10.9 8.1 8.4 8.3
CPIInflation(%) 15.2 2.5 5 5
HDIRank 0.584 0.586 0.589 -
GiniCoefficient n/a n/a n/a n/a
BAHRAIN
83. TRIGGERS&DRIVERSOFUNREST:
Bahrains majority Shia
population is politically,
economically and socially
marginalized, resulting in
grievances that are sources of constant
tension. Political representation is unequal
between sects; most ministerial posts are
appropriated by the Sunni ruling family.
Bahrain is also struggling to combat rising
unemployment, adding to frustrations and
unrest. The current trials of protestors and
perceived non-combatants (particularly
doctors)arrestedduringtherecentuprising
have provoked outrage. The uprisings can
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 25
alsobeviewedaspartofalongersequence
of political and social unrest, following the
1990s Intifada between the emirate
government and opposition movements
that resulted in approximately 40 deaths. A
referendum in February 2001 reinstated
constitutional rule and opened politics to
minority parties including Islamist groups
and human rights campaigners. However,
progress could not mask widespread social
inequity, and current crackdowns will sow
theseedsforfutureconflict.
Table9BahrainNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 28.416 19.314 22.656 26.484
GDPPerCapita(US$) 6,074 4,698 4,591 4640.535
GeneralDebt(%GDP) 14.6 25.4 32.0 24.8
Population(million) 0.779 1.039 1.107 1.129
UrbanPopulation(%) 88.52 88.56
CPIInflation(%)
5.1 2.8 2 2.7
HDIRank 0.809 0.798 0.801 -
GiniCoefficient n/a n/a n/a n/a
5
Economic Intelligence Unit (Aug 12, 2011) referring
toremarksquotedinLondon-basedAsharqal-Awsat.
This increase is due in part to government
cashtransfersofUS$2,660toeachfamilyin
an attempt to compensate for declines in
the banking, retail and toursim sectors, as
well as failed government efforts to
diversify the economy. These measures
were intended, at a societal level, to
increase employment opportunities,
prosperityandlivingstandardsforBahrians
inhabitants.
86. MAJORRISKS&OPPORTUNITIES:Risks:
Unrest will damage Bahrains reputation as
afinancialhub.Theoutcomeofthetrialsof
arrested protestors could exacerbate
unrest. Association of the uprising with
BahrainsShiascouldincreasesectarianism.
Opportunities: While expectations are low,
the National Dialogue could mark the
beginnings of reform and greater political
participation. Relocation of the
headquarters of the European Islamic
Investment Bank from London to Bahrain is
a positive step towards financial
stabilization.
OMAN
90. STATE OF PLAY: The Omani
administration has mitigated social unrest
that peaked in February 2011 through a
stick and carrot approachdeployment of
armed forces matched with a
riseinminimumwage.Therehas
been little overt criticism of the
Omans Sultan Qaboos; rather,
protests have been directed
against ministers and powerful
businessmen. Ministers implicated in
corruption have been dismissed, which has
lead to restructuring of certain organs of
the state. The Council of Oman is expected
to absorb legislative and audit powers,
amendments yet to be entered into the
Basic Law. The Financial Affairs and Energy
ResourcesCouncilshavebeenrestructured.
91. TRIGGERS & DRIVERS OF UNREST:
Participants in Februarys Green March
were largely members of a fast-growing
young population frustrated by excessive
state control over the media and restricted
freedom of expression. Unemployment and
growing inequality have fed
demand for a more open system
ofgovernanceinoneoftheGulfs
most hidebound pillars. Oman
wasoneofthefoundingstatesof
the GCC in 1981, after pursuing
an ambitious economic liberalization and
modernization strategy that did not extend
to the political system. A non-participatory
political structure, ruled by decree in the
absence of a legislature and political
parties,remainsinplacetodate.
Table10OmanNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$) 60.568 46.861 55.62 66.048
GDPPerCapita(US$) 21,747 16,255 18,656 21,421
GeneralDebt(%GDP) 5.1 8.0 5.9 4.1
Population(million) 2.785 2.883 2.981 3.083
UrbanPopulation(%) 71.62 71.66 - -
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Table10OmanNationalStatisticsataGlance
CPIInflation(%)
7.8 3.4 3.4 3.3
HDIRank n/a n/a n/a n/a
GiniCoefficient n/a n/a n/a n/a
6
In2010,SaudiArabiawasawardedthelargestarms
dealinUShistory,totalingUS$60billion.
project themselves as caretakers of
tradition, whilst pursuing a pro-Western
economic agenda and exuberant
lifestyles. A founding member of
GCCandOPEC,SaudiArabia,asan
economic powerhouse, defines
the direction of economic growth
throughout the Middle East.
However, lack of economic diversification
and human rights repression at home has
opened the door to grassroots rather than
extremistdisaffection.
SAUDIARABIA
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102. MAJOR RISKS & OPPORTUNITIES: Risks:
Given the financial commitments made by
the Saudi regime to placate public opinion,
oil price volatility presents major risks to
stability. Current fiscal surplus projections
are highly fallible, based on a surge in oil
price and decline in output amongst other
oil exporters. Any surplus could be
momentary and gains may fail to offset
increased long-term government spending
(US$130 billion), risking budget deficit. The
private sector will be set back under the
Saudization" program, envisaging
preferential employment for Saudi
nationals. Saudi militants currently
operating in deteriorating Yemen could
returntofermentunrest.
103. Opportunities Current fiscal surplus
could be injected into high employment
generating industries such as tourism and
manufacturing. Increased employment
opportunities can contribute to expanding
the non-oil sector, offering opportunities
forfurtherdiversification.
104. FUTURECHANGEAGENTS:(i)KingAbdullah
bin Abdel-Aziz al-Saud and his Cabinet; (ii)
Politicallyactive,economicallydeprivedand
socially discriminated women and youth;
(iii)Islamicfactions.
Table11SaudiArabiaNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 476.941 376.268 443.691 578.566
GDPPerCapita(US$) 19,156 14,744 16,995 21,685
GeneralDebt(%GDP) 13.2 16.0 10.8 8.3
Population(Million) 24.897 25.519 26.106 26.680
UrbanPopulation(%) 82.42 82.26 - -
UnemploymentRate(%) 9.8 10.464 10.476 10.8
CPIInflation(%) 9 4.9 5.4 6.6
HDIRank 0.746 0.748 0.752 -
GiniCoefficient n/a n/a n/a n/a
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YEMEN
108. Yemensbrutalconflicthasteeteredon
the edge of regime decapitation since
President Saleh fled the country to Saudi
ArabiainJune.Hisdecisiontobackoutofa
GCC brokered peace plan intensified
confrontation between security forces and
Hashid anti-regime tribesmen. However,
Salehhasnowagreedtoreturntothetable,
with a recent announcement that he has
authorized Abdrahbuh Mansur Hadi
Yemensvice-presidenttosignaGulfArab
initiative paving the way for transfer of
power.Thisannouncementcamesoonafter
thousands of protestors stormed Sanaas
main university on 17
th
September, calling
for an end to the current regime. However,
it may be too late to prevent a de facto
fracturing of Yemen. The death of the
Chairman of the Shoura Council and Saleh
ally, Abdulazziz Abdulghani, has sparked a
fresh wave of protests and clashes with
loyalists to Sadiq Al-Ahmar. Islamist
militantshavetakencontrolofthetownsof
Zinjibar, Jaar and Shuqrah in the Abyan
governorate, accelerating displacement
levels and constraining a humanitarian
response.
Table12YemenNationalStatisticsataGlance
2008 2009 2010 2011
GDP(US$Billion) 26,909 25,131 31,273 38,255
GDPPerCapita(US$) 1,171 1,060 1,281 1,522
GeneralDebt(%GDP) 36.4 49.9 40.6 42.0
Population(million) 22.978 23.687 24.398 25.13
UrbanPopulation(%) 30.64 31.22 - -
UnemploymentRate(%) 15 - - -
CPIInflation(%) 19 3.7 9.8 8.9
HDIRank 0.424 0.431 0.439 -
GiniCoefficient 37.7 37.7 37.7 n/a
113. FUTURECHANGEAGENTS:(i)Heavilyarmed
tribes; (ii) Hamid al-Ahmar, allegedly
financing the opposition and aspiring to
leadership; (iii) Republican Guard; (iv)
Islamic factions; (v) increased Al-Qaeda
involvement; (vi) GCC and Saudi Arabia in
particular, given its significant influence
overYemenskeyactors.
IMPACTONOTHERREGIONALHOTSPOTS
IRAQ
116. Iraqisatapivotaltimeinwhatstillisa
post-war phase of development, despite it
approaching the ninth
anniversary of Saddam Husseins
downfall. Iraq continues to be
plagued by violence perpetrated
by a range of groups including
Al-Qaeda in Iraq. August proved
to be the bloodiest month in a
year, with an estimated 395 civilian deaths
accordingtoIraqBodyCount(IBC).
7
7
IBCreferencedinEconomicIntelligenceUnitcountry
page,September12,2011
political stakes for Iraq as it struggles to
buildafunctioningstate.
LEBANON
121. LebanonhasahighstakeinArabSpring
outcomes, particularly in Syria. In June
2011,anewgovernmentwasformedunder
Prime Minister Najib Mikati, however
cabinetdeadlockinAugustoverthepassing
ofanenergyinvestmentplanhas
already highlighted government
fragility. The balance of power
between the March 8th and
March 14th blocs has shifted,
with significant increases in the
representation of the latter dominated by
pro-Syrian and Shia representatives.
Hizballah currently risks losing its crucial
Syrian ally, which would perhaps compel
Iran to fill the gap and heighten tensions
with Israel. The aftermath of the Special
TribunalforLebanon(STL)intothekillingof
formerprimeminister,Rafiqal-Hariri,could
polarizepoliticalandsectariandivides,with
thepossibilityofviolence.
SUDAN
ISRAEL/OCCUPIEDPALESTINIANTERRITORIES
131. ISRAEL:Israelisinaparticularquandary.
Well aware that a democratic model in
former Arab autocracies does not
necessarily augur well for neighborhood
relations, Israel has been stumped on how
and whether to welcome emerging events
inEgypt,SyriaandtheGulf.Regimechange
in Egypt and developments on Israels
periphery have already required
reconfiguration of national security
priorities. Egypts embargo on Gaza has
been lifted and the blockage of the Rafah
border crossingthe sole border bypassing
Israelhasbeenreopenedintheaftermath
of the crackdown on Mubaraks regime,
unleashing potential arms smuggling into
the Hamas-administered Palestinian
territory.
132. Protests on Israels northern borders
with Syria and Lebanon are also offshoots
of the Arab uprisingas Assad attempts a
diversionfromthebleedingstreetsofSyria.
Of all the possible outcomes in Syria, none
look very promising for Israel's current
leadership. Regime change in Damascus is
unlikely to improve relationships across the
GolanHeights.AndwhiletheKnessetwould
bedelightedwithanyscenariohurtingIran,
it is far from clear that a Sunni-dominated
or chaotic Syria would be a true body blow
to Ahmedinejad and the Supreme Council.
Iran would lose a key ally in Assad, but it
would also gain space to assume some of
Syrias influence elsewhere; moreover, an
unstable Syria might provide greater scope
for agitation on Israels border. Balancing
these threats against the known devil of
Assad, it is easy to understand why
Netanyahu took so long to join the
international clamor for Assads departure.
Israel has also experienced a weakening in
relationship with two key allies. Israeli
relationswithTurkeyreachedanewlow,as
Turkey expelled the Israeli ambassador in
response to Israeli refusal to apologize for
the Gaza flotilla incident. Additionally,
relations with Egypt look uncertain as the
Egyptian population expressed their anger
at Israel through the storming of the Israeli
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 36
embassy in Cairo, following the shooting of
threeEgyptiansoldiersbyIsraelitroops.
135. PALESTINIANTERRITORIES:Thoughslowoff
the mark, the Palestinian Arab Spring
caught up on May 14th-15th, with mass
demonstrations across the Palestinian
territoriesandrefugeecampsinLebanonto
commemorate the Naqba (catastrophe)
marking the creation of the Israeli state in
1948. In addition, as a welcome diversion
from its own troubles, Syria assisted
hundreds of Palestinian protestors defy
Israeli border fences and enter the Golan
Heightssomething which no Arab Army
had managed to do in 38 years.
8
When
8
The Economist, Spring for Arabs, winter for Jews,
19
th
May2011
combined, Palestinian protests along with
HizballahIsrael confrontations led to
more than 15 deaths and many more
injuries. Despite this, the Palestinian
Spring has been somewhat muted, with
threats of a third intifada failing to
materialize.
138. Tocapitalizeonthisopportunity,Fatah
and Hamas need to move beyond key
sticking pointsrecognition of Israel and
adoption of non-violent approaches. Their
willingness to do so may depend on long-
term transitions elsewhere in the Arab
world. With nearly 2 million registered
Palestinian refugees in Jordan, and another
million split between Lebanon and Syria,
Palestinian leaders are steered by regional
winds almost more than any others. If new
administrations in key capitals, particularly
Cairo, can give Hamas as much incentive to
come to the table as it has had thus far to
stayaway,thennewpossibilitiesmayopen.
However, to bring suffering populations
along in Gaza and the West Bank will take
morethanregionalinfluence;itwillrequire
a concerted effort to alleviate economic
and human rights woes, and to convince a
weary populace that a more accountable
system of governance has their best
interests at heart. The implications of the
PalestinianbidforUNMembershipisbriefly
discussedbelow.
INFOCUS:PALESTINIANBIDFORUNMEMBERSHIP
On 28th September 2011, the United Nations Security Council (UNSC) discussed Palestines application to
becomeaUNMemberStatebeforeforwardingtheapplicationtotheUNSCCommitteeontheAdmissionof
New Members. Earlier that same week, the 15-member body held closed-door discussions regarding the
applicationofficiallysubmittedbyMahmoudAbbastoSecretary-GeneralBanKi-moonon23rdSeptember.If
the Palestinian application succeeds at the UNSC, a recommendation will then be presented to the 193-
memberUNGeneralAssembly,whereatwo-thirdsmajorityofvotingmembersisrequiredforadmissionofa
newState.
Pending a final decision, the world waits anxiously, though many are resigned to (or hopeful of) what they
perceive as a pre-defined outcome, resulting ultimately in a rejection of Palestines applicationnot least
given confirmation from the United States of its intention to veto any Palestinian statehood recognition.
However, Should the Palestinians succeed in gaining full state recognition and membership to the UN, the
implications will be significant for relations both with and between Israel, the Middle East region and the
international system as a whole. That said, a majority of UN member states (120) already recognize a
Palestinian state. In this sense, the positive impact of a yes vote on UN membership for the Palestinian
Authority will be limited and will imply few changes in terms of foreign relations. Negative impacts on the
other hand could be significant with financial penalties and restrictions imposed by the US and further
drasticmeasuresimposedbyIsrael.
InthecontextoftheArabSpring,outsideofPalestinesUNbid,recentdevelopmentsconcerningIsraeland
Palestinehavebeenwhippingupsentimentandexacerbatingpre-existinginternalandinternationaldivides
across the Middle East for months now. Angry reactions to the killing of Egyptian soldiers during an Israeli
operation along Egypts borders expressed through attacks on the Israeli Embassy in Cairo, and threats of
similaractioninJordanraisedtensions,whiledeteriorationinTurkish-Israelirelationsthreatensthebalance
ofpowerandallegiancesacrosstheregion.Notably,however,theArabrealmsreactiontoallthingsIsrael-
PalestineisexpressedmoreoftenthannotthroughangryreactionsagainstIsraelratherthansolidsupport
forthePalestinianswhenitisneededmost.ThishasremainedthecasethroughouttheArabSpringtodate,
andtheArabresponsetoPalestinesapplicationforUNmembershipregardlessoftheresultisdifficultto
predict.
SUMMARYFINDINGS
140. Those countries that have taken
significant economic, social and political
risksthroughengaginginsocialstrugglewill
lose economically in the short term, with
GDP contracting significantly. Egypt, Libya
Syria, Tunisia and Yemen are projected to
lose the most. It remains to be seen
whether the short-term costs and risks of
social upheaval will be repaid with interest
by longer-term economic, social and
political dividends. The longer these
dividends take to accrue, the less incentive
there will be for other societies to take the
inherent risks associated with social
struggle.
METHODOLOGY
142. Costing the Arab Spring in 2011 cannot
be done precisely because many critical
economicindicatorsareunavailableandthe
situation is highly fluid. For example, the
costs of social reforms, military operations
or future elections cannot be estimated
precisely.
COUNTRIESLOSINGMOSTWITHFEWWINNERS
145. The countries projected to lose the
mostintheshorttermfromtheArabSpring
intermsofGDPEgypt,Libya,Syria.Tunisia
and Yemenhave experienced either
prolonged and/or intensive civil
disturbances and have not managed to
suppress the uprisings. In these countries
there are likely to be few net winners as
GDP is contracting significantly. However,
wins from increased public expenditures
willbeexperiencesbysomeinSyria,Tunisia
and Egypt. In Yemen and Libya public
expenditures have fallen considerably
alongside public revenues as Government
collapsed. It is in these countries that there
will be the fewest winners over the short
term.
COUNTRIESLOSINGONAGGREGATEWITHMANY
WINNERS
147. Many other countries, such as Bahrain
and Jordan, are projected to lose in terms
of GDP but will experience significant
economic benefits to some sectors and
actors. In these countries GDP projections
for 2011 have fallen slightly while public
expenditure is projected to rise
significantly. This is a result of disturbances
toproduction,expenditureandinvestment,
ascomponentsofGDP,butalsolargepublic
expenditures in the form of increased
salaries in the public sector, food subsidies
andreducedtaxesonfuel,amongothers.
Table13EconomicImpact(%GDP)
Countries ImpactonGDP
ImpactonPublic
Spending
ImpactonPublic
Revenues
Algeria -1.70% -0.94% 11.28%
Bahrain -2.77% 14.73% 9.77%
Egypt -4.20% 5.36% -0.07%
Iraq -3.37% 32.93% 28.14%
Kuwait 1.41% 2.95% 27.70%
Jordan -0.20% 8.15% 6.72%
Lebanon n/a -5.76% -19.09%
Libya -28.17% -55.26% -84.10%
Mauritania 0.15% 13.12% 17.89%
Morocco 0.02% 4.23% 0.34%
Oman -3.33% 3.54% 16.52%
Qatar -3.52% 6.76% 8.89%
SaudiArabia 2.07% 15.60% 25.13%
Sudan -9.68% -14.47% -3.46%
Syria -4.52% 14.05% -1.72%
Tunisia -5.22% 1.92% 0.66%
Yemen -6.33% -32.89% -77.76%
Sources: Geopolicity staff calculations based on October 2010 and September 2011 World Economic Outlooks and
AfDBprojections(Libya).
Countries ImpactonGDP
Libya -7.674
Egypt -4.27
Qatar -3.38
Tunisia -2.03
Algeria -1.44
Syria -1.388
Iraq -1.32
Oman -1.087
Lebanon n/a
Sudan -1.047
Bahrain -0.39
Yemen -0.121
Jordan -0.028
Mauritania 0.002
Morocco 0.018
Kuwait 1.000
SaudiArabia 5.019
Sources:IMF(WEO),AfDB
Table15ImpactonFiscalBalance(billionUS$,2011)
151. TheRiseofGlobal-FacingYouthCulture
in Regional Politics: Arab youth has
comprehensively rejected the overall
controlframeworkthathaskeptpolitics,oil
and corruption in the hands of a few. They
represent the true potential of the Arab
Spring. International support for
macroeconomic stabilization alone will not
address the fundamental structural
problemsthatstifledthemforsolong.New
leaders and their international supporters
have a clear mandate for a reform
framework that addresses the core drivers
ofdiscontent,ataminimumencouraging:
Improvedfreedomofexpression;
Greaterstatejusticeandseparation
ofpowers:
Political rights/expression and the
right to formal, legal, political
opposition;
Greater capital equity and
utilization over national oil
revenues;
5: LONG-TERM OPPORTUNITIES
Thevisionandleadershipforchangein
theArabrealmalreadyexiststorealize
thisgreatopportunity.However,an
inclusiveroadmapfortheregionmust
befound-onethatincludespeace
betweenIsraelandPalestine.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 43
Human rights for minority groups
andgendermainstreaming;and,
PeacebetweenIsraelandPalestine
9
The problems being faced by France Telecom in its
launch of Orange Tunisie and Qatar Telecoms 75
percent stake in Tunisiana are evidence of risks of
poorly regulated FDI deals. UAE based DAMAC
156. Whilst Arab realm countries need to
chart their own reform programs,
leadershipandvisioncanbestbeleveraged
from the experiences of other countries
such as the UAE and Qatar, who are
successfully navigating complex socio-
economic transitions that covers political,
security and socio-economic spheres. This
section therefore, provides an indicative
frameworkofmeasuresthatcouldformthe
foundationforsucharoadmap.
Propertieshavefiledaninternationalarbitrationcase
against Egyptover the development of the Festival
Cityat the International Centre for Settlement of
InvestmentDisputes.
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GeopolicityInc.(2011) 46
Table16FrameworkofPossibleCountry-BasedCorrectiveMeasures
Country CoreStructuralChallenges ImplicationsforEngagement
Egypt Absenceofaclearroadmapfortransition.
Security and political vacuum stalling
recovery.
Identifying strong growth and employment
futures;
Political freedoms requiring constitutional,
lawandorderandjudicialreforms;
Strengthening the regulatory environment to
encourageprivatesectorinvestmentandFDI;
StablerelationswithIsrael.
Economicadjustmentandpoliticalliberalization.
Counter-cyclical macroeconomic policy and fiscal consolidation is key to reducing
inflationinertiaandthecostsofdisinflation.
Creating a vibrant economy to absorb the 700,000 people entering the labor market
annually, likely mean a strong focus on property rights, commercial law, commercial
creditandskillstraininganddevelopment.
Enhance competition so that markets become more contestable for domestic and
foreigninvestors,meaningapredictableandopenbusinessandtraderegime.
Creating a business environment that attracts and retains private investment and
supportssmallbusinesses.
Reforminglabormarketsandlaborlaws.
Reducingthefiscaldeficitthroughremovingsubsidies.
Ensuregreaterinvestmentininfrastructure,humancapital,andsocialprotection).
Algeria High unemployment rates (especially among
youth)andlowstandardofliving;
FDI regulations deter foreign investors and
hampergrowth;
DeclineinNon-PerformingLoans;
Volatile natural gas prices and exports linked
tooilpriceinfluxandindustrialactivity;
Lackofdiversificationofthetradablesector.
Constitutionalandenablingregulationreforms.
Encouragesustainable,diversifiedandprivateinvestment-ledgrowth.
Achievemacroeconomicstabilityandrestorefiscalprudence.
Modernize and strengthen the financial sector and improve business climate to
enhanceprivateinvestmentandemploymentgeneration.
Increasenon-hydrocarbonrevenues.
Contain public spending thought greater control of the public sector wage bill, better
targetingoftransfersandsubsidies,andprioritizationofpublicinvestmentprojects.
Achievewiderintegrationintheregionalandglobaleconomy(encourageFDI).
Enhancegovernanceandmodernizationofpublicbanks.
Libya Absence of a clear roadmap and agents
(institutions and public administration
capacity)fortransition;
Constitutional, electoral and reconciliation
processes;
Democratizationandhumanrights;
Migration (return of refugees /displaced
persons);
Establishpoliticalinstitutionsandnon-stategrowthenablingregimes;
Lift sanctions (delisting) from previous regime and provide access to frozen state
assets.
Economicadjustmentandpoliticalliberalization.
Provideemploymentopportunitiesforayoungandgrowinglaborforce.
Advancestructuralreformstosupportprivatesectordevelopment.
Implement reforms to diversify the economy and reduce the high dependence on oil
revenue.
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Table16FrameworkofPossibleCountry-BasedCorrectiveMeasures
SSR/DDR;
Largeexcessliquidityinthebankingsystem.
Investment funds outside the budget
complicatepublicexpendituremanagement.
Cast fiscal policy in a medium-term framework to minimize the impact of oil price
volatility.
Containtheincreaseincurrentspendingandensurethequalityofspending.
ImprovethegovernanceofLCBandencouragefiscalprudence.
Morocco HighlevelsofIlliteracy;
Address unemployment, poverty and
inequality;
Sustainmacroeconomicstability;
Inflatedcommodityprices;
Declining growth in the Euro zone (primary
tradingpartner);
High public expenditure (wider budget
deficit).
Reform and strengthen the education sector to enhance workforce capacity and
productivity.
Reorient, manage and rationalize expenditure to allow for improvement of education
andhealthservices.
Introduce further structural reforms, to promote inclusive economic growth,
strengthen the business environment and accelerate employment generation and
livingstandards.
Achieve macro-economic sustainability though the introduction of sound fiscal
measures.
Furtherimprovetheenablingenvironmentforprivatesectorgrowth.
Civilservicereformtoincreaseoutputandlowerexpenditurelevels.
Expansionanddiversificationofexports(beyondphosphates).
Tunisia Adopting and inclusive electoral process and
clarifytheroleoftheConstituentAssembly;
Resolve disagreements between the state,
IslamandIslamicpractice.
Politicaluncertaintyandspill-overfromLibya;
Higher and more inclusive growth and
employmentgeneration;
A regulatory environment discouraging
privatesectorinvestmentandFDI;
Economicgovernanceandtransparency;
Financialsustainability.
Navigatecomplexpoliticalandsecuritytransition.
Developeconomicandsocialrecoveryplans.
Improvegovernanceandtransparencyincludingrecoveryofstateassets.
Offset increase in current spending, whilst reorienting, managing and rationalizing
allocationofresources.
Advance structural reforms to support private investment, and encourage higher and
moreinclusivegrowth.
Stimulatetheeconomytoaccommodatethedemandofover1millionjobsinthenext
decade.
Reformthelabormarketandeducationsectortoaddressunemployment.
Substantialinvestmentininfrastructureasaprerequisiteforsustainabledevelopment.
Jordan Politicaluncertainty;
High unemployment amongst educated
youth;
Scarce natural resources, harming the
developmentoftheagricultureandindustrial
Greaterpublicsectorefficienciesnecessitatesacivilservicereformandmoderationof
thepublicsectorwagebill.
Prioritization of capital spending, including replacement of generalized subsidies with
targetedsocialprotectiontools.
Achieve fast and more inclusive growth, inclding through stimulating tourims
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GeopolicityInc.(2011) 48
Table16FrameworkofPossibleCountry-BasedCorrectiveMeasures
sectors and creating dependency on
commodityimportsandexternalgrants.
Broadbasedgrowthinvestments;
Private sector productivity and external
competitiveness.
(inversmentinifnrustructure)andtheprivatesectors(SMEssupport)asanenginefor
empoymentgeneration.
Accelerate growth through wider regional trade integration (enery and rail sectors)
andremovalofremainingtaxexemptionsoncommodities.
Further liberalization (energy and water sectors) to improve business environment,
boostingproductivityandexternalcompetitiveness.
Debtmanagement.
Syria Rigid labor market regulations impede job
creationintheformalsector;
Socialandpoliticalfreedoms;
Large numbers of refugees and internally
displacedpersons;
Prolonged stalemate between regime forces
andtheopposition;
Political stabilization, reconciliation and
publicsectorreform.
Restore security and political stability, complimented by a public administration
reform.
Facilitatepoliticaltransitiontowardsreformsandabroaderdemocratizationeffort.
Promoteinclusiveandsustainableeconomicgrowth.
Introducetargetedsocialprotectionmeasures,avoidingunaffordable/excessivepublic
spending.
Tackleunemploymentthroughrelaxationandreformoflaborlawsandintroductionof
structural reforms, creating a better enabling environment for the formal private
sector.
Bahrain High debt levels, resulting from Increased
governmentborrowing(pastyears);
Downturn in construction and financial
services,amidstlownon-oilrevenues;
Growth is anticipated below historical
averages;
Enhancement of human capital and tackling
unemployment;
Improving the provision of basic services
(health,education,housing,etc.).
Rebalance the fiscal accounts in order to accommodate reforms in the education,
health and housing sectors and generate employment opportunities (given lower
growth).
Achieve higher public savings though better targeted public investment (ex.
compensatorytransferstovulnerablehouseholds).
Seekdiversificationoftheoilrevenuebase.
Furtherstrengthendebtmanagementcapacity.
Address uncertainty in the legal and regulatory framework to improve the business
environment.
Introduce public administration reforms in view of strengthening public sector
productivity.
Fostergrowthandinvestmentthroughhigherintegrationwithregional(GCC)markets.
Oman Privatesector,non-oileconomicgrowth;
Sustainable and accelerated employment
generation to accommodate employment
needs of a young and growing population
(~43%under15yearsold);
Strong and sustainable non-hydrocarbon growth to generate employment for the
rapidlygrowingpopulation.
Enhanceproductivitythroughreformsintheeducationsector.
Address anticipated decline of hydrocarbon reserves through a multi-year budgeting
framework,fiscalprudenceandhighersavings.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 49
Table16FrameworkofPossibleCountry-BasedCorrectiveMeasures
A monetary policy environment constrained
byacurrencypeg;
Rapidsocialandculturalchange.
Increasetargetsubsidiestothemostvulnerable.
Strengthenthebankingsystemandmonetarypolicythroughmacro-prudentialtools.
Stimulate the private sector through higher access to finance (relaxation of interest
ratesandquantitativeceilings).
Saudi
Arabia
Provide jobs and housing for growing
population;
Improvetheenablingenvironmentforprivate
sectorgrowth;
Oilrevenueoverreliance;
A conservative clergy stalling meaningful
politicalandsocialchange;
Humanrightsandequality;
Peacefulsuccessionofpower.
Constitutionalreformandelectoralreform.
Furtherdiversifypublicrevenueandexpandthenon-oilsector.
Enable the private sector (small and medium enterprises) by accelerating access to
finance.
Stimulateemploymentgenerationthroughpublicinvestmentsthatcomplimentprivate
sectorgrowth.
Enhancetheeducationsectorinviewofhigheremployabilityandproductivity.
Furthermainstreammeaningfulreformstowardsgenderequality.
Carefullybalancesocialreformwiththeexpectationsoftheclergy.
Yemen Weakstructuresofpoliticalrepresentation;
Economiccollapseandsoaring
unemployment;
Scarcerecourses(landandwater)underlining
unrest;
Excessive fuel subsidies (about 810% of
GDP);
Risk of penetration of terrorism into the
politicalrealm;
Unreststallingreforms.
Constitutionalandelectoralreform.
Strengthenruleoflawandnationalcounterterrorismcapacity.
Publicsectorreformandstrengtheningtheprovisionofbasicservices.
Inclusiveandsustainable,privatesectordrivengrowth.
Strengthen tax policy and administration reforms to reduce reliance on the
hydrocarbonsector.
Reducefuelsubsidiesandintroducebetter-targetedsocialprotectionmechanism.
Introducereformsandregulateland/resourceownership.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 50
STRATEGICENTRYPOINTS:
160. Any road map would need to take
immediate, short and long-term priorities
into consideration, be driven internally by
the Arab realm/countries themselves and
be supported by the international
community (G7/G20/UN). Should Arab
world leaders and G20 focus on these as
primarytargetsforanewpartnership,then
expertise and financing can channel
towards the following key entry points for
internationalassistance:
a. Macroeconomic Stabilization is
vital to allow transitional
10
Foreigndirectinvestmenthasbeenbadlyhitforall
countriesembroiledinconflict,ashavecountrycredit
ratings, increasing the costs of borrowing
considerably.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 51
governments off set production
losses which have significant
revenues and employment
implications; now and over the
medium term. Where broad-scale
infrastructure damage and
disruption of oil production has
occurred investments to not only
bounce-back but rather to
bounce-forward should be
secured. G20 fiscal stimulus
support should however be set
within a programmatic framework
to foster long term transition
objectives, with achievable
benchmarks that allow early
structuraladjustmenttotakeplace;
c. Re-distribution of wealth is a
parallel priority, where support is
needed to redress perceptions of
social injustice and do more to
relieve absolute poverty while
reducing strain on welfare budgets.
Redistributionofwealthwillalsobe
required to spur economic
diversification, given that an
economy of corporate giants will
fail unless small to medium
enterprises are central to side-
stream and downstream
investments;
11
11
Greater transparency over the management of
national oil and gas reserves, and wealth
redistribution mechanisms are also required, and the
Extractive Industry Transparency Initiative (EITI)
providesaframeworktowardssuchobjectives.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 52
employment sectors, and look even
more fundamentally at basic
mother and child support, nutrition
andhealthcare.
Governance:Stabilityisbestguaranteed
by slowly re-orienting public sector
governance and accountability
structures, security sector reform (SSR)
and in many cases decentralized service
delivery.
b. PublicWageBillsneedtobebrought
downan over-large public sector
that accounts for a disproportionate
amount of full-time formal
employment is indelibly linked to
corruption and economic
mismanagement. Rightsizing core
state economic functions by
delimiting mandates to encourage
contracting out will be key. Archaic
and often convoluted civil service
administrative systems need
modernization to re-orient towards
service, openness and performance,
andtoimprovedregulatoryoversight
of the emerging private sector.
National fiscal and expenditure
prioritieswith the national budget
set as the central tool of policywill
meanthatanyroadmapofcorrective
measures needs to be reflected in
nationalpolicyandspending;
12
Water stress will emerge as one of the biggest
challengesofthewiderArabrealm,andalongsidethe
longtermtransitionfromoildependency,sustainable
and collaborative regional solutions will need to be
found.
RE-THINKING THE ARAB SPRING: A ROADMAP FOR G20/UN SUPPORT?
GeopolicityInc.(2011) 53
a. Avoid Short-Term Promises: Where
regimes have changed, international
supporters should avoid the
temptation for overnight fixes, over-
supportandone-size-fits-allmodels
to promote a new body politic.
Politicalpartieswillnecessarilytakea
long time to mature and rushed
electionsshouldbeavoided.TheUAE
and Qatar have embarked on long-
term reform agendas, with citizens
who now boast per capita earnings
and services not seen in the rest of
the Arab world. However, a
sustainable process depends on the
widest possible participation,
including of radical groups who risk
de-railing a successful transition;
Egypt and Tunisia being good
examples. International support will
be necessary to build an open,
dynamic and multi-representational
media, causing national social
networks and local cooperative
structures to thrice as the basis for
future civil society. Financing to new
civil society groups should be
carefully balanced to allow survival
of the fittest, i.e., those genuinely
valuedbylocalpeople.
b. Leading-Change Management:
Where regimes continue in a climate
ofchange,G20andUNbodieshavea
key role to encourage a dialogue
between long-standing and new
leaders on strategies to revitalize
social frameworks and political
dialogue.
INSTITUTIONALPARTNERSHIPS
161. The key to success is good structural
management; however, the unique
architecture of many Arab Spring nations
notably Libya, Egypt and Yemenmakes it
particularly challenging to pitch the right
balance of international engagement, local
institutional leadership and regional
capacity transfer. In each country, a central
leadership body to drive change is a sine
quanonofanyinstitutionalpartnership.In-
country inter-ministerial leadership and
change advisory groups should be
encouraged, linking finance, security,
planning, major national financial
institutions and high-level leadership, in
addition to other appropriate government
offices. The change-management effort
would most usefully be led by this group;
with the UN/WB representing international
support,andmustmaintainaclearfocuson
charting a progressive triple-transition;
covering political, security and socio-
economicspheres;
FINANCINGOPTIONS:
163. A financing model for transitioning
Arab states should ideally seek to avoid: (i)
increased debt burdens on the one hand,
and(ii)over-commitmentofpublicfinances
ontheotherparticularlyinthetemptation
to increase spending to quell dissent.
Further, given that most G20 support is
focused on achieving macro-economic
stabilization objectives, there remains a
considerableriskthatanuprising-dividend
does not accrue to those who took to the
streets; increasing the likelihood of more
structuralturbulencedown-stream.
THEVIEWFROMHERE:
167. The international community has a
vestedinterestinsupportingtheaspirations
of millions of Arabs as they seek to shape
their future. We have already witnessed
the power of organized, cooperative,
humanist protest across two continents in
less than one year. The emergence of
progressive, open and dynamic systems
could have an even more dramatic impact
onArabworldpoliticsoverthenextdecade.
To a large extent, the need for economic
diversification away from oil will have an
openinganddiversifyingeffectanyhow.
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NotesonStatisticalData:
1. Allactual,projectedandforecastGDPfiguresaresourcedfromtheInternationalMonetaryFund.
2. AllfiguresforcorruptionaresourcedfromrelevantannualreportsfromTransparencyInternationals
CorruptionPerceptionsIndex(CPI).
3. Allfiguresforpublicspendingarefromnationalauthorities,butarereportedinUS$.
4. AllhumandevelopmentfigurescomefromtheUnitedNationsDevelopmentProgram(UNDP)Human
DevelopmentIndex(HDI),whichprovidecountry-by-countryranking.
5. GovernanceIndicatorsaresourcedfromWorldWideGovernanceIndicators,anannualreportofthe
WordBank.
6. AdjustedgrowthfuturescomefromtheIMFWorldEconomicOutlook(WEO).
7. InflationratescomefromnationalConsumerPriceIndexes.