Onn Winckler
Dr. Winckler is a professor in the Department of Middle Eastern History at the University of Haifa.
Since December 2010, many non-oil Arab countries1 have gone through tremendous political changes that can only be compared to the coups d'état of the 1950s and 1960s. The old regimes have already collapsed in four Arab countries (Tunisia, Egypt, Libya and Yemen). In Syria, although Bashar al-Assad's regime still survives, there has been a devastating civil war since mid-2011. The only old regimes that still survive in the same form as they were before the Arab Spring are the two non-oil Arab monarchies (Morocco and Jordan). Why did resentment by youth toward their governments erupt in late 2010 and early 2011? What were the main triggers for this almost simultaneous all-Arab outburst?
Although some research on the socioeconomic causes of the Arab Spring has been published in the past two years,2 the vast majority of journalistic and academic coverage of the Arab Spring has concentrated on the events themselves and later the political-ideological characteristics of the new regimes in Tunisia and Egypt, the political instability in Yemen and Libya and recently the endless Syrian civil war. Little academic attention, however, has been given to either the economic causes or the consequences of the uprisings. Moreover, none of the research that deals with the socioeconomic aspects of the Arab Spring examines the responses of the regimes to the consequences or the chances for these countries to regain economic development.
THE SOCIAL "CONTRACT"
The Arab regimes that took power in coups d'état during the 1950s and 1960s, without exception, adopted socialist-étatist socioeconomic policies. This was the basis for the "social contract" between the new regimes and their people; it included massive subsidies and public-sector employment in exchange for political non-participation.3 Overall, this new socioeconomic regime rested on four main pillars:
• Establishing a large bureaucracy to provide social services, including health care and education
• Expanding the security services and the army, both to continue the armed conflict with Israel and to safeguard the regimes
• Setting up a large number of public-sector factories and companies
• Subsidizing basic foodstuffs and energy products.4
Because the population was relatively smaller then, the nominal number of new entrants to the workforce was much lower than in later periods. In Egypt, the most populous Arab country, the 20-29 age group numbered only 2.86 million in 1947;5 by 2009 it had grown to 15.1 million.6 In Tunisia, this age group numbered 2.0 million in 2008,7 compared to only 548,080 in 1956.8
The rapid expansion of employment opportunities under the socialist policy and the relatively small working-age population resulted in a rapid decline in unemployment. This occurred mainly among the urban young, who took advantage of the vast majority of the new public-sector jobs.9 Hence, the 1950s and 1960s were the decades of the young. This sector, particularly the educated among them, benefited more than any other from the new socioeconomic policy. It is quite clear why these young people served as the bodyguards of the new regimes, protecting them from attacks by any opposition, particularly Muslim fundamentalists.
OIL-BONANZA ILLUSION
The October 1973 oil boom changed the economic situation, not only in the Arab oil-exporting countries but also in the non-oil economies. As shown in Table 1, GDP growth rates in developed oil-importing countries sharply declined during the 1970s compared to the 1960s, due to the marked increase in oil prices. In the non-oil Arab economies, however, the opposite trend occurred. GDP growth rates during the 1970s were extremely high, almost double what they were during the 1960s and 1980s: 7.4 percent in Egypt, 7.5 percent in Tunisia, 5.6 percent in Morocco, 9.3 percent in Jordan and as high as 10.0 percent in Syria.
The rapid expansion of these economies during this period was mainly due to four factors:
• A surge in revenue from the oil exports of the smaller Arab oil exporters, mainly Sudan, Egypt and Syria, as a result of the sharp increase in prices;
• A sharp rise in aid from the Arab oil exporters, which dramatically increased following the onset of the boom, particularly following the signing of the Egyptian-Israeli peace treaty (March 1979). Although Egypt was denied Arab aid from 1979 for making a separate peace with Israel, it began to receive massive Western financial assistance;
• A dramatic increase in labor migration to the countries of Arabian Gulf and Libya. At the peak of the process in the mid-1980s this amounted to a considerable percentage of the labor force of the non-oil Arab countries. Consequently, since the late 1970s and early 1980s, workers' remittances constituted the largest component of foreign currency in all the non-oil Arab economies;10
• A remarkable increase in the number of tourists from the oil-exporting Arab countries to the non-oil countries, particularly to Egypt, Jordan and Tunisia.
In sum, the Arab non-oil countries, in contrast to most other developing economies, reaped substantial economic benefits from the rapid oil-price increase during the 1970s.11 These high growth rates enabled them to avoid two things: adopting structural reforms that would re-orient their economies away from services and rents toward export-oriented industries — as did many developing economies during the 1970s — and carrying out a family-planning policy to reduce their extremely high fertility rates. Therefore, not only did natural-increase rates not decline, they increased, as death rates dropped sharply due to the rise in per capita incomes, while the extremely high fertility rates were sustained.12 Thus, despite rapid economic growth, from a macroeconomic structural point of view, the bonanza decade was wasted.
FUNDAMENTAL PROBLEMS IN THE MID-1980s
The end of the bonanza decade, marked by a drop in oil prices in mid-1986 to less than $10 per barrel, exposed the structural shortcomings of the non-oil Arab countries. The consequences were most evident in the lack of real employment opportunities for the rapidly growing workforce. In a few years, unemployment increased significantly, amounting in Egypt to as high as 20 percent in late 1988.13 In Jordan, unemployment climbed from 4.3 percent in 1982 to more than 10 percent in 1989.14 In Tunisia, the unemployment rate was already estimated at 16.4 percent in 1984.15 Due to their economic deterioration, these countries adopted socioeconomic reforms, including more extensive family-planning policies and structural reforms in line with the "Washington Consensus": an adjustment of exchange rates; privatization of public-sector factories, banks and other assets; reduction of tariffs to encourage private investments; and some reduction of subsidies.16
TABLE 1.
GDP Growth Rates, 1960-2012
Period | 1960-1970 | 1970-1980 | 1980-1990 | 1990-2001 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 |
Developed Economies | |||||||||||
United States | 4.3 | 3.0 | 3.4 | 3.5 | 2.7 | 1.9 | 0.0 | -3.5 | 3.0 | 1.6 | 2.2 |
Canada | 5.6 | 3.9 | 3.4 | 3.0 | 2.8 | 2.2 | 0.7 | -2.8 | 3.2 | 2.4 | 1.8 |
United | 2.9 | 1.9 | 3.1 | 2.6 | 2.8 | 2.7 | -0.1 | -4.9 | 1.4 | 0.8 | 0.2 |
France | 5.5 | 3.5 | 2.2 | 1.8 | 2.5 | 2.3 | -0.1 | -2.7 | 1.5 | 1.7 | 0.0 |
Sweden | 4.4 | 1.7 | 2.2 | 2.0 | 4.3 | 3.3 | -0.6 | -5.2 | 5.6 | 4.0 | 1.2 |
Germany** | 4.4 | 2.6 | 2.1 | 1.5 | 3.7 | 3.3 | 1.1 | -5.1 | 3.7 | 3.1 | 0.9 |
Japan | 10.9 | 5.0 | 4.1 | 1.3 | 2.0 | 2.4 | -1.2 | -6.3 | 4.0 | -0.7 | 2.0 |
Australia | 5.6 | 3.0 | 3.4 | 4.0 | 3.1 | 3.8 | 3.7 | 1.3 | 2.7 | 2.1 | 3.6 |
Non-Oil Arab Countries | |||||||||||
Egypt | 4.3 | 7.4 | 5.0 | 4.6 | 6.8 | 7.1 | 7.2 | 4.7 | 5.1 | 1.8 | 2.2 |
Jordan | -- | 9.3* | -- | 4.8 | 7.9 | 8.5 | 7.6 | 2.3 | 3.1 | 2.6 | 2.8 |
Syria | 4.6 | 10.0 | 2.1 | 5.5 | 5.0 | 5.7 | 4.7 | 6.0 | 3.2 | -- | -- |
Tunisia | 4.7 | 7.5 | 3.6 | 4.7 | 5.7 | 6.3 | 4.7 | 3.1 | 3.7 | -1.8 | 3.6 |
Morocco | 4.4 | 5.6 | 4.0 | 2.5 | 7.8 | 2.7 | 5.6 | 4.8 | 3.7 | 4.9 | 3.0 |
* Data relates to 1970-1982.
** Data relates to West Germany prior to 1990.
-- No data available.
Sources: The World Bank (WB), World Development Report, various issues; WB, World Bank Data, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?page=5; IMF, World Economic Outlook Database, April 2013.
However, these reforms, though conducive to some major positive outcomes, were not enough to pull the non-oil Arab economies out of severe recession. The worse occurred in Jordan, which not only suffered from the decline in the number of its workers in the Gulf, but also from the end of the Iran-Iraq War in 1988. In line with the IMF demand, the Jordanian government sharply cut subsidies and increased taxes, which led to severe protests, mainly in the southern part of the kingdom.
By the late 1980s, the economic situation in all the non-oil Arab economies was severe; by the end of the decade, in most of them, real per capita GDP was less than it had been at the beginning of the decade. The more dependent the country was on the oil-exporting countries, the more severe the economic recession. Thus, since the early 1990s, all the non-oil countries have been living on borrowed time, as their economies could no longer support their expenses.17
LIFELINE, 1990s TO EARLY 2000s
The salvation of the non-oil Arab economies throughout the 1990s and the first years of the 2000s came mainly from the dramatic changes in the Middle East strategic balance. First came the substantial financial windfall that Egypt and Syria received during the Kuwaiti crisis of 1990-91 in exchange for supporting the U.S.-led anti-Iraq coalition. In the case of Egypt, this aid mainly included debt forgiveness from the United States, the Gulf oil states and the Paris Club. Thus, by fiscal year (FY) 1997-98, Egypt's foreign debt was down to $26.6 billion, from $49.2 billion in FY 1990-91.18 In the case of Syria, the combination of $3 billion in aid from the Gulf oil states, the discovery of new oil fields and the massive labor emigration to Lebanon after 1991 returned the Syrian economy to a solid growth of 5-6 percent annually during the first half of the 1990s.19 For Jordan, it was the peace treaty with Israel (October 1994) that boosted its economic recovery through sharply expanded tourism, the generous forgiveness of foreign debt, international financial aid (mainly from the United States and soft loans from the IMF), a free-trade agreement with the United States, and the return of Jordanian workers to the Gulf oil states after their deportation in 1991.
Later, the May 1996 "oil-for-food agreement" between the United Nations and Iraq led both to a massive increase of commodity exports to Iraq from Egypt, Syria and Jordan, and to the acquisition of Iraqi oil at extremely low prices by both Jordan and Syria. This cheap oil enabled Jordan to avoid raising gasoline prices and allowed Syria to maintain its oil exports despite the rapid rise in domestic consumption.20
In the early 2000s, it was the U.S. invasion of Iraq (March 2003) that bestowed some major economic benefits on Egypt and Jordan, including U.S. financial support as compensation for the destruction of Saddam Hussein's regime. Combined with the dramatic improvement in the security situation in the region, low oil prices (see Figure 1), and the sharp expansion of the tourism industry, all the non-oil Arab countries succeeded in one way or another to continue with their traditional "social-contract formula": primarily massive subsidies of basic foodstuffs and energy, as well as vast public-sector employment.
YOUTH UNEMPLOYMENT
Although the non-oil Arab economies succeeded in avoiding political turmoil during the 1990s and the first decade of the 2000s because they still had sufficient financial resources for maintaining the social contract, their economic structures could not provide enough new jobs for the rapidly growing workforce, which skyrocketed due to the extremely high natural increase rates in the 1980s. For example, although the Jordanian economy expanded by 6.5 percent on annual average over 2000-09 — almost three times the population growth rate — the unemployment rate did not even slightly decline.21 As the International Labor Organization (ILO) noted in its 2012 report on the Jordanian labor market, "Evidence suggests that growth has not translated into a diversified economic structure and a reduction of unemployment and poverty rates."22 This imbalance between a relatively high economic-growth rate and a worsening of the employment situation was the result not only of the extremely high growth rates of the workforce but also due to the fact that many of the new jobs were low-skilled and low-paid. Consequently, during the 2000s, approximately 63 percent of the newly created jobs in Jordan were filled by foreign workers23 earning extremely low wages.24 Jordanian nationals continued to be concentrated in the public-sector, and their numbers increased by as much as 10.9 percent during 2007-10.25
In Tunisia, where the economic growth rate averaged 5 percent annually during the 1990s and 2000s,26 unemployment actually rose, as most of the new jobs were low-skilled and low-paying. In 2008, on the eve of the global economic crisis, the unemployment rate reached 12.4 percent and climbed as high as 28.4 percent in the 15-24 age group.27 In all, the unemployment rate, which was 16.4 percent in 1984 at the beginning of the first stabilization plan, declined only to 13.0 percent in 2010, despite relatively rapid economic expansion.28 The BTI 2012 report on Egypt commented on this employment paradox: "The overall growth of the economy does not have a significant impact on employment."29
Thus, during the 1950s and 1960s, many new jobs were created for the educated young in the bureaucracy and the public-sector. During the oil decade, many new jobs became available in the Arab oil states and the Western European countries. However, since the mid-1980s, and even more since the early 1990s, these two options rapidly declined. The Gulf oil states gradually shifted their foreign labor from Arabs to non-Arabs,30 while the public-sectors of the non-oil countries were too loaded to absorb the surplus workforce. Moreover, although the global crisis harmed the non-oil Arab countries less than the developed economies, it had a negative impact on the opportunities for young Arabs to migrate to an EU country for temporary employment. The closing of this employment option was devastating, particularly for North Africans.
RUPTURE OF THE SOCIAL CONTRACT
As one can see in Figure 1, from 2004 to the present, except for a few months in late 2008 and early 2009, oil prices have remained extremely high. However, while high oil prices served both the oil and the non-oil Arab economies in the past, this is no longer the case. Current high oil revenues in the Arab oil states serve neither to absorb more employees nor to provide financial aid to the non-oil Arab countries. As a result, during the past decade, higher oil prices have become a curse for the non-oil Arab economies.
Steadily increasing commodity prices resulting from the steady rise in oil prices, combined with continuing rapid population growth due to "demographic momentum,"31 led to a sharp increase in the cost of subsidies for basic foodstuffs and energy products. In Egypt, for example, governmental expenditure on energy products alone amounted to $12.3 billion in FY 2009-10, compared to $6.9 billion in FY 2005-06.32 However, even these huge allocations were not enough to prevent a rapid rise in the cost of living: during 2008-10 alone, local food prices in Egypt increased by 37 percent.33 The inescapable result was galloping inflation. In Egypt in 2006, inflation amounted to 7.6 percent, rising to 9.3 percent in 2007, 18.3 percent in 2008, and falling to 11.8 percent in 2009 due to decreasing oil prices in the first few months of that year.34 Thus, as noted by Kandil "…the standard of living for almost all Egyptians was getting progressively worse."35 In Jordan, inflation started to rise in 2007 and reached double digits in 2008 because of the government's inability to fully compensate for the steady rise in international oil and food prices.36 Tunisia's governmental expenditures on subsidies tripled between 2000 and 2010.37 But even this increase in governmental allocation was not enough to maintain the prices of basic foodstuff and energy products.
To the failure of the non-oil Arab regimes to fulfill their part in the social contract one should add the growing personal resentment of the people toward their rulers. While the first generation of revolutionary leaders, such as Gamal Abd al-Nasser of Egypt, Hafiz al-Assad of Syria and even Habib Bourguiba of Tunisia (who was a civilian rather than a military politician) enjoyed broad public support — inter alia due to their personal modesty and simplicity — the second and third generations were regarded by their people as corrupt and aloof. The result was the creation of "underlying dynamics that were driving popular discontent," as noted by the 2011 UNDP report on the Arab countries.38 Hence, while the emergence of the "social contract" in the 1950s was accomplished by sacrificing the pre-revolutionary upper classes, breaking it sacrificed the lower and the middle strata that had served as the political cornerstone of these regimes.
FIGURE 1.
Crude Oil Prices (WTI), 1986-2013 (Current U.S. $)
US$ per barrel (current prices)
Source: EIA (Energy Information Administration), Available at: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=D.
THE FAILURE TO PREDICT THE "ARAB SPRING"
There were many warnings of increasing popular dissatisfaction, which was manifested in mass protests against steadily increasing food and energy prices.39 Although some academic researchers had warned that the non-oil Arab economies had reached a kind of "dead end," as they could not overcome the unemployment problem and the steady increase in the cost of living, the regimes themselves, the IMF, and other international financial institutions all failed to predict political turmoil.40 Thus, for example, in the IMF report of April 2010 on Egypt, only seven months prior to the collapse of the Mubarak regime, the following analysis was presented:
Sustained and wide-ranging reforms since 2004 had reduced fiscal, monetary, and external vulnerabilities, and improved the investment climate. These bolstered the economy's durability and provided breathing space for appropriate policy responses. Prompt fiscal and monetary responses helped cushion the impact of the post-Lehman slowdown. As the recovery gains strength, the focus of policies can shift back toward fiscal consolidation and other growth-oriented reforms.41
This report, like those on the other non-oil Arab economies, did not even mention the demographic problem or the lack of sufficient jobs, particularly those pertaining to the educated young, as the major problems of the Egyptian economy at that time. In the IMF report on Egypt, the demographic issue is never mentioned.
The only economic policy model that was accepted by the IMF and the other international financial institutions was the Washington Consensus. Since most of the non-oil Arab countries followed this policy, one should not be surprised by the positive predictions of the IMF regarding their economic situation even when unemployment, particularly among the young, and inflation were steadily increasing. Only after the outbreak of the Arab Spring did international organizations realize that economic growth was not enough to avoid political turmoil. The 2011 ILO report on Tunisia states, "In spite of the economic and social strides made over the past half decade, the lack of good jobs remains the 'Achilles heel' of the Tunisian economy."42 This report, however, was being wise after the fact.
The IMF also started to pay attention to the socioeconomic gaps following the outbreak of the Arab Spring. Its September 2012 report on Tunisia contains the following:
This [economic] model delivered for several years high growth and stability but also led to the building of substantial challenges, which were at the root of the revolution. Economic gains were not fairly shared among the population, and there were economic and social disparities across regions…Weak governance and favoritism fueled a sense of denied opportunities and depressed economic potential.43
Although the socioeconomic gaps and rising unemployment started to receive more attention in IMF reports as well as in those of other international financial organizations and international banks, the demographic issue continued to be ignored, most notably in the case of Jordan. Despite the kingdom's continuing high fertility rates,44 its extremely wide-based age pyramid,45 and the endless inflow of refugees from both Iraq and Syria,46 the IMF's May 2012 report on Jordan did not deal with the issue of the high fertility rate and the crucial need to reduce it in order to alleviate both the huge cost of subsidies and future employment pressures.47 One might ask how it is possible to predict economic development, even in the short run, without taking the various demographic aspects into consideration.
UNIQUENESS OF THE "SPRING"
Was the Arab Spring unique? Consider the following:
• Political upheavals in the region since the military takeovers of the 1950s and 1960s did not involve regime changes.
• Previous upheavals were short and recovery very quick — no more than a few weeks or months. This was the case following the security-forces riot in Egypt in February 1986, the riots in Jordan in 1989 and again in 1996, the Iraqi invasion of Kuwait in August 1990, the U.S. invasion of Iraq in March 2003, and so forth. The current crisis has continued for almost three years, and the political situation has not yet stabilized in even one country.
• In former crises, massive international economic aid was donated in order to stabilize the affected economies. Egypt in 1987 received a large loan from the IMF. This was also the case for Jordan in 1996 and following the 2003 U.S. invasion in Iraq. In the current crises, international financial aid is extremely low, barely enough to prevent these governments from deteriorating into an irreversible loss of control.
• The former political disturbances were concentrated in one country or a limited area; the current crisis has affected all the non-oil Arab countries.
• The current crisis is the first one in which the GCC oil states are not ready to supply large-scale financial support, even to countries that unhesitatingly supported them previously. This lack of willingness is best expressed by the extremely low GCC financial support to Egypt, although it has promised more, now that the army has taken control.
ECONOMIC CONSEQUENCES
Since early 2011, with the exception of Morocco, all the non-oil economies reacted drastically to the Arab Spring events. This was reflected by very low growth rates in both 2011 and 2012 (see Table 1) — in fact, a negative growth rate in per capita terms. Why were the economic consequences so severe?
The Crash of the Tourism Industry
The reaction of the tourism industry to the Arab Spring events was sharp and immediate. As early as February 2011, the occupancy rate in Cairo hotels declined to only 17 percent.48 Although the number of hotel nights in Egypt declined only slightly, from 136.4 million in FY 2009-10 to 131.8 million in the FY 2011-12, the number of tourists from North America and Europe declined sharply.49 This drop led to a substantial reduction in overall tourism receipts: from $11.6 billion in FY 2009-10 to $9.4 billion in FY 2011-12. According to preliminary data, Egypt's tourism receipts in 2012 increased slightly, to $9.9 billion — an improvement over the previous year, but still much below 2010. 50
More severe was the damage to the Tunisian tourism industry. Prior to the Arab Spring, it accounted for 6.5 percent of total GDP and provided jobs for 11.5 percent of the workforce.51 Tourism receipts in 2011 declined by as much as one-third compared to 2010.52 The sharp fall was due to the nationality composition of the tourists in Tunisia (mostly Europeans and Libyans).53 Although Tunisian tourism largely recovered in 2012,54 it deteriorated again in 2013 following the murder of opposition leader Chokri Belaid in February 6, 2013, and some Islamist attacks on tourism sites, such as in Hergla in April 2013.55
In Jordan, too, the Arab Spring brought about a sharp reduction in tourism despite the survival of the Hashemite regime. A large segment of the Jordanian tourism industry is made up of regional tours, which in most cases include Egypt, the holy places in the West Bank and Arab Jerusalem, and even Syria. In 2011, Jordan's tourism receipts declined by 16.3 percent from 2010,56 while the number of tourist arrivals fell by 22 percent.57 In 2012, the number of hotel nights in Jordan increased by 5.1 percent compared to 2011,58 while total receipts increased by 13.5 percent.59 This recovery was not enough to bring Jordan's tourism back to its pre-Spring level.
In Syria, although the authorities stopped the regular publishing of economic data in mid-2011, it is quite clear that its tourism industry, which enjoyed relative prosperity during the 2007-2010 period, has totally collapsed. Moreover, in 2012, the Syrian civil war spilled over into Lebanon and severely harmed its tourism industry as well. As it had been a large share of the Lebanese economy, Lebanon's real GDP growth rate dropped from 7.0 percent in 2010 to 1.5 percent in 201160 and further deteriorated to a mere 0.8 percent in 2012.61
Rising Unemployment
Three major factors led to the rapid deterioration of the employment situation: (1) the shrinking of tourism and its related services; (2) the sharp decline of foreign workers in Libya following the collapse of Qadhafi's regime; and (3) the declining demand for foreign labor in the EU due to the prolonged recession.
Since Tunisia was affected by all three factors more than any other non-oil Arab country, its employment situation, accordingly, deteriorated the most. In 2011, the number of jobs decreased by as many as 106,700. To this must be added the return of approximately 40,000 Tunisian workers from Libya after February 2011.62 Thus, the unemployment rate in Tunisia went up, from 13 percent in 2010 to 18.9 percent in 2011.63 By mid-2012, unemployment had declined to 17.6 percent, still far above the rate before the collapse of the Ben Ali regime.64 According to official Tunisian data, in the second quarter of 2013, the unemployment rate continued to decline, reaching 15.9 percent compared to 19.1 percent in the fourth quarter of 2011.65 This recovery, however, was only temporary, as it occurred due to the massive recruitment of new employees to the public-sector (see below). The three major nongovernmental employment engines — tourism, employment in other countries, particularly in Libya and the EU, and the manufacturing industry for export to Europe — did not recover at all.
In Egypt, the official unemployment rate climbed to 12.6 percent during the second quarter of 2012, compared to 11.8 percent a year earlier. In mid-2012, according to official figures, the number of unemployed amounted to 3.4 million, more than 25 percent of whom had recently lost their jobs.66 The unemployment rate for the 15-29 age group soared to as high as 77.5 percent!.67 According to unofficial estimates, however, real unemployment in Egypt is two or even three times the official rate.
In Jordan, in contrast to the other non-oil Arab countries, a major factor in increasing unemployment among nationals is the huge number of foreign workers. This phenomenon, which started in the mid-1970s, climbed rapidly throughout the 1980s and 1990s. According to official Jordanian data, by early 2013, the number of foreign workers in the kingdom was 860,000, approximately 600,000 of whom did not have valid work permits.68
It should be noted, however, that the real employment situation in all of these economies is much more severe than what is revealed in the official figures. Much of the urban informal employment in these countries is in tourism: informal tour guides, souvenir sellers at tourist sites, taxi drivers at the tourist sites and nearby hotels, and so forth.
Depleted Foreign-Currency Reserves
Since early 2011, foreign-currency reserves have been shrinking rapidly and steadily. In the case of Egypt, in early 2012, reserves were estimated at $15.7 billion,69 compared to $36 billion in January 2011; by February 2013, they had fallen to only $13.6 billion,70 equivalent to less than three months of imports. In the Tunisian case, as well, the same trend has been underway since early 2011. Thus, while in 2009 Tunisia's current-account deficit was 2.8 percent of GDP,71 it rapidly increased to 7.3 percent in 2011. By mid-2012, Tunisia's foreign-currency reserves had declined to below $6 billion, equivalent to only three months of imports.72 This decline was the result of lower workers' remittances,73 far less tourism and foreign investment, and the smuggling of local capital.
THE GOVERNMENTS' REACTION
Each government, whether the new ones or the regimes that succeeded in surviving, reacted in line with specific events. However, one can find some common reactions to the Arab Spring in the economic arena:
• Expansionary fiscal policy to avoid a substantial deterioration in living standards. In Egypt, for example, approximately three-quarters of the FY 2011-12 budget was earmarked for governmental employees' wages, subsidies and interest payments.74 The new regimes adopted this policy to gain political support from the masses, while the old regimes adopted it in order not to lose public support. The three most prominent components of this policy were the following:
(1) Keeping food and energy prices as constant as possible despite the huge increase in international prices, in line with a steady depreciation of the local currencies against the dollar (which in the case of Egypt, for example, amounted to 20 percent between January 2011 and August 2013). This was achieved through subsidy increases. In Egypt, in FY 2011-12, the petroleum subsidy alone amounted to $15.7 billion, equivalent to 6 percent of GDP.75 In Jordan, the energy subsidy in 2011 reached 6.3 percent of GDP ($1.3 billion), compared to only 1.3 percent in 2010. In 2012, the cost of the subsidies for electricity and petroleum in Jordan amounted to $1.7 billion and $1.1 billion, respectively.76 Egypt's energy subsidies in FY 2012-13 amounted to $17.4 billion, higher than ever before.77
(2) Increasing public-sector wages in order to sustain loyalty to the regime.78 In Tunisia, public-sector wages increased in 2011 by 4.7 percent on average, while the security forces were provided with additional benefits.79 The elected Egyptian government under Muhammad Morsi decided to raise the wages of public-sector employees in FY 2012-13.80 In Jordan as well, public-sector wages increased following the start of the Arab Spring;81 the minimum wage for all Jordanians was raised in early 2012.
(3) Recruiting new employees to the public sector in order to somewhat alleviate unemployment. Following the fall of Ben Ali, the newly elected Tunisian government immediately announced the recruitment of some 20,000 new civil employees.82 In 2013, the wage expenditure of the government amounted to more than 50 percent of total tax revenues (12.4 percent of total GDP).83 Overall, in 2011, in both Egypt and Jordan, public-sector employees constituted approximately 35 percent of the total workforce.84 Taking into consideration that almost half of the Egyptian workforce is employed in agriculture, this means that most of the urban formal workforce is employed by the public-sector in one way or another.
• Absorption of the maximum foreign financial assistance for implementing the expansionary fiscal policy. The most extreme case in this respect is Jordan. Since its independence in 1946, its budget has been to a large extent dependent on foreign grants. However, with the deterioration of the economy since the start of the global economic crisis and more so since the onset of the Arab Spring, its dependence on foreign grants significantly intensified. In 2011, foreign grants to Jordan amounted to $1.7 billion (from the GCC countries and the United States), or 5.9 percent of total GDP.85 In December 2011, the GCC countries signed a $5 billion grant to Jordan for a five-year period. Kuwait, Qatar, Saudi Arabia and the UAE would each provide a quarter of these grants.86 In 2012, U.S. aid to Jordan totaled $763.7 million, $460 million for economic assistance and $300 million for military assistance,87 while GCC financial aid to Jordan totaled $1 billion as part of a $5 billion package deal.88 In August 2012, Saudi Arabia pledged $1 billion to Yemen to strengthen the Yemeni riyal.89 In 2011, U.S. financial aid to Egypt amounted to $1.56 billion.90 In early January 2013, Qatar announced an aid package to Egypt for $5 billion, $1 billion in cash and $4 billion in deposits to the Egyptian Central Bank to help stabilize the pound and boost Egypt's foreign-exchange reserves.91 These grants, however, met only a small fraction of the needs of these countries.
The result of economic deterioration and expansionary fiscal policy was a rapid increase in budget deficits. Jordan's governmental spending in 2011 was 700 million dinars higher than the original budget, leading to a deficit of 7 percent of GDP.92 Without the foreign grants, its 2011 deficit would have amounted to 12.7 percent of GDP.93 The steadily increasing deficits were, of course, contrary to the initial plans directed at narrowing them. For example, in early January 2012, the Jordanian finance minister, Umayya Salah Touqan, said that the 2012 budget included spending cuts.94 These cuts, however, did not materialize. On December 31, 2012, the Jordanian government approved the 2013 budget with total revenues of $8.7 billion (including $1.2 billion in foreign grants) and total expenditures of $10.5 billion, an increase of 9.1 percent from the 2012 budget. This means that, without grants, the projected deficit would reach 8.9 percent of total GDP.95 In Egypt as well, the expansionary fiscal policy led to a huge increase in the fiscal deficit of FY 2011-12, from the originally planned 8.6 percent of GDP to an actual 11 percent.96 In the FY 2012-13, Egypt's budgetary deficit already amounted to 13.8 percent.97 In Tunisia, the fiscal deficit widened from 1.1 percent of GDP in 2010 to 3.5 percent in 2011 and 7.0 percent in 2012.98
It should be noted, however, that expansionary fiscal policies were implemented from early 2011 in the oil-rich Gulf countries as well, out of fear that the Arab Spring would spread. On March 18, 2011, King Abdullah of Saudi Arabia announced the implementation of new socioeconomic reforms: immediate payment of two months' salary to all governmental employees as compensation for the rise in living costs; a monthly payment of 2,000 Saudi riyals (SR) as an unemployment allowance; a minimum wage of SR3,000 for all governmental employees; and the addition of 60,000 positions in the Interior Ministry.99 Moreover, in order to alleviate the housing shortage, the government allocated an imaginary amount of $67 billion for the 2011-16 period in order to build 500,000 units.100 In September 2011, the Qatari government announced a 60 percent rise in the pay and pensions of national (Qatari citizens) public-sector employees and a 120 percent rise in wages for military officers.101 The UAE 2013 federal budget allocated 51 percent ($6.2 billion) to social spending. In addition, the minimum monthly wage for UAE nationals employed by the public-sector was raised to $2,723.102 Even Bahrain — the least affluent among the GCC countries — adopted an expansionary fiscal policy in 2011, which included a rise in public-sector wages, investment in social services, etc.103 The Omani authorities also reacted with an increase in governmental expenditures, mainly by raising the minimum wage.104 According to a forecast by the National Bank of Kuwait (NBK), in January 2013, GCC government spending "is seen rising by 6-8 percent per year over the next two years, and by 2014 spending could be nearly 50 percent higher than in 2010."105 This new massive social spending "relieved the pressure to enact political reform," as noted by the BTI report on Saudi Arabia.106 The Algerian government also increased its expenditures, mainly on wages for public-sector employees and subsidies.107
This expansionary fiscal policy was financed by the much higher oil revenues of recent years, due both to higher oil prices and higher production levels.108 By 2012, GCC oil income was higher than ever before, amounting to $737.5 billion compared to $695.9 billion in 2011 and only $305 billion in 2005.109 A major factor behind the much higher oil prices of 2011 and 2012 was the Arab Spring events themselves. Thus, as the economic and, consequently, the political situation in the non-oil Arab countries worsened, the economic situation in the Gulf oil economies improved.
During the second half of 2012, it became clear to the governments of the non-oil Arab countries that without substantial reforms, their economies would soon collapse. Moreover, the IMF made loans conditional on implementation of reforms, primarily in the area of subsidies, that would become an unsustainable burden on their budgets. Consequently, these countries began to try to implement some reforms in order to stabilize their deteriorating economies. In November 2012, the Jordanian government decided to lift fuel subsidies by raising the price of 90-octane gasoline by 10 percent and diesel by 6.8 percent. Large-scale demonstrations immediately following the announcement led King Abdullah to reverse the decision.110 Gasoline prices eventually increased in early 2013,111 but in order to compensate poor families, the government distributed $141 million in cash to about 3.3 million Jordanian citizens — $99 per person for a maximum of six people per eligible family.112
In Egypt, in his election campaign, Morsi declared that his economic aims were to increase GDP annual growth to 7 percent, cut inflation and reduce unemployment.113 However, the reality was quite different. On December 9, 2012, Morsi announced that the prices of 50 consumer items would be increased by 50 percent and that there would be an increase in property taxes in accordance with IMF demands. Only one day later, following large-scale demonstrations, Morsi suspended these tax increases.114 The new Egyptian regime under the rule of General al-Sisi has thus far done nothing to cut subsidies.
CAN DEVELOPMENT BE REGAINED?
Looking at the economic analyses from both academicians and the IMF and other international institutions reveals their generally optimistic approach regarding the ability of the non-oil Arab countries to regain economic development. For example, the IMF predicted in May 2012 that Jordanian "growth rates are projected to recover in the medium term," between 3 percent and 4 percent annually on average for the 2014-17 period.115 For Tunisia, the IMF predicts an even faster economic recovery, with a real GDP growth rate of 4.1 percent, 5.3 percent, 5.5 percent and 6.0 percent in the 2014-17 period.116 The overall IMF approach was that "Tunisia's medium-term economic growth potential remains favorable."117 These are only two examples, both of which predict an economic recovery if certain reforms are implemented.
Is this recovery actually possible? There is an ongoing debate on the preferred model for economic prosperity for developing economies, but without the fulfillment of the following preconditions, economic recovery under any model cannot be achieved:
Democracy and Political Stability
History indicates that economic prosperity in non-rentier economies can be achieved only under democratic regimes and political stability. This has been the case, thus far, in all the developing economies worldwide that transformed into developed economies. Examples of these are the "Asian Tigers," Argentina, Indonesia and recently China, which, though not a democracy, is more politically open than ever before.
High Labor-Force Participation Rates
Long-term economic development requires high labor-force participation rates in order to achieve high savings rates as well as high per capita income. This requires two conditions: the working age population (15-64) represents a high percentage of the total population ("demographic gift"118); and there is a high rate of female participation. This was the case in the "Asian Tigers" and recently also in China, India, Brazil, Argentina and Indonesia.119
Low Nonproductive Government Expenditures
This means lowering food and energy subsidies, elderly and child allowances, security expenditures, public-sector salaries and pensions, large-scale health and education services, etc.
Rapid and Stable Global Economic Development
Due to globalization, rapid economic development in any economy is largely dependent on the worldwide economic situation. One major reason for the rapid economic expansion in the "Asian Tigers" from the 1960s to the late 1980s was rapid global economic development, 120 which supported rapid growing demand for consumer products and services. This was also true for China and India during the decade preceding the onset of the current global economic crisis.121
Low Oil Prices
Since energy is the primary input in any given product or service, low oil prices are crucial in order to improve global economic development. Indeed, during the 1950s and 1960s, when the global economy was recovering from World War II, and again during the 1990s and the early 2000s, oil prices were extremely low.
OBSTACLES
Democracy and Political Stability
Although both Tunisia and Egypt held democratic elections, the new regimes failed to achieve political stability. In Tunisia, the political situation deteriorated in February 2013 following the assassination of Chokri Belaid. In Egypt, the inability of the Morsi regime to "deliver the goods" in the socioeconomic arena led to frequent riots and finally a military coup in July 2013 that transferred control to the army. In Libya and Yemen, following the collapse of the old regimes, the political situation fell into chaos. Syria is being destroyed by civil war; the direct economic damage was estimated at more than $20 billion by the end of 2012.122 Naturally, the lack of political stability is paralyzing any attempt at economic recovery.123
High Labor-Force Participation Rates
The unemployment rate in each of the non-oil Arab economies is currently substantially higher than prior to the onset of the Arab Spring. Moreover, with the exception of Yemen, and to a lesser extent Jordan, all the other non-oil Arab countries are currently in their "demographic gift" age pyramid; without massive labor immigration, it will end naturally within two to three decades. They have only a short period to rapidly improve their labor-force participation rates before the number of elderly overwhelms them. Malik and Awadallah noted in this respect, "The irony in the Middle East is that there is a vivid mismatch between demography and economic structure."124 Hence, in the case of the non-oil Arab countries, instead of leading to an economic boost, "the demographic gift" has become "a political burden," as the number of job seekers is much higher than the number of new jobs.
Low Nonproductive Government Expenditures
So far, none of these countries has succeeded in narrowing nonproductive government expenditures (subsidies, public-sector wages and security expenditures). Thus, they do not have sufficient financial resources to invest in "economic-generator sectors," particularly in the areas of infrastructure or research.125 In the near future, this inability will exacerbate their already harsh employment situation, which will probably translate into a "vicious circle" of unemployment, poverty and political instability.
Rapid and Stable Global Economic Development
Without recovery in the EU and to a lesser extent North America, it will be extremely difficult to regain prosperity in the non-oil Arab economies. Workers' remittances and tourism are both highly dependent on the EU market. Recovery is not going to happen soon. By 2012, the combined GDP of the EU economies contracted by 0.4 percent.126
Low Oil Prices
The NBK noted, regarding future oil prices: "Our base-case forecast assumes that oil prices average $100 per barrel over the forecast horizon — a level that allows most GCC governments to finance higher spending without draining their financial reserves."127 Indeed, according to various forecasts, the oil price will average $95 a barrel in 2014.128 One main reason is the expansionary fiscal policy of the GCC countries since early 2011 (see above). This was the reason the Saudi oil minister, Ali al-Naimi, declared in early 2012 that the Saudi target price is $100 per barrel.129
CONCLUSIONS
The non-oil Arab economies are trapped in an impossible situation. Without implementing necessary reforms, primarily a sharp decrease in subsidies, these economies will totally collapse. On the other hand, whenever the authorities of these countries have tried to implement such reforms, the masses have reacted with large-scale riots that have led authorities to immediately withdraw, or only partially enforce, them. The middle class, which had been the core of the non-oil Arab regimes since the 1950s, revolted against the old regimes. There was no longer the possibility of socioeconomic mobility, either through public-sector employment or jobs in one of the Arab oil economies or the EU. People were trapped in a dead-end situation. Since the old regimes could no longer uphold their end of the social contract of no taxation and no representation, the middle classes were no longer willing to fulfill their part. This is the core of the Arab Spring: "taxation" in the form of no governmental employment and lower subsidies led to the active political participation of the masses.
In order to stabilize the political situation, the regimes that have survived, mainly the monarchies of Jordan and Morocco, have started to implement political reforms by increasing political participation. In Morocco in July 2011, following large-scale demonstrations, the constitution was changed, giving more power to the government and the elected parliament at the expense of the king. In Jordan as well, some political reforms were recently implemented, and the elections conducted in January 2013 were more democratic than all of the previous ones.
In the Gulf oil countries, the political situation remains as it was before. The authorities have the resources to continue with the traditional formula: huge economic benefits in exchange for no political participation. Its continuation, however, requires constantly increasing governmental expenditures financed from increasing oil revenues. For the first time in history, the oil states need high oil prices in order to preserve their regimes, but high oil prices jeopardize the chances for economic recovery in the non-oil countries.
Financial aid from the GCC oil states to the non-oil states since the beginning of the Arab Spring is meager relative to both the revenues available and the need. The donors are giving some financial support to Jordan and Egypt to curb the spread of al-Qaeda groups. They are already in Iraq, Yemen and Syria. But this aid is not enough for economic development. It seems that the only short-term practical solution to the increasing unemployment and consequent worsening socioeconomic situation in the non-oil Arab economies is the large-scale recruitment of their surplus workforce by the GCC countries, particularly Qatar and the UAE, where the demand for foreign labor has increased dramatically in recent years. This, however, is not happening; the GCC countries, without exception, continue to prefer non-Arab labor.
* An earlier version of this article was published in Hebrew in The New East, 51 (2013).
1 "Non-oil country" refers to a country in which the rental revenues, mainly oil and gas, constitute less than 40 percent of its GDP.
2 Such as: Filipe R. Campante and Davin Chor, "Why Was the Arab World Poised for Revolution? Schooling, Economic Opportunities, and the Arab Spring," Journal of Economic Perspectives 26, no. 2 (Spring 2012): 167-88; Hazem Kandil, "Why Did the Egyptian Middle Class March to Tahrir Square?" Mediterranean Politics 17, issue 2 (2012): 197-215; and Adeel Malik and Bassem Awadallah, "The Economics of the Arab Spring," World Development 45 (May 2013): 296-313.
3 There is a great body of research on the "social contract" in the Arab countries. On the case of Nasser's Egypt, see, for example, Nathan J. Brown, "Nasserism's Legal Legacy: Accessibility, Accountability, and Authoritarianism," in Rethinking Nasserism: Revolution and Historical Memory in Modern Egypt, eds. Elie Podeh and Onn Winckler, (University Press of Florida, 2004): 129-35.
4 On the economic policy of the non-oil Arab countries during the 1950s and 1960s, see, for example, Tarik M. Yousif, "Development, Growth and Policy Reform in the Middle East and North Africa since 1950," Journal of Economic Perspectives 18, no. 3 (Summer 2004): 92-97; and M. Riad El-Ghonemy, Affluence and Poverty in the Middle East (Routledge, 1998), 151-71.
5 UN, Department of Economic and Social Affairs, Demographic Yearbook 1960 (UN Publications, 1960), 180, table 5.
6 UN, Demographic Yearbook-2009-2010, 161, table 7.
7 Ibid., 172, table 7.
8 UN, Demographic Yearbook 1960, 176, table 5.
9 On the decrease in the unemployment rates in the non-oil Arab countries during the 1950s and 1960s, see Onn Winckler, Arab Political Demography: Population Growth, Labor Migration and Natalist Policies, second edition (Sussex Academic Press, 2009), 111-12.
10 In Jordan, for example, which was relatively the largest labor exporting country among the Arab countries, workers' remittances in 1984 amounted to $1.237 billion (current prices), which constituted as high as 24 percent of its total GDP. See World Bank Data: http://data.worldbank.org/indicator/BX.TRF.PWKR.CD?page=5.
11 In the case of Egypt, for example, the rental incomes' share of the total GDP increased from a mere 3 percent in 1970 to 24 percent in 1980. See Paul Rivlin, Arab Economies in the Twenty-First Century (Cambridge University Press, 2009), 107-08.
12 See Winckler, Arab Political Demography, 112-14.
13 Economist Intelligence Unit (EIU), Country Profile, Egypt, 1989-90 (London: EIU, 1990), 17.
14 Muhammad Sa'ad 'Amirah, "Waqi' al-Bitala fil-Urdun wa-Nazara Nahwa al-Mustaqbal," in al-Iqtisad al-Urduni: al-Mushkilat wal-Afaqa, ed. Mustafa al-Hamarneh (Markaz al-Dirasat al-Istratigiyya, 1994), 224, table 2.
15 Ilham Haouas, Edward Sayre, and Mahmoud Yagoubi, "Youth Unemployment in Tunisia: Characteristics and Policy Responses," Topics in Middle Eastern and African Economies, 14 (September 2012): 399, table 3.
16 El-Ghonemy, Affluence and Poverty in the Middle East, 172-213; and Paul Rivlin, Economic Policy and Performance in the Arab World (Lynne Rienner Publishers, 2001), 95-133.
17 See, for example, United Nations Development Programme (UNDP), Arab Development Challenges Report 2011 (Cairo: UNDP, 2011), 4-5.
18 Mohammed Omran, Testing for a Significant Change in the Egyptian Economy under the Economic Reform Programme Era, United Nations University, World Institute for Development Economics Research (WIDER), Discussion Paper No. 2002/59, June 2002, p. 3, table 1.
19 Onn Winckler, "Hafiz al-Assad's Socio-economic Legacy: The Balance of Achievements and Failures," Orient 42, no. 3 (September 2001): 455-56.
20 On the economic fruits to Egypt, Syria, and Jordan from the "oil-for-food" agreement see Onn Winckler, "The Economic Consequences of the Iraqi Crisis on the Mashreq Countries," Mediterranean Politics, 11, no. 3 (November 2006): 400-07.
21 International Monetary Fund (IMF), "IMF Executive Board Concludes 2012 Article IV Consultation with Jordan," Public Information Notice (PIN) No. 12/38, April 20, 2012, p. 1; IMF, Jordan: Selected Issues, IMF Country Report No. 12/120, May 2012, p. 14; and IMF, Arab Countries in Transition: Economic Outlook and Key Challenges, Deauville Partnership Ministerial Meeting, Tokyo, October 12, 2012, p. 8.
22 Sahar Taghdisi-Rad, Macroeconomic Policies and Employment in Jordan: Tackling the Paradox of Job-Poor Growth, ILO Employment Working Paper, No. 118 (Geneva: ILO, 2012), 3.
23 World Bank, Hashemite Kingdom of Jordan: Resolving Jordan's Labor Market Paradox of Concurrent Economic Growth and High Unemployment, Report No. 39201-JO (23 December 2008), i.
24 In 2011, about 85 percent of foreign workers in Jordan earned monthly salaries below JD (Jordanian Dinar)150 (US$211), with many earning even below the minimum wage of JD143. See QNB (Qatar National Bank), Jordan Economic Insight 2012, 6.
25 Ibid., 6-7.
26 International Labour Organisation (ILO), International Institute for Labour Studies (IILS), Studies on Growth with Equity: Tunisia — A New Social Contract for Fair and Equitable Growth (Geneva: ILO/IILS, 2011), 11.
27 IMF, Tunisia: Staff Report for the 2012 Article IV Consultation, IMF Country Report No. 12/255, September 2012, 42.
28 ILO, Studies on Growth with Equity: Tunisia, 22-23.
29 Bertelsmann Stiftung, BTI 2012- Egypt Country Report (Gütersloh: Bertelsmann Stiftung, 2012), 23.
30 See Andrzej Kapiszewski, "Arab Versus Asian Migrant Workers in the GCC Countries," paper presented at the United Nations Expert Group Meeting on International Migration and Development in the Arab Region, Population Division, Department of Economic and Social Affairs, United Nations Secretariat, Beirut, May 15-17, 2006.
31 Due to the wide-based age pyramid, despite the substantial fertility decline, the natural increase rates of the non-oil Arab countries will continue to be high at least for the coming generation.
32 Middle East Economic Survey (MEES), July 2, 2012.
33The Economist, March 17, 2012.
34 Bertelsmann Stiftung, BTI 2012, Egypt Country Report, 20.
35 Kandil, "Why did the Egyptian Middle Class March to Tahrir Square?" 210.
36 Bertelsmann Stiftung, BTI 2012, Jordan Country Report, 18.
37 African Development Bank (ADB), Tunisia: Economic and Social Challenges beyond the Revolution (Tunis: ADB, 2012), 17.
38 UNDP, Arab Development Challenges Report 2011, 1.
39 In the case of Egypt, for example, in April 2008, there were many riots throughout the country due to the increase in bread prices and a shortage of bread in the markets. See "Egyptians Riot over Bread Crisis," Telegraph, April 8, 2008. Overall, in 2008, due to the rapid increase of oil prices, food prices increased accordingly and led to large-scale protests in many of the non-oil Arab countries. See The Economist, March 17, 2012.
40 On the colossal failure to predict the Arab Spring, see F. Gregory Gause III, "Why Middle East Studies Missed the Arab Spring: The Myth of Authoritarian Stability," Foreign Affairs 90, no. 4 (2011), 81-90.
41 IMF, Arab Republic of Egypt: 2010 Article IV Consultation—Staff Report, IMF Country Report No. 10/94, April 2010, 3.
42 ILO, Studies on Growth with Equity: Tunisia, 11.
43 IMF, Tunisia: Staff Report for the 2012 Article IV Consultation, IMF Country Report No. 12/255, September 2012, 4.
44 By 2012, the total fertility rate in Jordan was 3.5 children per woman, namely 1.4 children above the replacement-level. See The Hashemite Kingdom of Jordan, Department of Statistics, Jordan Statistical Yearbook-2012 (Amman, 2013), 15.
45 By the end of 2012, the under-15 population in Jordan constituted 37.3 percent of the total population — higher than in all of the other non-oil Arab countries with the exception of Yemen. See ibid., 12.
46 By March 2013, the number of the Syrian refugees in Jordan had climbed to over 450,000 and continues to rise on a daily basis. See Jordan Times, March 16, 2013.
47 IMF, Jordan: 2012 Article IV Consultation, IMF Country Report, No. 12/119, May 2012.
48 "Middle East Economic Review 2011" (Middle East Economic Digest, 2011), 23.
49 Central Bank of Egypt, Monthly Statistical Bulletin 197 (August 2013), 142, table 54.
50 Ibid., 76, table 21.
51 Charlotte Kan, "Qatar: Investing in Tunisia's Future," The Middle East, July 2012, 47.
52 Central Bank of Tunisia, 53th Annual Report 2011 (Tunis, 2012), 21, table 2-1. See also Monia Ghanmi, "Tunisian Tourism Shows Signs of Recovery," Magharebia, March 27, 2012.
53 Since the early 2000s, Tunisia has emerged as the preferred tourism destination for Libyan tourists. By 2010, 1.8 million Libyans visited Tunisia. See Emanuele Santi, Saoussen Ben Romdhane, and Mohamed Safouane Ben Aïssa, "Assessing the Preliminary Impacts of the Libya's Crisis on the Tunisian Economy," Topics in Middle Eastern and African Economies 14 (September 2012): 6
54 During 2012 there was a 33% increase in the Tunisian tourism receipts compared to the disaster year of 2011. See World Tourism Organization (WTO), World Tourism Barometer, 11 (January 2013), 5.
55 Monji Saidani, "Tourism in Tunisia Still Struggling," Asharq al-Awsat, April 26, 2013, http://www.aawsat.net/2013/04/article55299934; and Tunis Times, April 14, 2013.
56 Kingdom of Jordan, Ministry of Tourism and Antiquities, Tourism Statistical Newsletter 7, no. 4 (2011): table 4.2.
57 The European Bank for Reconstruction and Development (EBRD), Country Assessment: Jordan (London, September 12, 2012), 13.
58 "Jordan's 25-Year Master Plan Shows Early Promise with Improved Tourism Revenues of $3.47 billion in 2012," Arabian Travel Market, February 10, 2013.
59 Bank Audi, Audi Saradar Group, Jordan Economic Report, April 30, 2013, 7.
60 IMF, Lebanon: 2011 Article IV Consultation—Staff Report, IMF Country Report No. 12/39 (February 2012), 28, table 1.
61The Daily Star, February 27, 2013.
62 Central Bank of Tunisia, 53th Annual Report 2011, 43. See also Santi, Ben Romdhane, and Ben Aïssa, "Assessing the Preliminary Impact of Libya's Crisis on the Tunisian Economy," 7; and Florence Eid, "Intra-Regional Remittances: Our Tooth Fairy," Al-Ahram Weekly, Issue No. 1109, August 2-8, 2012.
63 IMF, Tunisia: Staff Report for the 2012 Article IV Consultation, IMF Country Report No. 12/255, 42.
64 IMF, Arab Countries in Transition,15.
65 Institute National De La Statistique – Tunisie, http://www.ins.nat.tn/indexen.php.
66Ahram Online, September 5, 2012.
67 Hend El-Behary, "Egypt's Unemployment Rate Hits Record High in Second Quarter," Ahram Online, August 14, 2012. See also Business Today: Egypt, March 11, 2012.
68Nuqady, "Jordanian Unemployment Is Higher than Reported," March 19, 2013, http://english.nuqudy.com/Levant/Jordanian_Unemploym-5008.
69MEED, April 6-12, 2012, 25.
70 Jeremy M. Sharp, Egypt: Background and U.S. Relations (Washington, D.C: Congressional Research Service, February 26, 2013), 4.
71 Central Bank of Tunisia, 53th Annual Report 2011, 42.
72Al-Arabiya News, June 12, 2012.
73 On the scale of the workers' remittances of the non-oil Arab countries in recent years, see The World Bank Data, http://data.worldbank.org/indicator/BX.TRF.PWKR.CD.
74 Sharp, Egypt: Background and U.S. Relations, 4.
75MEES, July 16, 2012, December 14, 2012. See also Arab Development Bank, Egypt: 2012-2013 Interim Strategy Paper (Tunis, October 2012), 3-4.
76MEES, February 8, 2013.
77MEES, September 27, 2013.
78 Economic and Social Commission for Western Asia (ESCWA), Survey of Economic and Social Developments in the ESCWA Region, 2011-2012 (Beirut: ESCWA, 2012), 28.
79 IMF, Tunisia: Staff Report for the 2012 Article IV Consultation, IMF Country Report No. 12/255, 6, 11.
80Ahram Online, September 5, 2012.
81 See, ILO, Macroeconomic Policies and Employment in Jordan, 6.
82 IMF, Tunisia: Staff Report for the 2012 Article IV Consultation, IMF Country Report No. 12/255. 6; Central Bank of Tunisia, 53th Annual Report 2011 (Tunis, 2012), 20.
83 IMF, Tunisia, IMF Country Report No. 13/161, June 2013, p. 18
84 Masood Ahmed, "Youth Unemployment in the MENA Region: Determinants and Challenges," IMF News, June 2012.
85 IMF, Jordan — 2012 Article IV Consultation, IMF Country Report No. 12/119, 6-7; EBRD, Country Assessment: Jordan, p. 13; IMF Survey Online, August 3, 2012, http://www.imf.org/external/pubs/ft/survey/so/2012/int080312a.htm; MEED, November 9-15, 2012, 28; and QNB, Jordan Economic Insight-2012, 27
86 QNB, Jordan Economic Insight-2012, 27.
87 Jeremy M. Sharp, Jordan: Background and U.S. Relations (Washington, D.C., Congressional Research Service: October 3, 2012), 18, table 2.
88MEES, February 15, 2013.
89MEES, September 3, 2012.
90 Sharp, Egypt: Background and U.S. Relations, 17, table 2.
91MEES, January 11, 2013.
92 ILO, Macroeconomic Policies and Employment in Jordan, p. 6.
93 EBRD, Country Assessment: Jordan, p. 13.
94Petra (Jordan News Agency), January 7, 2012.
95MEES, January 11, 2013.
96 "Egypt Revises Up 2011/12 Budget Deficit to 11 Pct of GDP," Reuters, September 11, 2012.
97MEES, September 27, 2013.
98 IMF, Tunisia: Staff Report for the 2012 Article IV Consultation, IMF Country Report No. 12/255, 6, 11; and IMF, Tunisia, IMF Country Report No. 13/161, 7.
99 IMF, Saudi Arabia: 2011 Article IV Consultation — Staff Report, IMF Country Report No. 11/292, September 2011, 11; MEED, February 10-16, 2012, 33; and Tatjana de Kerros, "Saudi Arabia: From National Strategies to Economic Realities," Entrepreneurialist, March 18, 2011.
100MEED, January 6-12, 2012, 22.
101MEED, March 9-15, 2012, 38.
102MEES, November 9, 2012.
103 ESCWA, Survey of Economic and Social Developments in the ESCWA Region, 2011-2012, 27; and MEED, June 15-21, 2012, 20.
104MEED, "2011 Economic Review," 12.
105 National Bank of Kuwait, GCC Economic Outlook-January 2013 (Kuwait City, January 2013), 2.
106 BTI 2012, Saudi Arabia Country Report, 4.
107 MEED, May 10-16, 2013, 28-29.
108 By 2012, GCC oil production totaled 17.16 million b/d (barrel per day) compared to16.34 million b/d in 2011 and 14.58 million b/d in 2010. See ESCWA, Survey of Economic and Social Developments in the ESCWA Region, 2011-2012, 14, table 4.
109 Zawya, "GCC Oil Income at All-Time High in 2012," March 17, 2013, http://www.zawya.com/story/GCC_oil_income_at_alltime_high_in_2012-ZAWYA20130318032244/.
110 Mohammad Tayseer and Dana El Baltaji, "Jordanians Demand Government Resign over Cut in Fuel Subsidies," Bloomberg, November 14, 2012, http://www.bloomberg.com/news/2012-11-14/jordanians-demand-government-resign-over-cut-in-fuel-subsidies.html; and MEES, February 8, 2013.
111MEES, February 8, 2013.
112MEES, February 22, 2013.
113 Pamela Ann Smith, "Egypt Sets Sail for an Economic Revival," The Middle East, July 2012, 42-43.
114MEES, December 14, 2012.
115 IMF, Jordan: Selected Issues, IMF Country Report No. 12/120, May 2012, 34, table 1.
116 IMF, Tunisia: Staff Report for the 2012 Article IV Consultation, IMF Country Report No. 12/255, 26, table 1.
117 Ibid., II.
118 "Demographic gift," or the "demographic dividend," describes an age structure in which the percentage of the working age population (15-64) of the total population is higher than ever before and after. In respect to the Middle East, see, for example, Pierre Dhonte, Rina Bhattacharya and Tarik Yousef, "Demographic Transition in the Middle East: Implications for Growth, Employment, and Housing," IMF Working Paper, WP/00/41 (March 2000).
119 On the increasing female labor force participation rate in these countries, see World Bank Data. Available at: http://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS?page=4.
120 During the period of 1965-80, the worldwide real GDP annual growth rate averaged 4.1 percent. See World Bank, World Development Report-1991, 207, table 2.
121 Worldwide GDP real growth rate amounted to 4.9 percent in 2004, 4.6 percent in 2005, 5.3 percent in 2006, and 5.4 percent in 2007. See IMF, World Economic Outlook, September 2011, 178, table A1.
122MEES, October 4, 2013.
123 See, for example, MEED, "2013 Economic Review," 7.
124 Malik and Awadallah, "The Economics of the Arab Spring," 297.
125 See, for example, ESCWA, Survey of Economic and Social Developments in the ESCWA Region, 2011-2012, 28.
126 IMF, World Economic Outlook Update 3, January 2013, 2, table 1.
127 NBK, GCC Economic Outlook-January 2013, 2.
128MEED, "2013 Economic Review," 7.
129 Al-Arabiya News, January 16, 2012; and MEED, June 15-21, 2012, 6, 20.
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