Libya Tribune

The Collapse of Authoritarianism in the Middle East

By Marwan Muasher

Two perfect storms have struck the Arab world in the past decade. In 2011, in what was at first optimistically called “the Arab Spring,” popular uprisings unseated autocrats across the region.

PART TWO

 

Changing Course

In Saudi Arabia, the end of high oil prices coincided with the passing of power to a new generation of leaders—most prominent among them Crown Prince Mohammed bin Salman, also known as MBS.

The economic writing was on the wall for Saudi Arabia well before MBS, who is only in his early 30s, rose to prominence. Starting in 2015, large deficits meant that Saudi Arabia could no longer afford to maintain its generous internal and external subsidies.

In 2017, the budget deficit reached $61 billion, or 9.2 percent of GDP. The country expects to run deficits until at least 2023. As a consequence, the Saudi government has cut subsidies and allowed the price of services to rise.

Saudi Arabia’s regional interventions in Syria, Yemen, and elsewhere have further strained its struggling economy. The Yemeni war alone is estimated to cost the Saudi government $6–$7 billion each month.

The Saudi government has responded to this new reality with a weak package of reforms that are unlikely to fully address the challenges. In an attempt to boost the country’s stagnant economy, the government announced a radically expansionary budget for 2018 but offered no sense of how it will be financed.

The Saudi government has stopped its traditional assistance to Jordan for three years and can no longer support the regime of Abdel Fattah el-Sisi in Egypt to the tune of tens of billions of dollars each year, a program the Saudis began after Sisi ousted Egypt’s Islamist government in 2013.

It has also embarked on an impressive social reform agenda, including allowing women to drive, reopening movie theaters, and curtailing the powers of the Islamist police force, in what is probably an effort to appease the new generation and divert attention from demands for political reform. 

These social reforms have gained MBS significant popularity among young Saudis. But youth unemployment in the kingdom remains staggering: it reached almost 35 percent in 2017.

Will the new generation accept austerity and the loss of privileges and subsidies without more of a voice in the running of their country in exchange? If the revolts of 2011 offer any evidence, the answer is likely no.

The Jordanian example, in particular, suggests that continued economic austerity, coupled with over 30 percent youth unemployment, is likely to push the new generation to demand more of a voice. Those demands may even include calls for the introduction of an elected parliament, which would be a first in Saudi history. 

Saudi Arabia is not the only Gulf country facing the challenge of low oil prices. Kuwait, which already has an elected parliament, faced a drop in its oil revenues of around $15 billion in 2014 and again in 2015.

As in the Saudi case, Kuwait first relied on its massive fiscal reserves (estimated at over $600 billion) but is now introducing cuts in subsidies and a medium-term plan of economic reforms that will begin steering the Kuwaiti economy away from its reliance on oil.

Oman has reacted similarly to the low oil prices: cutting subsidies, reducing benefits for public-sector workers, and hiking taxes. 

Precarious Peace 

In Jordan, declining financial support from neighboring oil-producing countries and a drop in remittances have challenged the government’s ability to continue funding a system of economic patronage.

Although Jordan is ruled by a monarchy that much of society accepts as legitimate, recent waves of protests suggest that the system is more vulnerable than many think.

The monarchy has traditionally responded to demands for reform by implementing ad hoc measures that pacify the public but never result in true power sharing with the legislative and judicial branches of government.

Essential to such measures has been generous financial aid from the Gulf states (and other powers, including the United States), which has allowed the Jordanian government to maintain an inefficient, patronage-based political and economic system.

The government has used the money to continue buying the support of the elite and funding a bloated bureaucracy in a system that prioritizes patronage over merit. 

In 2011 and 2012, large-scale protests erupted throughout Jordan in response to economic and political grievances, but they petered out after King Abdullah made a series of political reforms and regional instability directed attention elsewhere.

But King Abdullah’s actions—firing prime ministers, reforming the constitution, and replacing the government three times in 18 months—were quick fixes designed to appease the protesters rather than lasting, serious reforms.

By 2016, Jordan’s political elite was so confident that it had gotten through the Arab uprisings unharmed that it amended the constitution to give the king additional powers and further consolidate the executive branch’s grip on power. 

But the apparent stability concealed deeper problems. Jordan is in the grip of a slowly developing economic crisis, driven by soaring public debt, which now stands at 95 percent of GDP; low growth, now around two percent; and high unemployment, now 18.5 percent and over 30 percent among young people.

The sharp reduction in financial support from oil-producing states has meant that the country can no longer rely on that aid to keep its debt in check and finance its public deficit.

Saudi Arabia, which headed a Gulf initiative that provided Jordan with $5 billion after the 2011 protests, put a three-year freeze on subsidies to Jordan starting in 2015. (After more recent protests, Kuwait, Saudi Arabia, and the UAE announced a new, $2.5 billion aid package to Jordan, mostly in the form of guarantees to pay the country’s loans, but that hardly replaced the lost assistance.) 

Apparent stability concealed deeper problems.

Successive Jordanian governments have treated such challenges as purely technical problems. Among the public, however, demands have escalated beyond the need for economic changes.

In May 2018, protests erupted throughout Jordan, particularly in affluent neighborhoods in western Amman, led by the middle class (the Islamists, who had spearheaded protests in 2011 and 2012, were conspicuously absent).

In addition to calling for the withdrawal of a controversial income tax law, the protesters demanded the dissolution of Parliament and a change of government. Evidently, King Abdullah’s quick fixes in 2011 and 2012 failed to address the roots of the unrest: without the rents necessary to keep funding a system of patronage, the social contract in Jordan has broken down.

Durable solutions to the protesters’ demands will require a new social contract, not symbolic reforms. 

Egypt continues to suffer from the economic effects of its revolution and from the decrease in the massive assistance it used to receive from Saudi Arabia and the UAE. In 2016, two years after that Gulf assistance dropped, Egypt floated its currency and had to rely on a $12 billion loan from the International Monetary Fund to help it restore economic stability.

The one notable exception to the current state of affairs in the Middle East is Tunisia. After its revolution in 2011, Tunisia may not have solved its political, economic, and security issues, but its leaders understood the need for a new social contract.

For three difficult years, an elected constituent assembly negotiated and ultimately agreed on a new constitution that upheld the principle of the peaceful rotation of power, gave women almost full rights, and affirmed a commitment to the collective and individual rights of all parts of Tunisian society.

Tunisia is by no means out of the woods, but it has achieved a solid footing for future stability and prosperity.

A New Social Contract

If the message coming from the Arab street was lost on the region’s leaders in 2011, in part due to the failure of the protests to spark serious efforts to build new institutions (except in Tunisia), the end of rentierism is giving Middle Eastern governments another chance to hear it.

Economic reforms must be accompanied by political ones that give people a meaningful say in the running of their countries. 

The transition to more efficient economies is sure to be slow and rocky and to face significant pushback from the forces that benefit from the status quo.

Decades-old rentier systems have created vested interests with little desire to usher in merit-based structures that might rob them of their privileges. 

Political will at the top will be needed to put in place gradual, serious, and participatory processes that the public can believe in. The necessary reforms will require a period of material hardship.

Middle Eastern citizens will accept short-term sacrifices in the name of badly needed long-term change—but only if they are included in the process and guided by leadership they can trust. 

Middle Eastern governments should begin this process by doing more to empower women. Women’s participation in the work force in the region is the lowest in the world (32 percent, compared with a world average of 58 percent, according to a 2009 World Bank report).

Governments must also better exploit technology to raise productivity and gear their efforts toward a more knowledge-based economy. They must rapidly diversify their sources of revenue away from oil by empowering the private sector and encouraging public-private partnerships.

And they must promote the rule of law and a culture of equality among all citizens, which will help foster innovation. This will require ending legal discrimination against women and minority groups. 

Critically, governments cannot remain the primary employers in Middle Eastern countries. Fostering the proper legal and financial environments to promote the private sector, particularly small and medium-sized enterprises, will help companies expand and replace public-sector jobs.

This is easier said than done: outdated educational systems and inadequate health services have left large parts of the population in most Middle Eastern states ill equipped for work in the private sector.

In order to minimize unemployment and hardship, transitions to economies dominated by the private sector must include big changes to educational and health-care systems.

In particular, schools and universities need to shift from promoting the rote learning of absolute truths toward encouraging critical thinking, innovation, and the acceptance of diverse viewpoints. 

Even if governments start now, these changes will require a generation or two to fully take effect. But the uprisings of 2011 should have already taught Middle Eastern leaders that they are short on time.

They must make painful economic decisions now to avoid worse suffering down the road. And whether leaders like it or not, the consent of the governed will be a critical factor in the success of transitions from rentier economies to productive systems.

Citizens and leaders will have to agree on a new social contract. This time, rather than governments imposing contracts from the top down, the ethnically, culturally, and religiously diverse communities that make up Middle Eastern countries must be allowed to negotiate them from the bottom up. 

Forging this new social contract will require visionary leaders who have the will to stand up to their country’s own elite, who grasp that the way to keep power is to share it, and who can persuade the populace that they are capable of guiding it to a better future.

Sadly, not many such leaders exist today. (They are rare everywhere, not just in the Middle East.) But Middle Eastern governments have no choice.

If they continue to ignore the need for change, the havoc to come will bring change on its own.

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MARWAN MUASHER is Vice President for Studies at the Carnegie Endowment for International Peace. He was Foreign Minister of Jordan from 2002 to 2004 and Deputy Prime Minister from 2004 to 2005. 

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