For those eager to engage in predictions as to where the events that have rocked North Africa, the Middle East and beyond will lead, it would be wise to remember that these are uncharted political waters, and the long wave of repercussions will run for decades as the old post-colonial order crumbles.
Our perceptions and expectations are somewhat distorted by history books that condense in a few pages an account of events that took years to develop and fully come to fruition. Even upheavals which some of us witnessed during our lifetimes leave memories that focus on the climax and exclude the lull. So when our internal equilibrium is shaken, we unrealistically expect a swift ending.
The collapse of the Soviet Union and the Warsaw Pact started with Gorbachev’s ascent and perestroika, then the break-up throughout Eastern Europe and finally the indelible image of Yeltsin on a tank declaring the end of the Empire. But it took several years. And the aftermath was not a smooth transition, but years of hyperinflation, mass unemployment, subsidy cuts, institution building, uprooting of state monopolies and judicial reforms.
In essence, historical processes so profound to reshape entire continents often follow a “drunkard’s walk” — two steps forward, one step back and maybe a few sideways. The vicissitudes of the “Arab Spring” will likely follow such a pattern. Hence in the months and years to come we will need a framework to evaluate the direction, the pattern and the likely outcome of this process. As economic exclusion leads to the mounting resentment that caused the turmoil, fiscal interests and redistribution will be dominant factors in shaping the course of history.
The convulsions have been especially acute in countries which depend on earnings from renting energy commodities (and also tourism). Rents provide the state with a cache of resources, but little incentive to build modern institutional capital, a pre-condition for social and material advancement. When governments can obtain conspicuous resources without having to resort to taxation it is hard for them to resist the temptation to eschew checks and balances; officials feel immune to scrutiny, deeming a partial distribution of these resources to powerful interest groups sufficient to retain power.
In the long run, the lack of modern public institutionsa trophies the ability of a society to progress, wastes the energies of the youth, spreads bitterness and often spurs a withdrawal toward tribal or sectarian splits. Resources are rarely eternal and in any case their size tends to shrink relative to the growing population. Unless the revenues are invested to diversify the economy into new sectors and enlarge the pie for all, eventually hand outs alone will not be enough ensure decent living standards.
Protests and riots should be interpreted not only by a call for redistribution but also for a social contract which fosters economic inclusion, upward social mobility and betterment opportunities. Unfortunately, this transformation cannot be delivered overnight and so the undercurrent of unrest will not abate instantly.
Still, it is a very positive sign that at least in the Gulf Cooperation Council the rulers have grasped what is at stake and have launched the so-called ‘Gulf Marshall Plan.’
One hopes that it will constitute the first step in a new economic strategy which desists from adding cadres to an already bloated and often utterly inefficient bureaucracy and focuses on skill creation and entrepreneurial talent. Likewise, one hopes that awareness spreads among decision makers that political survival is not only a matter of throwing a few handouts around, but devising a set of rules hinging on rights and not on privileges, on fairness and not on proximity to elites, on competence and not on favors. It will be a long road because it will clash with entrenched bad habits and long-established traditions — a good reason not to delay the journey and stick to newfound determination.
Fabio Scacciavillani is chief economist at the OmanInvestment Fund
