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Stagnant economies with high potential: Marco Arnone of Lavoce.info talks to PeaceReporter about the economic roots of the crisis in the Maghreb area, and Europe’s responsibilities

In Tunisia the regime of Ben Alì has collapsed, in Egypt that of Mubarak is tottering, and tension is high throughout the Middle East. All this was sparked by the extreme gesture of one obscure shopkeeper in a Tunisian village who set fire to himself in protest against the confiscation of his stall, and the demonstrations of countless people crushed by the inflation affecting basic food prices. PeaceReporter spoke to Marco Arnone, lecturer at the Cattolica University of Milan and a regular contributor to Lavoce.info, one of the most prestigious Italian sites specialising in economics. Given the depth of his knowledge of the area, we asked Professor Arnone to talk about the economic roots of the popular uprisings that have overthrown Ben Alì in Tunisia and are pushing Mubarak's thirty-year rule to the brink of the precipice.

 

The events in Tunisia in December have created - at least from a journalistic point of view - a ‘brand' which we could call "the bread revolts." From an economic perspective, what sparked this movement off? And what are the differences compared to Egypt?

Tunisia has huge problems with youth unemployment, as have all the countries in the region, but in Tunisia this also affects the middle class: a mass of well trained young people who feel the lack of employment - and of any prospects for employment - even more acutely. Let's say that most of the Arab world lacks growth prospects, that economies throughout the area are stagnant... but let's be careful: it's fine to talk about sparks igniting events, but that doesn't mean that this is the cause of the current explosions in the Arab world. The causes are economic but also political. A huge number of young people are insisting on more freedom of expression, of being part of the process of deciding their countries' political priorities. This is particularly clear in Tunisia. Algeria has its own particular situation, because the army is involved and nothing has happened there so far. Egypt is different because Mubarak has been in power for thirty years and the country doesn't suffer from the same lack of prospects as Tunisia: its economy is quite well structured and it has a flourishing tourist industry. And there are further differences: the United States plays an extremely powerful role inside Egypt, and generally speaking the Egyptian regime has considerable international support. This is one element that is emerging as a common denominator in these uprisings: they're taking place in countries whose regimes have long been supported by Western nations despite them not observing the same principles of democracy professed by the West. Perhaps an increased coherency of principle would be no bad thing. There are also different situations in the Lebanon, Yemen and another nation with a huge question-mark hanging over it, Saudi Arabia.

 

What about Saudi Arabia?

It's the world's biggest producer of petrol and is a moderate regime - at the same time as being a monarchic dictatorship - propped up by Western support: an absolutely vital ally for the West. I'm not sure what would happen in Saudi Arabia if a wave of mass agitation like that in Egypt today were to come about. I don't know if the US would back a Saudi equivalent of El Baradei. When petrol is involved the situation gets much more complicated than when mere regional stability is at stake. I'm not sure whether anything will happen there, or whether anything will be allowed to happen there.

 

For many years there has been a kind of dichotomy between the petrol-powered economies of the Persian Gulf nations and the geographical Middle East, on the one hand, and the tourist-fed economies of North African countries (apart from Libya), on the other. Apart from this stereotype, what is the real situation in these countries? Do they have dynamic economies or are they doomed to the cage of this simplified picture?

The paradox is that this dichotomy would appear to favour the petrol-producing countries more than the North African ones. I believe that this is not really the case, even if that seems to go against common sense. Economies based on petrol generally possess few other resources. They seem exceptionally rich because they depend exclusively on petrol sales. Over the last ten years, the international community and the IMF have made strong attempts to encourage these countries to diversify their economies. Qatar and the United Arab Emirates have invested in medical care, hoping to create a vast hospitals hub. But it's not easy to create expertise by attracting personnel from other countries. On the other hand, the Mediterranean countries have an enormous potential, despite their current stagnation. Their problem is not a lack of prospects: they are stagnant because they are badly run, they barely manage any international trade. The European Union is basically closed to them, especially in terms of the agricultural market, and this has hindered the development of North African agricultural potential. As for tourism, it has been successfully developed in Egypt, rather less in Morocco, much less in Tunisia, practically not at all in Algeria and Libya, and less than zero in the Yemen. Potential is high in other areas too: with their youthful populations and high average levels of education, these states could perform well in the area of services and in Mediterranean trade, although this would depend on collaboration from the European Union. In such a scenario, the EU's Mediterranean countries could play an important supporting role in stimulating economic development and democratic orientation. Italy has never been a colonial power in this area, always following France, the dominant North African colonial force, which in the past has sought to weaken democratic development in its ex-colonies which are, after all, easier to control if guided by dictators disguised as Presidents of the Republic.

 

If Europe were to reduce trade barriers against North African products, it would help the region's development.

Certainly. It would encourage development in the area but it would also favour European consumers: we don't produce certain products, like dates or African bananas. We import citrus fruit from South Africa and Israel, but not from Egypt or other North African countries, which could produce much more. They may have badly run economies, but we haven't done much to help them. Over the last few years the Spanish government has signed bilateral agreements with Morocco which have led to a rise in Moroccan agricultural production. Agreements not with EU, but with Spain. This could be a good model to follow: use bilateral agreements to allow North African countries limited market outlets in the EU's Mediterranean countries and encourage the kind of trade development that could hopefully eventually lead to a revision of the overall CAP agricultural rules. The US role in international trade is also important. Take bananas, for instance: here the US calls the tune, which may not be a negative thing in itself, but becomes negative when it results in a monopoly or oligopoly as in this case, where the result is that not a single African banana can enter Europe. To sum it up, there are things that North African countries could do on their own, but there are are many areas where trans-Mediterranean collaboration could help enormously.

 

One curiosity: how much do you think that the drop in emigrant send-home money may have contributed to popular distress, since in recent months emigration has been severely cut back, with far less people managing to reach Europe?

This is an important point. Emigrant remittances are extremely important to developing nations, whether we look at Sub-Saharan Africa, Central America, Sri Lanka or North Africa. The global crisis has strongly affected these countries, both in terms of international trade - a relatively minor factor in most cases - and the drop in family send-home money. In October 2010, the IMF specifically advised Tunisia to reinforce its social assistance payments, underlining the widespread distress caused by unemployment but also by the international economic situation. The economic factor, affected as we have seen by the closed policies of the EU, goes hand in hand with a political crisis in countries with a well-educated young middle class, perfectly capable of following international politics... and this might help us to transcend the squalid "Immigration: yes or no?" debate in Italy and elsewhere. The average immigrant arriving in Italy from North Africa has higher educational qualifications than the average Italian.

 

 

Christian Elia