Challenges of a turning point in development: Arab countries after the Spring

Date: 2015
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Les enjeux d'un tournant du développement : les pays arabes après leur Printemps
67
Article Index
A young and growing population
Tomorrow's demographic challenges
67

The Arab Spring caused upheavals that questioned the economic development model that Arab countries had known for over two decades. Another model must be reinvented in a social and political context that continues to be unstable. The '2015 juncture' is an opportunity for these countries, but also for Europe.

Arab countries have experienced major upheavals in recent years. The 'Arab Spring' swept away the incumbent powers that had been exceptionally stable for several decades and plunged several countries into civil war. Most observers agree that the origin of the current turmoil is due to failures of governance in these countries, i.e. the rejection of dictatorships (Brownlee, Massoud and Reynolds, 2013, pp 29-44), and geostrategic elements, i.e. the transfer of the Arab world's centre of gravity towards the Gulf countries (Alcaro and Dessi, 2013), and the increasing power of Turkey (Bank, Karadag, 2012) and Iran (Gause, 2007). However, very few commentators have focused on the demographic and socio-economic changes that are part of the cause

Chloe Mulderig, April 2013.

,

Jahanzeb Hussein, 1 November 2013. It should be noted that the Gulf satellite channels, the various 'think tanks' and social media have played a major role in favouring the interpretation of the 'Arab Spring' as a quest for democracy and for freedom, at the expense of socio-economic ('dignity' in the language of the revolt) and geostrategic interpretations.

, although these changes are so profound that they are causing a historical rupture that will take time to reach a new equilibrium.

The year 2015 will be a turning point. All eyes will be on Tunisia, which completes its transition to democracy, but is struggling to find a new development model

Government Presidency, Tunisia, September 2014.

even though the problems it faces are much simpler than those in Egypt, Yemen and Syria. Furthermore, this issue of a new model of growth that could be described as inclusive, concerns even those countries that have not experienced dramatic changes.

Models of growth challenged

The demographic dimension

The momentum of economic and social development during the period following the gaining of independence of many states has produced significant population growth. Population growth rates have increased together with the improvement of human development indicators, that reached high levels in the 1980s, to more than 3% annually for some countries. A real baby boom. These growth rates later decreased, in most cases to less than 2%. However, at the beginning of the third millennium these children of the baby boom have now reached working age. The age pyramid has profoundly changed: we are now seeing the so-called 'youth bulge' (Aita, 2011).

This rejuvenated Arab world, which is now in crisis, has grown to a significant size. By 2050 its population will have reached 600 million, which is roughly the size of the population of the European continent, which is in population decline. Egypt alone will exceed 120 million inhabitants; Algeria, Saudi Arabia and Iraq will each have populations similar to that of France. The Mediterranean would then border two equally populated worlds. A situation that has not occurred for a long time in human history. But today there are marked differences in resources and living standards.

Some demographers (Courbage Y., Todd E., 2007) emphasize the demographic transition to explain the current political upheaval. But it is more at the level of the social transformations that are accompanying the 'wave of youth' that we should try to understand the issues and long-term developments (Mirkin, 2013). The importance of the demographics fuels the thesis of the 'civilization clash' (Lewis, 1993; Huntington, 1993), the demographic transition leads to a turning towards democracy (Filiu, 2011), and the 'wave of youth' stimulates the need for a new development model (Amin, 1980) and a new social contract (Aita, 2011).

The rural-urban migration

The first period of independence brought electricity and telephony to rural areas, and especially education and the improvement of health and hygiene conditions. Also, land reforms were made, even in countries that had not adopted 'socialist' development models. These improvements had positive effects on the rural population, but could not be maintained over the long term.

Families that gained ownership of land increased in size two generations later. The income derived from the land became no longer sufficient to support the descendants, who were even more numerous as rural areas had experienced the highest population growth rates. Furthermore, the models of development and land use gave insufficient attention to the creation of alternative economic activities on this land; and it is essentially the centres of large cities that have experienced the most sustained economic growth. The rural exodus towards big cities therefore began, firstly seasonal and circular migration by men to find work, and later more permanent movement towards the outer suburbs of small and medium-sized cities (Aita, 2009).

The rural exodus accelerated in the 1990s after the fall of the Berlin Wall, due to the entry of Arab countries into globalization and the adoption of neo-liberal agricultural production modes. And it is through access to water for irrigation, a scarce resource in this part of the world, that the greatest transformations have taken place. The management and control of water resources have been gradually abandoned by states. The former large landowners and stakeholders with the means to invest in irrigation networks, in deep drilling and pumping, seized control of the industry. They therefore industrialized agricultural production. Smallholders lost their access to water resources and the title deeds of land could only be used to negotiate agricultural tenancies with unfavourable conditions.

In human history it was in these lands that the very concept of state was born, in Mesopotamia, from the need to organize irrigation for agricultural production and the livelihoods of its people. However, the modern Arab state has started, as in Africa, to offer large tracts of land for farming to large companies that come mainly from the Gulf region.

Thus, during the last two decades it is the agricultural sector that has become the economic activity that has undergone the most dramatic productivity jump in Arab countries. Meanwhile, peasant populations have been consigned to poverty, forcing them to migrate in huge numbers to the suburbs of large cities and to small and medium-sized towns that have experienced rapid and informal urbanization. Within twenty years the populations of some of these urban areas have increased from 2,000 to more than 200,000 inhabitants, the majority being young people.

With this rural-urban migration, the wave of youth has become a 'tsunami of young people' in some places, changing socio-economic data and causing significant challenges ranging from education to employment and urban planning, but also to ideological radicalization (Khashan, 2010, pp 7-18).

These issues of rural-urban migration, their socio-economic rationale, and their impact have received little attention in the debate on the ongoing transformations in the Arab world.

The issue of inter-regional migration

To these rural-urban migrations must be added other migratory phenomena, each having an impact on the transformations in progress.

First, there is internal migration caused by war. For example, during the civil war in the 1990s, one million Algerian citizens were displaced, which is about 3% of its population. A decade earlier, Lebanon had undergone an even more significant phenomenon during its own civil war. While Palestine and Syria suffered in similar ways following the 1967 war. Most recently, Syria is experiencing a huge scale internal displacement of its population, again due to civil war. Half of the country's total population is affected.

In addition, several Arab countries have welcomed the refugees in large numbers. Initially there were two waves of Palestinian refugees that fled the Israeli invasions in 1948 and 1967, and who settled in Jordan, Lebanon, Syria and elsewhere. They now form a significant proportion of the population of these countries, up to one third for Jordan. The second major wave was that of Iraqi refugees to Syria and Jordan after the US invasion and the civil war that followed. At one point, they made up 10% of the populations of the countries concerned. Subsequently, there has been a further flow of refugees following the Arab Spring upheavals: two million Libyans in Tunisia (20% of the population); two million Syrian refugees in Lebanon (30% of the population); and a million and a half in Jordan (25%). These inward migrations, which are huge in scale, result in shocks to societies and economies of the countries affected. Moreover, these migratory flows are much greater than those towards Europe, which raise public policy and even identity problems for European societies.

In addition, Arab countries are experiencing significant outward migration. Since independence, these migrations are mainly a result of economic causes, those from the Maghreb (North Africa) flow towards Europe; while those from the Mashriq (Arab Middle East) head into the Gulf. Twelve million first generation immigrants were divided between these two major destinations. These immigrants make a major contribution to the economic balance of their country of origin. Their financial transfers are much higher than the flow of foreign direct investment (FDI), making up a significant proportion of the gross domestic product, up to 20% for Lebanon. They constitute an important 'socio-economic safety net', especially for the most disadvantaged populations.

Outgoing immigration has remained significant in recent years, despite draconian restrictions by Europe and the Gulf countries. It is estimated that of all the new entrants onto the labour markets of Arab Mediterranean countries, 15% emigrate each year. The phenomenon has even taken on a dramatic dimension with the Arab Spring upheavals. Everyday, the 'boats of death' scatter hundreds of immigrants onto the north Mediterranean coast, without any public policies in southern coast countries that can really do much to stop this happening in the medium term.

To all this must be added the seasonal or circular cross-border migrations and the passage of African migrants through Arab countries.

Some of these migrations have therefore become structural, and others cause major shocks. They represent major challenges for public policy in the countries concerned.

Some aspects of these migrations are the subjects of intense debate. First, there is the attention given to Palestinian refugees, especially as the UN specialized agency (UNRWA) that supports these people is no longer able to deal with the totality of their growing needs, especially since they lack social rights in many countries. Also, in Europe, the focus is on cross-Mediterranean migration, leading to public policies of 'cooperation' that limit migration and which tend to erode with current events (Lenart, 2012). This aspect has become one of the most sensitive issues in the internal political debates in European countries, where civil society organizations call for an opening of borders in response to the humanitarian catastrophe in the South, while politicians react to the extreme right and budgetary difficulties by calling for border closures. Migration will cause long-term damage to the Euro-Mediterranean 'partnership' (Eylemer and Semsit, 2007). It contributes to the radicalization of the South, especially since Southern countries themselves have to support migratory waves of an unprecedented magnitude.

Employment, particularly among young people

With the arrival of the 'wave of young people', the share of the population of working age has increased dramatically, from around 50% in the 1950s to around 70% at the turn of the millennium. This has resulted in a significant growth rate of the labour force, between 3% and 4% per year (Chaoul, 2013). These rates are even higher if we consider participation in non-farm work, because of the massive abandonment of agricultural labour. This growth would be even greater still if the participation of women increased significantly, as in Arab countries it is currently one of the lowest in the world (Aita, 2008).

However, the rate of job creation has been low in these countries, generally between 1% and 2% annually, and therefore largely insufficient to absorb the demand for work. Average unemployment rates are high, and those of young people and women even more so: more than 20% for the former and around 50% for the latter.

Their situation is even more severe than this depiction and cannot be understood only through the measurement of the unemployment rate obtained through surveys (because people who work at least one hour during the week preceding the survey are considered as non-unemployed, according to the definition adopted by the International Labour Organization). Indeed, most of the new jobs created are informal, whether self-employment or non-contractual employed labour. Thus, if we exclude those in administration employment (the public sector generally constitutes between a quarter and one third of total employment), and those in agriculture, informal employment represents a large majority, up to 70% of the total.

For example, between 2000 and 2007 in Syria, around 300,000 newcomers entered the labour market, which had a total workforce of five million people. Economic growth, although estimated to be between 4% and 5% per year, has only created 105,000 jobs per year (90,000 for men and 15,000 for women). In reality, much fewer jobs were created since there was simultaneously an annual loss of 25,000 agricultural jobs for men and 44,000 jobs for women. Among the employment generated, there were only 8,000 formal jobs per year. These figures show the seriousness of the situation that led to the Arab Spring, regardless of any political considerations.

The concept of employment is thereby called into question (Kadri, 2012), in particular in relation to salaried employment, since most informal jobs are in the self-employment sector. It is in this context that we must remember that Mohamed Bouazizi, who set himself on fire in December 2010, triggering the Tunisian 'revolution', was not regarded as unemployed in statistical surveys. Coming from a family who had to stop working on the land, this young Tunisian, aged just 27, was self-employed as a street vendor of fruits and vegetables in a small provincial town, Sidi Bouzid.

It is young people like him that took to the streets to ignite the Arab Spring. It is also these young people that took up arms in Syria, Yemen and Libya, thus finding a means of remuneration from the war economy or external funding. The outcome of the upheavals that are currently underway in Arab countries will largely depend on the outlook that they can hope for, particularly the economic prospects. This is the case not only in countries where the war took hold, but also where the transition was made in a less destructive way. Indeed, young Tunisians of Sidi Bouzid live today, three years after the 'revolution', in an economic and social situation that is much worse than before.

It must be remembered that extremist organizations, which have led to, among other things, the creation of the 'Islamic State', have taken root within a young population that has been abandoned and left idle in the countryside and suburbs; and not only in Iraq, Syria and Yemen, but also in Tunisia, which has 'exported' the largest contingent of jihadists. This leads to the current debate on how to combat jihadism: through war or development?

The issue of education

Since the 1990s, all Mediterranean Arab countries had launched structural adjustment policies, that aimed to control public spending. The education sector has suffered directly, undergoing major budget cuts.

Indeed, there has been a lively debate on education spending (World Bank, 2008), especially regarding some of the most educated groups, which have high unemployment rates. Someone like Bourguiba would have replied: 'It is better to have educated unemployed people rather than non-educated unemployed people.' But there were strong arguments among the leaders of modernization regarding the value of investing in education when the best-educated people emigrate abroad (Lebanon is a typical example of this situation) and where unemployment is more prevalent amongst better-trained people. There was often a focus on the inadequacy of the education system to address the needs of the labour market and on 'vocational training' (Galal and Kanaan, 2010).

However, the debate was partly misguided. It was based on global comparisons, without taking the two aspects of the 'youth tsunami' into account. The stagnation of the total of investment expenditure at a time when the number of young people increased dramatically has had serious consequences. The wealthiest turned to private education, and the middle classes to private courses; all to the detriment of the most disadvantaged.

Moreover, the education system has struggled to follow the social transformations: there has been a lack of new schools in response to demographic developments and rural-urban migration; and of new universities in smaller towns where the populations have increased; and insufficient modernization of education based on new technologies, etc.

The mismatch between training and the labour market must also be balanced by the major gap that has been created between the supply and demand of jobs, regardless of the level of training. Also, labour has to be a real market, because there is a severe lack of institutions that govern mechanisms. Jobs are found mostly through networks of friends and family, without any connection to educational structures.

In this era of the 'youth tsunami', the challenges of education are therefore acute in all Arab countries. They are even dramatic in Syria, Yemen and Libya where war has led to a mass exodus of young people away from education.

The issue of the participation of women

While the human potential represented by the youth of the population struggles to find expression in terms of economic development, the situation is even more serious for the potential of women.

It has often been argued that cultural considerations, particularly those related to Islam, explain the low participation of women in the labour market in Arab countries. At around only 20%, this rate is the lowest in the world. However, this interpretation has been challenged (Aita, 2009) by the observation that participation rates are higher in other Muslim countries, and that the low rates were in particular due to rural-urban migration. Women work in the fields, especially when men are engaged in seasonal or circular migration, and it is not until they eventually migrate to the crowded suburbs and cities on a permanent basis that they no longer engage in economic activity. And it has often been observed that women have a greater propensity than men to choose administrative and public sector work. These sectors account for a large proportion of new job opportunities for young women, especially educated ones - up to 50% in some countries - although they are rare because of budget restrictions.

Also, the average age of those getting married for the first time has increased to 28 in some countries. This points towards the fact that young women are being discouraged from working due to a lack of employment opportunities and non-compliance with labour rights.

Urbanism and land-use planning

These major demographic and social changes have had a significant impact on the development of cities and territories. New migrants have crowded themselves into the peripheries of major cities in informal settlements that are becoming increasingly numerous. It has not been possible for public utilities (water supply, wastewater collection, electricity, telephone, etc.) to keep pace with the growth in construction, which is often illegal and lacks any master plan; giving rise to real slums. For example there are now twelve million people living in Cairo; around six million in Baghdad, Khartoum and Riyadh; three million in Sana'a in Yemen, where the population is growing at 5% annually (!). Even cities like Hama (Syria), Marrakech (Morocco), Medina (Saudi Arabia), Dubai (United Arab Emirates) already exceed one million inhabitants.

The management of urban cities as places of social and economic life has thus become a major issue (UN Habitat, 2012). It is noteworthy that the first Euro-Mediterranean cooperation project, launched in the framework of the Union for the Mediterranean, is a wastewater treatment project in Cairo, which is an issue that concerns the city's municipality. Of course, the main impact of this project is on public health; but all other social and economic development matters are contained within the issue of urban and land-use planning.

The Arab Spring has highlighted these issues. The Tunisian, Egyptian and Yemeni revolutions originated in the urban peripheries, which marched to occupy the public squares in the hearts of their capitals. The Battle of Aleppo that was waged by insurgents, was a military conquest of disenfranchised youth from satellite towns and disadvantaged districts against the metropolis of the middle and upper-classes. Conversely, the turmoil in Libya has seen a particularism of cities, reviving the models of the city-states of antiquity. Some trends in national identity have also awakened in Yemen, as well as in Kurdish-majority regions of Syria, raising the issue, just like in Iraq after the US invasion, of the internal cohesion of the Arab states derived after independence.

The development model of the past fifty years is highly centralized. The heart of economic growth is in the capital cities, along with two or three smaller cities. The centre is globalized. The few industries are located in the surrounding area, and water and energy is brought there at great cost and at subsidized prices. And as this is the only place of employment creation, it is the centre which attracts migration. Satellite cities begin to grow in its vicinity, as property in the centre is essentially a primary source of economic rent. But these satellite cities are rarely served by efficient public transportation, and utilities are often failing. The regional transportation infrastructure puts a heavy emphasis on the car; this infrastructure starts from the centre and spreads out in a star-shaped arrangement. This excessive centralization is not sustainable: rampant pollution, car traffic congestion, power cuts and shortages of drinking water, etc. Moreover, it is contrary to the social history of these countries, which were built in the image of Italy or Germany: a set of city-states, each with its economic specialization and identity particularism. Social cohesion of the centre has been shaken up by recent events.

The typical example is Lebanon, a small country with a dense population. All development has been concentrated in Beirut. Going to Tripoli, the country's second largest city, is a real adventure that first involves the negotiation of huge traffic jams to get out of the big metropolis. There is no public transport between the two cities. The development of Tripoli has been neglected; its city centre is the place of religious irredentism, while that of Beirut offers the image of a globalized Dubai.

Escaping from this economic blockage, resulting from waste and inefficiency, and from the social one, that creates chronic instability, is a real dilemma. Should we invest primarily in urban transit networks in large cities or create efficient inter-regional transport networks linking not only the satellite towns to cities, but also these satellite towns to each other? How can we move from a highly centralized, but failing, mode of governance to one that is more cooperative and empowers local communities to define their own priorities? How can we develop regional production of goods and services to reduce inequalities that exist primarily between the centres and the peripheries of each country? How can decentralization, which is necessary today, be made to function, while keeping unity within each country?

These dilemmas are felt more acutely in the current turmoil. The transition period in Egypt and Tunisia has seen an explosion of informal constructions. In the advent of peace, should the half of the Syrian population that was displaced by the civil war reintegrate into the same suburbs and informal cities that have been destroyed?

Changing the development model

The upheavals of the Arab Spring have questioned the model of economic development that Arab countries have experienced, especially over the last two decades. Another model must be reinvented in a social and political context that is unstable over the long term.

The first priority today is certainly to find 'decent jobs', possibly with training, for the millions of young men and women that arrive each year on the job market. Without this, no political stability can be expected in the medium term, and the flow of refugees will continue to pour from boats onto the north shore of the Mediterranean. Everyone agrees on this priority, but not on the policies needed to achieve this objective.

The case of Tunisia is exemplary in this regard, because the issues are less acute here. The three years following the revolution were marked by a deterioration of the economic and therefore social situation. Private investment has stagnated. As for public policies, during the transition they have continued, for the most part, to address an old systemic problem: how can public spending be reduced in terms of subsidies for essential commodities, including petroleum products, in order to free up resources for public investment policy? This focus on a reform that is difficult to achieve in times of economic recession, has diverted attention away from other issues that would have enabled governments to have a margin of intervention. Thus, rentier sectors that had allowed the previous authorities to maintain their power have not been truly reformed. By this we essentially mean the telecommunications and real estate sectors. Moreover, Tunisian banks are in trouble, burdened by non-performing debts, to the tourism sector in particular. These debts, and the banking sector as a whole, must be restructured to free up resources for financial intermediation for both the private and public sectors. However, these two issues are determined by political economy considerations, which were difficult to address in the context of negotiations on the new constitution and democratic processes. Nevertheless, the focus on subsidies is particularly controversial, especially in the absence of economic tactics, even opportunistic ones, to take advantage of 'opportunities' created by other Arab upheavals, for example by taking into account the fact that Tunisia has become a refugee country for Libyans and their funds.

There was little outside assistance for the transition process. European countries, while recognizing the importance of the need for a successful democratic transition in Tunisia, have not been magnanimous. It is true that the Tunisian upheaval has taken place in a period of economic crisis in Europe. But making a difference in Tunisia would have had a much lower cost than the provision of assistance to the democratic transition in Spain and Portugal, or lower than the cost of the current support for such a transition in Ukraine. Clearly, Europe still looks eastwards, instead of worrying about its southern Mediterranean borders. The US and Japan have provided some support, notably through loans to the Central Bank. While the assistance from Gulf countries has remained low.

Assuming that the means exist, which public policy should be designed to address the first priority of youth employment? The case of the Spanish transition to democracy can be an example. Two major axes were its pillars: land-use planning through large infrastructure projects and the reform of local governance, allowing for more effective decentralization. These pillars must be priorities for future development.

Land-use planning could enable the better integration of the population and economic production (inclusive development) by facilitating the geographical mobility of employment and capital within each country. Neighbourhoods and informal cities must become true living spaces, or more organized living spaces must be developed. But this major project cannot be developed today in a highly centralized way, as has been done since independence. It can only be negotiated and realized in discussion and partnership with local societies and actors, who must build their own local governance structures and put forward their priorities. This is one of the main missing links in the development model that has followed independence.

But the development of decentralization is not easy in times of social and political turmoil. In Libya, Syria and Yemen, separatist tendencies are emerging, as well as movements to eradicate borders. Decentralization can only be carried out by a stable central government, based on a real social consensus, ensuring the cohesion of the country through the physical links of the infrastructure.

Thus, the decentralization reform has been established in Tunisia's new constitution. However, this reform has to wait for the end of the political negotiations in Tunis, the capital. The land-use planning scheme also awaits the stabilization of state institutions and... financial resources.

Finally, there is little chance that all this could be implemented without a regional integration perspective that is stabilizing and mutually beneficial. However, the Arab integration schemes, or even those of sub-regional cohesion (such as the Arab Maghreb Union) are more blocked than ever. Furthermore, differentiation is widening between the oil countries of the Gulf Cooperation Council (that are fairly well integrated) and other countries that are much more populated and suffer with employment and development problems. In the region it is as if capital and labour had been separated. New modes should be designed to encourage these elements to be brought together again.

Integration should be rethought between the two sides of the Mediterranean. Europe has a vital interest in a return to stability of the southern Mediterranean coast. However, in nineteen years of the Euro-Mediterranean partnership, there has been little effort dedicated to the labour market. And it is clear that those who have focused on institutional reforms are now suffering the after-effects of the Spring. The so-called 'neighbourhood' policy must be rethought because Arab and European Mediterranean countries are not only neighbours but share a common history. A dimension must be integrated that fosters sub-regional cooperation in the South, and partnership between regions in different countries. Indeed, Europe is also a Europe of the regions of the countries that constitute it. And it is in this context that we should consider structural funds that would help decentralization in conjunction with land-use planning. Also, in the same perspective, Europe should merge its 'partnerships' between Gulf Arab countries and the others.

The Arab countries are today living through a turning point in their history and development. This turning point is materialized by an unprecedented crisis, which has not yet seen its full development. But it also presents an opportunity, for Europe as well. The gap cannot widen further across the Mediterranean, nor between the Mediterranean and the Gulf.

A young and growing population

Since independence the Arab world has experienced major population growth that has led to a catching up in populations between the two sides of the Mediterranean. The economic context however remains very different.
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Tomorrow's demographic challenges

The Mediterranean will in future be dominated by demographic heavyweights (Egypt, Iran and Turkey). This evolution means that equivalent economic development is crucial.
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