by Lin Noueihed
The Bush administration's public enthusiasm for accelerated Arab democracy appeared to be waning by 2006. The 2005 Egyptian parliamentary election lauded by Bush had again shown the Muslim Brotherhood to be the strongest opposition force there. Washington's carefully groomed secular exiles had failed to win votes in Iraq, trounced in 2005 elections by Shi'ite Islamist groups who now dominated the government. The 2006 Palestinian elections had brought a clear win for Hamas, who had rejected the Oslo accords with Israel. By 2007, the noisy US demands for Arab rulers to accelerate democratic reforms and hold elections had shifted focus.
More emphasis was placed on empowering civil society, activists and NGOs. Arab bloggers were invited to the United States, while activists were given training and in some cases funding. Signed into law on 3 August 2007, the ADVANCE Democracy Act enshrined Washington's declared commitment to promote democracy abroad into law. Similar measures were passed through National Security Presidential Directive 58, which was signed by Bush in July 2008. Rather than pushing for change from the top, the United States appeared to settle for a longer-term strategy of empowering young, secular activists to establish the bedrock on which more stable and organic democracies could later be built. To many activists, such efforts were little more than window-dressing, hopelessly overshadowed by continued US support for unelected rulers.
Warmly welcomed when he first became president in 2008, Barack Obama changed the tone of engagement with Arab leaders and people, but his handling of the Arab Spring would suggest that the US dilemma remained essentially unchanged. How does it balance its oft-stated desire to promote democracy and free markets in the Middle East and North Africa with its often conflicting political, economic and security interests in the region? On the eve of the Arab Spring, only 20 per cent of Arabs saw Obama in a positive light compared to 45 per cent the previous year. Some 63 per cent were discouraged by his Middle East policy, compared to 15 per cent a year earlier.27
In the decade before Mohammed Bouazizi's desperate suicide sparked the 2011 uprisings, people in the Arab world had witnessed Israel's crushing of the second Palestinian intifada, marked by a spree of Palestinian suicide bombings that had shocked world opinion. They had watched Islamic extremists fly passenger jets into buildings on 9/11. They had suffered the darkest side of the US ‘war on terror’. They had witnessed the US-led invasion of Iraq in 2003, and Israel's war against Hezbollah in 2006 and then against Hamas in the Gaza Strip in 2009.
Writing after the invasion of Iraq but before Israel's war with Hezbollah, Samir Kassir encapsulated the feelings of helplessness that pervaded the region at the time. ‘The Arab people are haunted by a sense of powerlessness; permanently enflamed, it is the badge of their malaise,’ he wrote in Being Arab.
Powerlessness to be what you think you should be. Powerlessness to act to affirm your existence, even theoretically, in the face of the Other who denies your right to exist, despises you and has once again asserted his domination over you. Powerlessness to suppress the feeling that you are no more than a lowly pawn on the global chessboard even as the game is being played in your backyard. This feeling, it has to be said, has been hard to dispel since the Iraq war, when Arab land once again came under foreign occupation and the era of independence was relegated to a parenthesis.28
With the odds so stacked against them, it seemed no wonder, as the first decade of the twenty-first century came to a close, that many people in the region lived in one of two equally-depressing situations: under the thumb of authoritarian rulers, be they monarchs or presidents-for-life, or in the midst of chaos, sectarian strife and foreign meddling. It seemed to reinforce these leaders’ oft-repeated warning that their heavy-handed rule was the only thing preventing anarchy, and it seemed to underscore the helplessness felt by millions who could see little hope of change.
Arab rulers had crushed opposition parties, preventing any meaningful consolidation among their ranks and dispersing their members between jail, exile and hiding. Their repression had left opponents nowhere to gather but the mosque, breathing life and legitimacy into religious movements that would defeat weakened secularists in the aftermath of the Arab Spring. They had undermined civil society, ensuring that NGOs were under-resourced and under pressure, and limiting the role they could play after the uprisings. And they had strengthened the networks of patronage and nepotism that weakened state institutions and forced people to look to sects or tribes for protection and favours, complicating the transition to new systems of government.
This legacy of repressive policies and foreign meddling would define some of the battles that would unfold in the post–2011 era, but, as the next chapter explains, deep economic divides and inequalities were stoking just as much anger.
CHAPTER 2
Bread, Oil and Jobs
The most dangerous moment for a bad government is usually when it begins to reform itself.
– Alexis de Tocqueville1
In the spring of 2008, popular discontent flared up around the Arab world. In Morocco, protests left 300 people injured and persuaded the government to cancel a planned 30 per cent cut in the bread subsidy. In Egypt, textile workers in the Nile Delta town of Al-Mahalla Al-Kobra took to the streets to complain about high prices and low wages, burning banners of the ruling National Democratic Party (NDP) and stamping on a poster of President Hosni Mubarak. Eleven people were killed in clashes and hundreds more arrested as a wave of strikes and demonstrations around the country descended into the worst unrest Egypt had seen since the late 1970s.
A similar movement had swept through deprived parts of central Tunisia since January, a direct precursor to the 2011 protests that would snowball into outright revolt. Smaller-scale demonstrations had also taken place in Algeria, Lebanon, Jordan, Yemen and dozens of other countries around the world as the cost of basic foodstuffs skyrocketed thanks to a combination of high oil prices, poor harvests, rising speculative investment in commodities, and biofuel subsidies that discouraged farmers from growing food.
As Egyptians fought each other in bread queues and soldiers were drafted in to bake loaves, energy-rich Gulf states like the UAE and Saudi Arabia were seeking to buy up millions of hectares of farmland in Africa and south-east Asia. This was not just a strategic move to secure future food supplies, but part of a wider reinvestment of revenues from oil, which by the spring of 2008 was approaching the peak of an extraordinary price spike that showered the major exporters with a wealth that was unprecedented, even by their standards.
While that wealth allowed Arab oil-exporters to provide for their citizens on a scale that was beyond the reach of governments in Tunis or Rabat, the very same boom was eroding the living standards of families in oil-poor countries around the region. The burden of food, fuel and housing costs piled pressure on household budgets that were already squeezed by unemployment and low incomes, breeding dissatisfaction that would so readily find an outlet in 2011. The 2008 protests in North Africa and elsewhere may have been subdued by a familiar combination of arrests and concessions, but their underlying causes remained unresolved.
Every revolution has its economic roots, though they are often inseparable from the politics. They formed two of three promises made to the Russian people in Lenin's ‘Peace, Bread, Land!’ slogan in the summer of 1917. Uncontrolled inflation stoked unhappiness with the Shah's regime in late 1970s Iran. Marie Antoinette's apocryphal suggestion that her people eat cake had its origins in the bread shortages which afflicted 1780s Paris. Economic stagnation in the 1980s meant that Eastern Europe lagged behind its Western counterparts to the extent that even those who believed in socialism had lost faith in their governments.
And it was no coincidence that demonstrators on the streets of Tunis, Amman or Cairo would brandish baguettes or flatbreads as a symbol of their rage in 2011. The cost of living had spiralled in the years before the uprisings, with the poorest hit harder than most. Impressive GDP growth had failed to create anywhere near enough jobs to satisfy the legions of u
niversity graduates who entered the job market each year with expectations that could only be dashed on the rocks of unemployment or the unskilled, low-wage jobs that awaited them.
Nor was it a coincidence that most oil-rich countries in the Arab world experienced neither bread protests in 2008 nor inflation-inspired uprisings in 2011. True, none were immune from rampant inflation during the oil boom, but they had long utilized their financial resources to offset price rises and neutralize the threat of serious economic discontent among their citizens – even though other manifestations of malaise would trigger revolts in Bahrain or Libya.
The financial clout that the Gulf monarchies – especially the region's economic, political and religious giant Saudi Arabia – derive from their energy resources would carry powerful political weight in 2011. It could be seen in the six-member Gulf Cooperation Council's (GCC) decision to intervene in Bahrain, in the reaction by Washington to signs of unrest in the Gulf, or in Qatar's role in funding and assisting Libya's National Transitional Council (NTC). Long a central factor in the political economy of the region, hydrocarbons were cast by the boom into an even more prominent role.
But while the economic picture was far from rosy in many Arab countries on the eve of 2011, problems like youth unemployment and income inequality were no worse than they were in parts of Europe. There was no sudden market crash or severe budget cuts in 2010, and economic discontent alone cannot explain why the uprisings spread so quickly through the region. Unlike people in Spain or Italy, most Arabs were helpless to change their condition. They could not realistically vote out their governments or their ageing presidents, could not criticize their policies in the media and, in many cases, could do little more than try to emigrate to the Gulf or to the West, where they at least had the assurance of a job or a vote, if not always both.
The majority, with nowhere else to go, watched with growing frustration as the gap between rich and poor widened and as government privatizations appeared to benefit the ruling elites at the expense of ordinary people who were locked out of job markets and sometimes unable even to pay for a wedding.
Preferred Partners
On the eve of the Arab Spring, there was a growing sense that those ordinary people were being excluded from the benefits of economic growth, especially the sort being fuelled by big-ticket foreign investments and economic liberalization policies. The petrodollars pouring into the banks of Abu Dhabi, Doha or Kuwait in the late 2000s needed an outlet, and the foreign companies riding the global economic boom and enjoying access to easy pre-2008 credit were on the prowl for investments. With Arab investors keen to focus on their home turf in the post-9/11 world, many looked to the Levant and North Africa for new opportunities.
Between 2003 and 2008, the countries of the six-member GCC invested an estimated $120 billion in the Middle East and North Africa out of their $900 billion in total spending.2 Most of that investment came from the smaller Gulf states. At the peak of the oil price spike in 2008, outbound foreign direct investment (FDI) was $1.5 billion from Gulf leviathan Saudi Arabia, compared to $6 billion from tiny Qatar, $8.9 billion from Kuwait and $15.8 billion from the UAE.3 But, ironically, it was an oil-poor entity, the emirate of Dubai, which became the poster child for this model of large-scale investment.
Dubai's oil production might be meagre, but its ruling family had long been reaping the financial benefits of operating an investment-friendly, international city at the epicentre of the world's most energy-rich region.4 The ruling Al Maktoum dynasty wove a web of funds and vehicles to invest at home and overseas, joining other Gulf states, as well as Libya, whose relatively conservative sovereign wealth funds (SWF) now became more acquisitive. While this new wave of multi-billion-dollar spending certainly massaged foreign investment statistics in Tunis or Cairo, it did little to improve life for the average person on the street, and contributed in several ways to popular discontent in the countries that were on the receiving end.
Privatization programmes being pursued by governments around the region were one magnet for oil money. In 2006, UAE-owned Etisalat paid $3.1 billion for Egypt's third mobile phone licence, while the National Bank of Kuwait purchased Egypt's Al Watany Bank for $1 billion in 2008. The opening-up of Syria's banking and insurance sector from 2005 onwards attracted a series of Gulf banks, while privatization in Morocco's power generation sector brought investment from Abu Dhabi and elsewhere.
Shiny billboards sprouted up everywhere from Rabat to Muscat as Gulf property developers like Emaar, MAF, Damac, Qatari Diar and Sama Dubai announced grandiose new projects. Real estate was the single biggest target for Gulf investors. Between 2004 and 2010, property developments accounted for an estimated $132 billion out of a total $171 billion in FDI that poured into North Africa from West Asia (the Levant and the Gulf, plus Turkey), and for 59 per cent of all greenfield FDI projects.5
On the surface, this was a boon for countries like Tunisia and Egypt, which both received more foreign investment in the three years between 2006 and 2009 than in the 15 years between 1990 and 2005.6 But any positive effects were diluted by crony capitalist systems that ensured the benefits of foreign investment went to a small clique of businesses owned or controlled by key regime figures, people like Rami Makhlouf in Syria and Sakher al-Materi in Tunisia, who were related by blood or marriage to the ruling families. These men and their networks were ideal conduits for rulers reluctant to share profits, now super-sized by the oil boom, and looking for ways to siphon off generous commissions. A handful of businessmen attained a new level of wealth with these big contracts. They increasingly owed their fortune to the status quo and they defended the regimes more fiercely than ever, despite growing public frustrations.
Either facing international pressure to liberalize their economies, or responding to a domestic need to find new sources of income and jobs, many Arab regimes embarked on privatization and deregulation policies that were packaged as reform but were, in reality, carefully managed to ensure that the benefits and the power remained in the hands of the regime or the elite that surrounded it.
Opening up the economy to overseas trade and investment often involved offering local distribution licences, joint ventures or franchise agreements to foreign companies. It was not difficult for governments to channel these opportunities towards a favoured clique. Larger foreign firms seeking to enter new markets naturally look for powerful local partners with the financial clout and political connections to drive sales and cut through red tape. What resulted was an oligarchy of quasi-private sector companies controlled by figures related to the ruling elite.
A couple of examples from Tunisia illustrate the point. In 2009, two front-runners had emerged in the auction for the country's third mobile phone licence. The first, and the eventual victor, was a consortium of France Telecom and a Tunisian telecoms company owned by prominent local businessman Marouane Mabrouk, the husband of Cyrine Ben Ali, the president's daughter from his first marriage. The second was a joint bid by Turkcell in partnership with Sakher al-Materi, the husband of another Ben Ali daughter. Materi was the scion of an established Tunisian business family and his union with the Ben Alis had propelled him to such rapid wealth and status that some speculated he was being groomed as a potential successor to the ageing president.
Meanwhile, the local dealerships of Fiat, Ford, Jaguar, Volkswagen, Audi, Seat, Land Rover, Hummer, Porsche and Mercedes were all controlled by Materi, Mabrouk or Belhassen Trabelsi, the brother-in-law of Ben Ali.7 Big companies that did not play by the rules found it tough to make inroads. McDonalds’ refusal to grant an exclusive licence to a regime-connected partner, for instance, torpedoed its planned entry into Tunisia.8
High-level corruption was no secret. It was fodder for juicy gossip on the street and details of corrupt dealings occasionally found their way into the press, particularly when they involved a regime insider who had fallen out of favour. In the spring of 2010, state-controlled newspapers in Libya carried stories of a major corruption scandal at
the Economic and Social Development Fund (ESDF), a sprawling state-owned entity where senior managers had allegedly been siphoning off millions in illegal commissions. Dubai's ruler, Sheikh Mohammed bin Rashed Al Maktoum, led something of a witch-hunt against corruption in government-owned developers and financial firms in the wake of the property market collapse in 2009.9 High profile Emiratis, not just foreign executives, were sacked and arrested as inefficiency and graft left these firms unable to withstand a downturn while the government was scrambling to pay or write off their debts.
When WikiLeaks released 90,000 US embassy cables in December 2010, it simply confirmed what people had been gossiping about for years. Some of the more potent material was penned by Robert Godec, the US ambassador in Tunis between 2006 and 2009, whose dispatches often carried sarcastic headings such as ‘Yacht Wanted’, referring to the alleged theft of a French businessman's yacht by a close relative of Leila Trabelsi, or ‘Mob rule’, which described the mafia-like behaviour of the Tunisian regime. A July 2009 cable included the following passage:
And corruption in the inner circle is growing. Even average Tunisians are keenly aware of it, and the chorus of complaints is rising. Tunisians intensely dislike, even hate, first lady Leila Trabelsi and her family. In private, regime opponents mock her; even those close to the government express dismay at her reported behaviour. Meanwhile, anger is growing at Tunisia's high unemployment and regional inequities. As a consequence, the risks to the regime's long-term stability are increasing.10
Another leaked cable, written in December 2009, reported other goings-on in Morocco. The source quoted in the report accused the palace of using state institutions to ‘coerce and solicit bribes’ and asserted that ‘contrary to popular belief, corruption in the real-estate sector during the reign of King Mohamed VI is becoming more, not less, pervasive.’ This trend, the cable's author said, ‘seriously undermined the good governance that the Moroccan government is working hard to promote’.11