Arab leaders were already incompetent, then came coronavirus

Arab leaders were already incompetent, then came coronavirus
Comment: Weak political and economic management will now be further exposed, as coronavirus and multiple new crises roll over the region, writes Rami Khouri.
6 min read
20 Mar, 2020
Volunteers distribute masks and gloves to a sanitation worker in Cairo [AFP]
The coronavirus pandemic, oil price plunge, popular revolutions, shrinking economies, climate change, and active wars across the Arab region are a veritable festival of tsunamis that will significantly worsen the lives of millions of citizens and further weaken some states. 

These new threats hit an Arab population already ravaged by very high poverty and vulnerability rates of 70 percent or more, alongside declining essential social services in most countries.

Incompetent or uncaring Arab governments that cannot meet and protect citizens' basic rights now grapple unsuccessfully with simultaneous crises of governance, economy, environment, health, warfare, citizenship, and even state integrity. It's unlikely they can respond effectively to the new menaces that are upon us, and we should anticipate larger-scale human suffering and displacement in the years ahead.

A 2017 United Nations-led report on multidimensional poverty revealed that 66.6 percent of surveyed Arab populations in 12 countries were poor or vulnerable, with many unable easily to access basic services like healthcare, electricity, and clean water, let alone jobs. 

The ongoing crises are increasing this figure, to somewhere around 70-75 percent of  Arabs. International officials report privately that at least 55 million Arabs need humanitarian aid, including many of the 27 million forcibly displaced by conflict.

Such studies also confirm that poor families will remain poor for several generations, due to insufficient new jobs or government interventions that can pull them out of poverty. This hopeless future is one reason why tens of millions of Arabs have demonstrated in the streets for the past year in Sudan, Algeria, Iraq and Lebanon, to oust their ruling elites and establish more effective and accountable governments.

66.6 percent of surveyed Arab populations in 12 countries were poor or vulnerable

Only a few wealthy Arab states can launch emergency programmes to revive economies or protect the most vulnerable. The United Nations Economic and Social Commission for Western Asia (ESCWA) this week estimated that the pandemic will reduce Arab gross domestic product (GDP) by at least $42 billion in 2020. Arab companies' market capitalisation decreased by $420 billion in January-March, and more than 1.7 million jobs could be lost by December.

Every economic sector that could mitigate Arab pauperisation will remain depressed, perhaps for years. Tourism, trade, energy exports, manufacturing, remittances, official aid, foreign direct investments, and others are declining, and the dominant non-energy services sector may shrink by 50 percent. The poor and vulnerable will be hardest hit.

If the World Bank, IMF or other global institutions assist, their stringent economic adjustment policies will exacerbate poverty and vulnerability, as their legacy indicates. Another UN report last year that analysed the impact of such macroeconomic reform policies in Tunisia and Egypt concluded that while they assisted some families, they increased poverty rates and inequality in many regions, promoted greater crony capitalism, and often have "severe microeconomic and social impacts."

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A new report by the respected Cairo-based NGO the Economic Research Forum and ESCWA, entitled Rethinking Inequality in Arab Countries, concludes that while Arab citizens' access to education and healthcare have improved over the years, quality in both cases has stagnated or regressed.

The report and an associated paper by Khalid Abu-Ismail, Paul Makdissi, and Oussama Safa note several big threats: Poorer countries bear a double burden of higher inequalities and deprivation; persistent and sometimes widening structural inequalities in some countries (for example, among rich and poor households); rising inequalities of income and wealth; and, national income increases that are not systematically transmitted to higher household income.

Surveyed households in Egypt "witnessed growth of less than 20 percent in their real income over a period of 25 years, while the economy as a whole grew by more than 70 percent," it said.

Also in Egypt, between 2005 and 2018 the middle class dropped from 51.5 percent to 34 percent of the population, while the poor and vulnerable group increased from 40.5 percent to 60 percent. The World Inequality Database estimates that 64 percent of pre-tax national income in the region is captured by the top 10 percent of earners, making the Arab region the most income-unequal in the world.

The poor and vulnerable majority dominates low-wage informal labour

The poor and vulnerable majority dominates low-wage informal labour, shows low productivity and labour force participation rates, and suffers weak social protections, with only 31.4 percent of Arab workers covered by social security systems.

Also vulnerable are the war-ravaged health facilities in Yemen, Syria, Iraq, Gaza, and Libya that are unable to handle the pandemic that is just starting to hit them.

Poor governance, economic mismanagement, and widespread war damage mean that the Arab rentier state in its present form, the report concludes, is "ill-equipped for addressing these multiple challenges" of declining income, growing poverty and inequality, high deficits, and weak social sectors. States that respond with more autocracy and security controls, it says, would repeat the same responses that ignited the uprisings since 2010.

Respected Lebanese professor at SOAS, University of London, Gilbert Achcar, in a new journal article On the 'Arab Inequality Puzzle': The Case of Egypt, sees Egypt as a striking example of Arab states that pursued flawed IMF-mandated economic policies and consequently now suffer extensive poverty and inequality:

"As was to be expected," he says, the economic adjustment policies "led to further and brutal decline in the standard of living of most Egyptians and a sharp increase in poverty…

Read more: How humiliation is fuelling the Arab street

"Between 1999/2000 and 2017/2018, the proportion of Egyptians living under the national lower poverty line almost doubled from 16.7 to 32.5 percent... These are the most striking results of an economic liberalisation that has mostly profited cronyism and corruption, hence provoking a steep rise in social inequality with the tip of the social pyramid getting ever richer while the lower tiers are increasingly unable to satisfy their basic needs."

Arab and international scholars who gathered in Beirut recently identified other reasons for the poor and vulnerable state of Arab populations. These included the rollback of the state in spending on social sectors alongside the increased privatisation of investment; the rentier state and its crony capitalists who tend to monopolise economic, education, and other opportunities for themselves and their friends; low productivity economies that rely heavily on energy exports; and, the inability of the state and private sectors to generate enough quality jobs to hire the millions of school graduates.

Most of these problems reflect weak political and economic management by governments, which will be further exposed now as the multiple new crises roll over the region.

The nonstop uprisings and revolutions since 2010 would suggest that turbulent days are ahead, as the existing Arab governance systems must deal with an unprecedented combination of challenges that are far bigger than the other routine national development tests that they have mostly failed already.  

Rami G. Khouri is senior public policy fellow, adjunct professor of journalism, and Journalist-in-Residence at the American University of Beirut, and a non-resident senior fellow at the Harvard Kennedy School's Middle East Initiative.

Follow him on Twitter: @ramikhouri

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.