In 2007, as inflation rates across the Arab world, including Gulf powerhouses like Saudi Arabia, soared to record, double-digit peaks, a senior colleague of mine at Reuters News predicted many countries in the region were on the cusp of popular revolts.
At the time, I was the Gulf region’s treasury correspondent, covering news related to economic, monetary and fiscal policy. In late 2007 and during the first part of 2008, we wrote a stream of articles focused on measures taken by Gulf governments to offset the impact of rising prices on their populations. There were riots by migrant workers in the UAE over wages, and pressure mounted on policymakers to take measures to quell popular discontent.
Saudi Arabia, for one, introduced subsidies targeted to help lower income Saudis, state employees received cost-of-living allowances and import levies were lowered on various food items to stem a massive rise in inflation that took price pressures to their highest since the 1970s oil boom.
Similar measures were undertaken across the six countries in the world’s top oil-exporting region, and North African states like Egypt also weighed in, albeit to a lesser extent than the Gulf due to the their smaller financial cushions and in the case of Egypt, much larger population.
But the popular revolts we had envisaged would unfold in 2008 did not transpire. Pressure from dollar weakness and soaring cost of living dissipated quickly with the onset of the global financial crisis in late 2008. Middle East economies decelerated rapidly as oil prices plunged from a peak of almost $150 a barrel in July 2008 to just above $30 a barrel before the end of the year. Inflation rates adjusted quickly and suddenly the mounting pressure on governments to allay popular discontent eased considerably.
Yet disgruntlement did not disappear – far from it. The global financial crisis perhaps masked the boiling unrest for a short while, but it also served to aggravate grievances of Arab populations. Slower economic growth meant weaker private sector expansion across the region, frustrating the unemployment problem, and leading to a widening of the income divide. Youth unemployment in the Middle East is alarming. At 23%, according to the International Labour Organisation, regional joblessness among young people is the highest in the world.
Even while inflation rates in Egypt more than halved in 2009 and 2010, they remained in double-digit levels and concerns over unemployment, low wages and corruption continued to brew across the Middle East. Even in Saudi Arabia inflation has held almost consistently above 5%, historically high for a country where inflation averaged 0.8% between 1990 and 2006.
Mohamed Bouazizi, a street vender in Sidi Bouzid, Tunisia, was the instigator of a dramatic twist in the plot for the entire region. Bouazizi publicly set himself on fire in protest of the confiscation of his goods and harassment and humiliation by a municipal official, later dying from the injuries and inspiring a revolution that toppled Tunisian President Zine al-Abidine Ben Ali after 23 years in power. The young 26-year-old’s story resonated across the region and has served as a trigger for the popular revolts that my colleague (who also foresaw the gravity of the global financial crisis) had anticipated would take place two or three years ago.
Bouazizi shifted the popular mindset such that Arab youth no longer sought state concessions such as subsidies, higher wages or promises for more jobs. They now demand freedom of expression, a meaningful voice in politics and an end to corruption and repressive dictatorship. Successful popular revolts in Tunisia and Egypt, and the momentum building in Libya, Yemen, Bahrain, Algeria, Morocco and elsewhere underpin this new desire for genuine freedom.
It will be difficult for even some Gulf monarchies to silence the calls of their youth by throwing funds from their ample oil wealth at social programmes. This entry by a prominent Saudi blogger underpins this change in mentality: 7,000 people are supporting a call on Facebook for the kingdom to establish a constitutional monarchy, fight corruption, and improve the situation of women. Momentum will have to build more extensively before the population of 27 million (including about 18.5 million Saudis) poses a threat to the regime. But Saudi youth have plenty of reasons to be frustrated with youth unemployment of as high as 39%, as you can see in this study I authored this month.
It is virtually impossible to predict how events will unfold this year, with two regimes toppled in less than two months following decades of political stagnancy, and another appearing on the verge of crumbling amid a violent massacre by Libya’s 42-year dictator Muammar Qaddafi. As Arab youth swallow their reservations and fear of death and rise in peaceful protest, it is fast becoming clear that no dictatorship can cling to the claim it is not a “Tunisia or an Egypt”.