SYRIA: The economic consequences of social unrest [Video]

Editor’s note: This post is from analyst Lahcen Achy, below left, with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of Carnegie analysts, nor does Carnegie endorse the positions of The Times or its blog.

Popular protests in Syria over the last five months have caused a notable decline in the country’s economic indicators. Gross domestic product is expected to contract by 5% for the current year, after International Monetary Fund estimates had originally predicted 3% growth before the protests erupted.

The budget deficit has increased due to expanded social expenditure and shrinking tax revenues. The economic and security situation is expected to deteriorate further as the unrest continues to grow. The international community may resort to additional sanctions affecting the private companies and government institutions that form the backbone of the Syrian economy. This could throw the country into an unprecedented economic and fiscal crisis.

Tourism, which accounts for about 12% of Syria’s GDP and directly contributes more than 10% of total employment, is one of the economic sectors most damaged since the protests began. Over the last three years, Syria has spent huge sums to increase its ability to receive Arab and foreign tourists and improve the quality of services provided to them. Tourist numbers rose from 6 million visitors in 2008 to 8.5 million in 2010, an increase of more than 40%. This activity supplied Syria with about $8 billion of hard currency over the same period.

SYRIA: Crisis may hurt economies of Turkey, Lebanon, Jordan, Iraq

Editor’s note: This post is from analyst Ibrahim Saif, below left, with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

Current events in Syria are expected to impact other states economically, especially neighboring Turkey, Lebanon, Iraq, and Jordan. The first potential effect is on bilateral trade between Syria and its neighbors. Turkey comes to the fore here, since its trade to and from Syria was valued at $2.27 billion last year.

The situation in Syria affects Turkey in two ways. The first is the potentially large drop in trade volume, especially since demand for imports and Turkish commodities –- which used to be high –- has dropped sharply since the beginning of the events. Some sources estimate that trade volume has dropped between 30% and 40%, and that these percentages could drop even lower with the expiration of prior arrangements and the continued state of chaos.

Meanwhile there is an absence of desire on both sides, Syrian and Turkish, to renew these contracts before matters become clearer. During 2010, Syrian exports to Turkey were valued at $1.6 billion, while Syrian imports from Turkey were around $630 million.

ALGERIA: Postponing economic therapy is playing with fire

Editor’s note: This post is from analyst Lahcen Achy, below left, with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

In recent weeks, Algeria’s government has taken a series of steps to improve the economy and reduce public anger over its poor political and economic performance. The government amended the 2011 budget law, approving a 25% increase in public spending.

The country also launched a new round of negotiations with the European Union aimed at postponing Algeria’s obligation to lift customs barriers on European imports. Policymakers also took various measures to improve the country’s business environment and stimulate private investment.

Although these moves may suppress the potential risk of short-term popular unrest, they fail to address the structural flaws in Algeria’s economy. Its excessive dependence on global oil and gas prices, along with the absence of any credible strategy for economic diversification, present clear mid- to long-term challenges.

This failure to use available resources today to develop competitive economic activities outside the fuel sector is exposing Algeria to serious dangers in the future. If the price of oil suddenly drops below $100 — which is plausible — it will be impossible to maintain the current pace of government spending without tapping the country’s sovereign wealth fund, known as the Revenue Regulation Fund, and then resorting to foreign loans.

On the other hand, sharply reducing government spending to limit the budget deficit could fuel popular anger and throw the country into a cycle of social unrest. Even if fuel prices stay high, however, Algeria’s oil and gas reserves could be depleted within 20 years. Algeria’s leaders must therefore start now to seriously plan for a post-fuel economy. 

IRAQ: Nouri Maliki attempts to bolster his power by looking to the provinces

Editor’s note: This post is from an analyst with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

As a stalemate between the State of Law and Iraqiya coalitions continues to paralyze Iraq’s central government, Prime Minister Nouri Maliki is looking to the governorates to tilt the political balance in his favor.

In the country’s south, Maliki is attempting to defend his base from the growing popularity of the Sadrist Trend. Meanwhile, in Iraqiya’s northern strongholds of Anbar, Ninewa, Salaheddine, and Diyala, the prime minister is mounting an ambitious campaign to consolidate his hold over Iraq. By attempting to break the link between provincial leaders and the Iraqiya coalition — his main parliamentary rival — Maliki is seeking to bind the governorates to Baghdad.

Already, public demonstrations and a deteriorating security situation in these governorates have challenged the credibility of local political leaders, who came to power following the 2009 provincial election. Governors, deputy governors and heads of provincial councils in all four northern governorates have been repeatedly confronted by protesters calling for service improvements. Recent attacks targeting provincial offices in Salaheddine and Diyala have called into question the competence of police and local security officials.

The Maliki-run central government now has an opening to play a greater role in provincial affairs.

In Ninewa, central government emissaries have ridden the wave of popular discontent to call for the resignation of local authorities. The army-run Ninewa Operations Command (NOC) has openly supported protests against the incumbent governor, Atheel Nujaifi.

ARAB WORLD: Democracy uprisings should herald a new dawn of education reform

Editor’s note: The post is from an analyst with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

As the popular uprisings in Egypt, Tunisia, and other Arab countries achieve their primary goal of changing the political regime, they will soon face the urgent need to reform the education system as well as the economy.

Consolidation of political democracy and economic liberalization requires citizens who have appropriate knowledge, skills and values. As states democratize, good governance will promote quality education, an objective that most Arab education systems have failed to achieve.

Despite the rapid expansion in primary and secondary education, Arab schools continue to have high dropout and repetition rates, with graduates lacking the required skills and knowledge to compete successfully in the global job market or to pursue quality higher education.

MOROCCO: Reform as a path to a genuine constitutional monarchy

Editor’s note: The post is from an analyst with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

When King Mohammed VI announced broad changes to Morocco’s constitution in March, he signaled a shift from an absolute to a constitutional monarchy. The new, elected government that results from these changes will be accountable to parliament, have an independent judiciary, offer a more decentralized governance system, provide broader individual liberties and offer women the same chance of winning elected office as men.

The changes came suddenly. Before massive protests erupted in Morocco on Feb. 20 — part of the upheaval that has swept across North Africa and elsewhere in the Middle East — the political scene seemed stagnant; no political party was pressing for constitutional changes.

On that day, however, protesters in more than 50 Moroccan cities called to set boundaries on the king’s powers and hand over the executive prerogatives to an elected government that voters can hold accountable. The king apparently received the message, although he did not make any explicit reference to the protests in his speech.

The announced constitutional reforms open new opportunities for political life in Morocco. Seven significant suggested changes included in the reforms would do the following:

Shift executive power from the king to the prime minister. The prime minister will serve as the head of the executive branch and is fully responsible for the government, the civil service and the implementation of the government’s agenda.

In the current constitution, the prime minister is responsible only for coordinating activities among the ministers of government. With the prime minister selected from the political party that enjoys a majority in parliament, parties will need to develop their economic and social platforms.

MIDDLE EAST: 'Arab Spring' has yet to alter region's strategic balance

Editor’s note: This post is by Paul Salem, director of the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of Carnegie's analysts, nor does Carnegie endorse the positions of The Times or its blog.

Despite their sweeping repercussions for both domestic and international players, the Arab uprisings have not led to a dramatically new regional order or a new balance of power. This could change, particularly if developments in Syria continue to escalate.

While Iran has welcomed uprisings against Western-backed regimes in Egypt and Tunisia, it dealt harshly with its own protesters and has been worried about recent events in Syria. Moreover, countries that threw out pro-Western dictators are not moving closer to Iran.

Egypt's and Tunisia’s future foreign policies are more likely to resemble Turkey's in becoming more independent while remaining allied with the West. And Iran's soft power has decreased as its regime looks increasingly repressive and new models of revolutionary success have emerged in Tunisia, Egypt, and other parts of the Arab world.   

Turkey, for its part, bungled the opportunity to take advantage of this historic shift to bolster its influence in the Arab world. The Arab uprisings are effectively calling for the Arab world to be more like Turkey: democratic, with a vibrant civil society, political pluralism, secularism alongside Islam, and a productive and fairly balanced economy. However, after expressing clear support for Egyptian protesters, Turkey has hedged its bets in Libya and Syria.

EGYPT, TUNISIA: After revolutions, rising to North Africa's economic challenges

As Egypt and Tunisia move away from their former regimes, the political path seems much clearer than the economic one. Both countries are setting the foundations to shift to a democratic political regime that will give all political movements the right to participate through free and fair elections. Disagreements may surface over details. But consensus exists on the transition to a pluralist party system that derives its legitimacy from the people.

The process of economic transition, however, appears more contentious. Some observers argue for greater trade and financial liberalization and for opening up more space for the private sector. They blame the rentier economy, the prevalence of corruption and the dominance by those close to the regime for limiting real economic competition.

Meanwhile, others demand that the state intervene more in the economy. In their opinion, privatization and excessive reliance on market mechanisms contributed to a rise in unemployment, poverty and inequality between the rich minority and the deprived majority.

IRAQ: The Sadrists' golden opportunity

Editor’s note: The post is from an analyst with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

Iraqi protesters have been greeted with promises from all sides.

Prime Minister Nouri Maliki has pledged 280,000 new jobs, a 100-day evaluation period for ministries and provincial councils, and public-sector reforms. Ayyad Allawi’s Iraqiya Party has backed improvements in agriculture and electricity services. And the Kurdish leadership has even tried to respark the Kurdish national dream of annexing hotly disputed Kirkuk to stem the flow of demonstrations calling for the leadership’s reform.

But the Sadrists — the Shiite militia-turned-political-movement led by the cleric Muqtada al Sadr -- have responded most promptly to calls from most Iraqis for better services. Although he did not participate in the demonstrations, Sadr immediately pledged to hold an inquiry to survey the needs of the country’s governorates. “The Week of People’s Voices” this month presented the Sadrists as spokesmen for the Iraqi people and caretakers of their demands.

This is the Sadrists’ second strategic move recently; in December, they released Iraq from a nine-month political deadlock by giving 40 seats to Maliki’s State of Law coalition, allowing him to form a new government. The kingmakers of the new government now have the chance to become key players in the government itself by capitalizing on the ministries under their control.

In exchange for their support of Maliki, the Sadrists were granted control of the ministries of municipality, water, and housing and construction. They also temporarily run the ministry of planning. Through these positions, the Sadrists control the provision of water, irrigation systems, and the building of national infrastructure -- including much-needed housing, public buildings, roads and bridges.

Most importantly, in leading the ministry of municipality, they regulate the delivery of services such as electricity, water and sewage in each province and directly oversee the municipal manager of each provincial council. By holding most of the service provision ministries, the Sadrists have the most to gain from meeting the demands of the Iraqi street.

While the Kurdistan region seeks new leadership, most Iraqis want better services, as Iraq lacks even basic infrastructure and access to potable water is below 70% in urban areas and 48% in rural areas. The country currently produces only one-third of the general demand for electricity and the majority of Iraqi homes are without power for almost 17 hours a day.

To meet these needs, the Sadrists will most likely respond with populist measures to increase their following, especially among unemployed youth, their traditional base of support. The minister of municipality has already proposed land redistribution for all those who are unemployed and homeless.

The Sadrists could also effectively improve services, build infrastructure and generate employment opportunities in key areas such as the Shiite-dominated southern provinces of Iraq and Baghdad, where they aim to increase their legitimacy and erode Maliki’s popular support.

In Basra, the minister of water recently inaugurated the Shat al-Arab Irrigation Canal Project to tackle the problem of water shortages. A grid of roads and bridges has been planned to connect the Maysan province to Baghdad. Since the Sadrists also run the ministry of tourism, they will manage all investments generated by the flow of religious tourism in Najaf and Karbala. Priority in all project implementations will be given to Basra, Maysan, Dhi-Qar, Babylon, Diwanya, Karbala and Muthanna, as well as the outskirts of Baghdad.

While the protests in Iraq may not threaten an entire leadership, they could shift the balance of power within the ruling coalition. With both promises and targeted public policies in southern Iraq, the Sadrists could infiltrate Maliki’s strongholds -- especially Basra and Baghdad -- consolidate their popular support there, and increase their pull within the new government, most likely at the expense of Maliki’s State of Law coalition. As a result, the Sadrists could regain politically what they lost militarily in the 2007 Battle of Basra to Maliki-affiliated armed forces and emerge as a key player in the government.

During the protests, the Sadrists lobbied for the resignation of several State of Law governors and high-ranking officials in Baghdad and Basra, accusing Maliki’s administration of being lax in combating corruption. This move may turn the Sadrists from an indispensable ally for Maliki’s reelection into his chief competition. Maliki already seems to be avoiding alienating the Kurds over the issue of Kirkuk, possibly to secure them as an alternative ally.

The winners of this period of social unrest will be those who heed the call of the Iraqi street, and hold the potential to respond at the local level. The Sadrists have a golden opportunity to overshadow their past as a sectarian militia and recast themselves as populist policy makers who are receptive to the people’s demands. Whether they do so remains to be seen.

--Maria Fantappie in Beirut

Maria Fantappie is a visiting scholar at the Carnegie Middle East Center in Beirut.

SYRIA: Economic hardship feeds social unrest, says analyst Lahcen Achy

Editor’s note: The post is from an analyst with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

Syria's economic challenges are feeding the population's growing anger, which recently led to protests in the south and are creating a nationwide uprising.

Despite an impressive annual economic growth rate of 5% over the last five years, reforms to gradually shift from a state-led to a market-oriented economy, and a promising trade-diversification strategy, Syria faces critical economic and social challenges. Its poverty rate remains high, with one out of every three Syrians living below the poverty line, and social and regional inequalities are increasing.

The social contract that prevailed in the 1980s and 1990s -- in which the state guaranteed jobs to college graduates and offered free public services and cheap food for its population -- no longer holds.

Five factors are of particular concern:

First, with a steady population growth of 2.5% per year, about 250,000 job-seekers enter the labor market annually. The public sector, which employs about 30% of the workforce, has created about 20,000 jobs per year since the mid-1990s. Although the private sector has created jobs at two to three times this rate, it also has not kept up with population growth. The official unemployment rate is around 10% but one of two jobs is of poor quality, with low pay and no social protection. On the other hand, youth unemployment exceeds 30%.

EGYPT: Evaluating proposed constitutional amendments

[Editor's note: Analysts at the Carnegie Endowment for International Peace are included among contributors to Babylon & Beyond. Carnegie is renowned for its political, economic and social analysis of the Middle East. The views represented are the author's own.]

The amendment to Egypt's constitution recently announced by Chancellor Tareq Bishri's commission -- if adopted by the Supreme Council of the Armed Forces and approved by a majority of citizens in a general referendum -- will lay the foundation for constraining the near-absolute powers granted to the president by the 1971 constitution.

They are also a positive step toward administering pluralistic legislative and presidential elections before the end of the current transitional phase. Some of the proposed amendments would help rein in presidential power in Egypt by affecting the following constitutional articles:

• Article 77: Shorten presidential terms to four years and limit presidents to a maximum of two consecutive terms.

• Article 148: Constrain the president's powers to announce a state of emergency and require a popular referendum to extend the state of emergency beyond six months.

• Article 179: Void presidential power to suspend citizens' civil liberties and political rights.

LEBANON: The Special Tribunal for Lebanon’s communications problem

Editor's note: Analysts at the Carnegie Endowment for International Peace are included among contributors to Babylon & Beyond. Carnegie is renowned for its political, economic and social analysis of the Middle East. The views represented are the author's own.

The absence of a coherent and disciplined communications strategy by the Special Tribunal for Lebanon (STL) is one of the main factors contributing to the current political crisis in Lebanon.

One of the tribunal’s most serious communications problems has been the frequent leaks of information to the media — specifically, its alleged controversial plan to accuse members of Hezbollah of killing former Prime Minister Rafik Hariri, whose son Saad Hariri’s government collapsed in January. The leaks were widespread, appearing in outlets from Germany’s Der Spiegel to Canada’s CBC television. With little response from the tribunal, it appeared as an uncontrolled institution at the top. Most importantly, much of the Lebanese public believes today the highly charged information is true.

The tribunal also has lacked any real communications plan to build its credibility as a politically independent judicial body, including in the eyes of pro-Hezbollah and March 8 coalition supporters, who have doubted its credibility.

The public’s perceptions are hardly surprising. From its inception, the STL should have established itself as a new institution completely independent from the initial organization — the Detlev Mehlis investigation commission — charged with investigating Hariri’s assassination. That commission publicly accused Syria of Hariri’s murder and has received strong political backing from Western powers that have historically opposed Syria and Hezbollah.

In the extremely volatile Lebanese political environment, the STL should have better explained that its role was to conduct a thorough judicial investigation, looking at all possibilities no matter where they led. Instead, the tribunal gave the impression that it was continuing the political work of the commission by focusing only on Syria and then Hezbollah.

For example, when Hezbollah Secretary-General Sayyed Hassan Nasrallah accused Israel last August, in a TV appearance, of assassinating Hariri, the STL should have publicly expressed more willingness to explore the leads he suggested. Those leads made sense in the opinion of many Lebanese. Instead, the tribunal only asked, in a press release, for more documents, leaving the public with the impression that it did not consider the idea that Israel could be responsible for Hariri’s death.

In addition, the tribunal has missed important opportunities to clarify misperceptions about its work. In April 2009, when the tribunal’s pre-trial judge, Daniel Fransen, released the four Lebanese generals arrested after Hariri’s assassination, the public perceived this act as the tribunal’s attempt to correct its earlier mistake. However, the arrests were actually made in 2005 by the separate investigation commission. The release could have been used positively to remind the public that the tribunal disapproved of the commission’s decision to make the arrests shortly after they occurred.

These message mistakes, the communication strategy inconsistencies and the constant bickering among the STL’s communications staff, have caused many senior members to leave. They have also undercut the tribunal’s reputation — the exact opposite of what a communications strategy is intended to do. And they have contributed to rising tensions as Lebanon eagerly and nervously awaits the tribunal’s findings.

-- Nadim Hasbani in Beirut  

Nadim Hasbani is communications director at the Carnegie Middle East Center in Beirut.