Saturday, July 9, 2011

Arab Spring or summer of discontent?

Protests have rekindled in Cairo’s Tahrir Square on a grand scale. Hundreds are expressing their frustration at what they see as a snail’s pace of change after the Arab uprisings that began in Tunis six months ago.

Now is a good time to take stock since Mohamed Bouazizi, the fruit seller, lit himself on fire as he was unable to see a way out of poverty. Protestors took to the streets, putting their lives on the line, and expectations were high that change would follow. But we are witnessing a dangerous reality gap of what protestors expect and what governments have been able to deliver.

Mustapha Kamel Nabli Governor of the Central Bank of Tunisia says that reality gap has widened and he is urging regional and global investors to speed into action to assist in the recovery effort.

“If we do not act now we will see failure after the success of the uprising,” said Nabli during a World Economic Forum webinar with government and business leaders.

He underlined the absolute collapse in tourism receipts, which has taken $1.5 billion out of the economy this year.

In Tunisia, we hear very little about the day-to-day struggle to sew together the fabric of society torn apart after the Arab Spring. Headline economic numbers look promising - 5% per year for a decade - but they mask real discontent in the bottom rungs of society. Now the challenge is to push through political reforms, while improving conditions and cutting red tape to attract foreign direct investment.

Unemployment, already in the double digits, will rise even faster in this period of transition, according to Masood Ahmed, director of the Middle East and Central Asia for the IMF. While policy makers and businessmen have been looking for stability at all costs, Ahmed suggests there has been almost “too much emphasis on stability in the past.” As a result, the Middle East was bypassed for Asia which offers faster growth and more open economies. (read more)