History of the Topic
In early 2011, the countries of the Middle East went through the uprising which overthrew dictators in the region. The monarchies of Jordan and Morocco withstood the revolutions, but their governments would experience political reform. The uprising of the people was due, not only to the repressing political system and the crooked governance, but also to the high unemployment rates and the economic instability of the region.
Stability has not always been the best virtue of Middle East and North Africa (MENA) region. The combination of corruption, high unemployment, and the unequal distribution of wealth and resources, helped create the perfect conditions for an uprising. The people want to have their basic rights and to practice their duties as effective citizens, which is made difficult by the already unstable political and economic status of these states.
Tackling the issue from an economic perspective, the status of the Arab countries was not at its best, even when the countries were stable. But after the revolutions, political instability was a key player that made economies weak and vulnerable. A weak and vulnerable economy can be predicted from different angles; the following conceptual approaches show to which degree an economy can be effected.
First, some use the approach that any country that is not an “emerging economy” - an economy that is defined as developing toward becoming a more advanced one, is characterized by fast development and industrialization- as a weak economy. In simpler words, any country that is not advancing or developing its economy, is considered to be a weak and a vulnerable economy. This includes all the low-income countries. This approach of labeling weak countries is based on economic performance.
Second, is how unstable the economy is when interacting with external factors. This goes back to the exposure of the country to the risk that destabilizes its economy when exposed to foreign shocks that are out of their control. Those economies are vulnerable because their structure is weak and their industries can be easily affected by external shocks. The industrial structure of those economies is concentrated and fragile, which makes it very vulnerable to external shocks that are beyond domestic control.
Third, the other factor that leads an economy to be considered as a weak and a vulnerable one, is its structural disadvantages. Those disadvantages can be geographical, which dictate what resources you have. The natural and geographical disadvantages can be tricky as to how a nation might go about fixing them, since there is little that can be done. When it comes to the policy making, some gaps can be fixed along the way with the policies and good management of human resources.
The Libyan case:
With about 3.5 percent of the worlds oil reserve and an output of 1.77 million barrels of crude oil per day, Libya plays an important role in the oil industry. The Libyan economy relies mainly on oil, where it accounts for more than 70 percent of the country’s GDP, about 95 percent of its exports and more than 90 percent of its government revenue.
Following the protests that took place on February 17, 2011, which turned into a severe conflict later on[Lv1] , oil production fell to 22,000 barrels per day. Other sectors in the economy were affected by the conflict and by the disruption of oil production activities. Sectors like banking and production were shut down due to freezing of their foreign assets and the government not being able to access them to sell or lease. Furthermore, the Central Bank of Libya (CBL) didn’t have access to its resources and was unable to sell foreign exchange which affected the value of the Libyan Dinar (LD) in the parallel market where at a certain point of time the value of the Libyan Dinar reached as low as half of its official value.
The sudden stop of the oil production produced a loss in oil income, which reduced not only Libya’s account surplus, but also its exports and imports. Exports fell from around $49 billion in 2010 to $19.2 billion in less than a year, while imports also dropped from $24.5 billion to $14.3 billion over the same period of time. These sudden changes resulted in the drop of the account surplus from around 21 percent of the GDP to around 4 percent in less than a year.
The economic shock from the revolution was expected to be temporary and solutions to solve the economic issues were introduced. The solutions varied from policy making to reallocation of budgets, to privatization. The 2011 budget was altered to cover the fall in oil revenue, humanitarian needs, and government spending.
The economic situation in Libya was expected to recover by 2014, but it continues to be unstable to this day. Numbers show that the economic activity will recover by 2014 and get back to the normal pre-conflict phase by 2016. The Libyan government is going through reforms and trying to recover from the revolution by passing policies and taking actions that will regain their strong economic position. There is no doubt that the transition will be challenging, but to regain economic stability, the government has to work on humanitarian needs and social safety, as they produced the revolt initially.
The Syrian case:
The case in Syria differs from all of the other Arab countries in terms of what is happening in the country. States like Tunisia and Egypt have gone through revolutions and managed to come out of them with the least possible loss, where Syria is different because of its uprising of the people, which later turned into what is known as the civil war.
The civil war in Syria has set the country back decades in all aspects, particularly economically. The country is destroyed, with most of its infrastructure destroyed. The production facilities are decimated as well, and it experienced a great loss in capitol. According to the International monetary fund, (IMF) the Syrian GDP dropped by more than half of what it was before the civil war.
Not only was the GDP of the country affected, but the social and human development was affected as well. It is expected to take the country over two decades to restore its gross domestic product back to its pre-conflict position. The reconstruction of damaged infrastructure and restoring the human and social capitol will be a huge and a long lasting challenge.
Levels of poverty rose dramatically after the start of the civil war and are expected to worsen in the near future. The Syrian government is classified as a failing state, due to its inability to cater for the needs of its people. This includes the destruction of schools, hospitals and public facilities. The country is unable to respond to the needs of its people, which makes it a burden on both the people and the government.
Economic stability has not always been on the side of the Arab countries. After gaining their independence from different colonizers the Arab states worked hard to attain their economic, social and political stability. The Arab spring was an unexpected shock to the Arab world. Even though the effects of the revolutions differ from one Arab country to another on how severe and how easy it is to recover from the uprising, it still had significant effects on the economies of the Arab countries.
Some countries, like Jordan and Morocco, withstood the uprising of their people but they gone through several policies and political reforms that cater to the needs of their people, and hope to recover with as little damage as possible from the uprising. Countries like Egypt and Tunisia have managed to get back on the right track after a relatively longer period of time, compared to that of Jordan and Morocco. On the other hand, Libya and Syria suffered the most from the uprising, as it crippled their economy on so many levels, causing huge damages to the infrastructure and the resources of the countries and causing the government to fail.
Nathir is a Senior economics student who is currently taking both masters and undergraduate courses in the honors program at LAU. It is his third year in MAL and MUN in the training and development team. In addition to that he was an LO coordinator last year in MAL. He chaired the UNICEF committee in the GCI Middle School conference in New York 2015. He was an entrepreneur at the age of 18 through starting a successful business in online payments. He is now a writer and editor in many journals and newspapers published under LAU’s name. He volunteered in teaching English and Economics for refugee students in Jusoor NGO in Beirut 2015. He was a speaker in Women Leaders as Agents of Change conference in LAU Beirut 2015.
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