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Middle East Protests: Can Money Buy Peace?

by and Svetlana Milbert | March 9th, 2011 | 12:30 pm
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Protests in the Middle East continue to rage even in Egypt and Tunisia, where the ruling regimes have been toppled. Throughout the region, activists and opposition leaders are demanding an overhaul of political systems. Though generalizations are difficult, it is clear that—whether the unrest is in Tunisia, Egypt, Libya, Bahrain, Algeria, Morocco, Oman, or elsewhere—the underlying discontent derives from both political and economic grievances. Yet at time when leaders should be addressing longstanding socioeconomic discontent, too often they are placating the populace with financial handouts and economic promises. Any peace bought at this price will not be sustained unless the core issues of political freedoms and job creation are addressed.

It is difficult to predict the next uprising, but it is evident that autocratic rulers have been trying to hold on to power and maintain the status quo by offering financial incentives and inducements. At first, Hosni Mubarak, Egypt’s embattled president, believed the riots against his regime were only economic in nature, more akin to the "bread riots" of 1977 and 2008. Thus he decided to increase salaries of public sector employees by 15 percent. Clearly, this did not work to move the protesters out of Tahrir Square.

In a similar vein, Libyan leader, Muammar Gaddafi, has tried to appease Libyans with cash handouts by promising each family 500 dinars, the equivalent of about $450, which covers an average salary for a month or two. In addition, Gaddafi has decided to reduce taxes, while concentrating on fighting the opposition. Neither of these gestures convinced the opposition to give up the fight and go home. In fact, many Libyans have reportedly simply taken the cash handout and returned to the streets.

In Algeria the opposition was slightly appeased when on March 1, 2011, President Abdelaziz Bouteflika, lifted the country’s emergency law in place since 1992. In addition, Algeria, a large oil and gas producer, has announced a long-term spending plan of $286 billion on development projects. At the same time, the government maintains a ban on protests and has only vaguely promised to address corruption and undertake meaningful economic reforms. Political reforms and the rapid creation of jobs has not been part of the rhetoric of the Bouteflika government.

Other Arab leaders have taken some hesitant steps to address both economic and political issues.
In Jordan, King Abdullah II promised salary increases for civil servants and military personal. To address food price spikes, the government introduced a $425 million package of price cuts. On the political front, a new prime minister was appointed and a 26-member cabinet was sworn in with the task of drawing up a blueprint for political reform. In practice, however, the king appoints the cabinet and controls its powers, so this move was not viewed by Jordanians, and particularly the Islamic Action Front, the main opposition party, as genuine reform. For now, it seems that Jordanians are waiting for the new government to deliver on the promise of political reforms, much as the citizens are in Tunisia and Egypt.

In Bahrain, the first Gulf country to be hit by the wave of protests, the ruling al-Khalifa family has been able to quell violence by rearranging the cabinet, pardoning 308 Shi’ite activists, and promising 40 million dinars ($107 million) of aid for families suffering from soaring prices. Other proposals include giving an equivalent of $2,560 to each Bahraini family to help cope with inflation. But this has not been enough to disperse the crowds gathered at the Pearl Roundabout in Manama, who are looking for significant institutional changes and some kind of a power-sharing agreement. Currently, the opposition does not have a unified message, because a rift has opened between those pushing for greater political reform and those going all the way in calling for the overthrow of the monarchy.

Ali Abdullah Saleh of Yemen is another Arab leader who was quick to promise reforms but has not moved on delivery. The only concession Saleh has made is to promise not to run for reelection in 2013 and not to pass power to his son. He has so far not met any of the demands raised by protesters to handle unemployment, deteriorating living standards, and rampant corruption. The opposition has outlined a transition plan, but Saleh has been unwilling to begin negotiations.

Another country that seems to have missed the point of the unrest is Kuwait. The Kuwaiti royals believe that it is primarily economics, and their recent strategy has been to use windfall oil revenues to distribute wealth. So far, the Emir of Kuwait, Sheikh Sabah al-Sabah, has promised a one-time grant of 1,000 dinars ($4,000) to every citizen as part of ‘Liberation Day’ celebrations, without any political commitments. This is hardly an appropriate response to the demands by the descendants of desert nomads for citizenship rights and benefits. However, the prime minister has now been removed, one of the main demands of the opposition. Even though, by the standards of Middle East countries, Kuwait has a more democratic political system, ultimately most of the power rests in the hands of the Emir and the al-Sabah family, which has ruled Kuwait since 1756.

Oman is the most recent country to experience the upheavals. The Omani ruler joined the rest of the worried Arab leaders, and has so far presented a generous social benefits package. Sultan Qaboos bin Said increased minimum wages for an estimated 150,000 private sector employees to $520 from $364 a month and has promised to create 50,000 new state positions, including a monthly stipend of $400 as unemployment benefits. Finally, Sultan Qaboos is attempting to address key political issues by promising to give more powers to the legislative council, and has reshuffled his cabinet.

The United Arab Emirates (UAE) and Qatar have been able so far to escape widespread discontent. Both countries are large oil and gas exporters with very small populations. As such they have a very high GDP per capita and have been able to provide their citizens a very high standard of living. Still, in the wake of Arab protests, the UAE government has decided to make some minor concessions by promising to expand the electoral college, which elects representatives to the consultative federal national council. In addition, the government has just recently approved subsidies on water and electricity.

Finally, Saudi Arabia is trying to preempt political pressures sweeping the region from affecting the Kingdom by unveiling the most grandiose social benefits program so far—amounting to $37 billion. This money is to be spent on pay raises, unemployment benefits, and affordable family housing. The Saudis can easily afford to spend $37 billion on social welfare programs and subsidies, as yearly oil revenues at current international prices amount to over $250 billion. This wealth also allows Saudi Arabia to serve as a financial benefactor for other Gulf and Middle East countries. For example, it is reported that the Saudi government has offered Bahrain $10 billion to finance a jobs program, and more recently Oman has approached Saudi Arabia for a $5 billion grant. Although some reforms have been introduced by King Abdullah, Saudi youth still lack job opportunities. Youth unemployment is estimated at more than 25 percent. Worries about potential social and political unrest in Saudi Arabia, in particular in the oil-producing Eastern Province, have led to recent increases in international oil prices and sharp declines in the Saudi stock market.

Will these steps be enough to stave off discontent? The answer is impossible to predict, and no single answer would apply to each country. But it appears, at least for now, that the 2011 uprising unfolding across the Middle East is fundamentally different from the earlier "bread riots" or Islamic revolts. The new wave of change is not about ideology or only economics. Political transformation has become the battle cry of the citizenry. For too many decades bad governance has reigned in the region and regimes have been able to suppress, co-opt or buy off dissenters. As history unfolds before the eyes of the world, analysts should note that even successful revolutions like those in Tunisia and Egypt have to sort out the root causes of the protests. It is unfortunate that Arab leaders have not addressed the growing dissatisfaction, evident by public opinion, with real creative political strategies instead of temporary financial remedies.

The lesson of the recent developments in the Middle East indicates that money cannot buy you peace. At best, it can only buy you time to bring in genuine political and economic reforms. Hopefully, the political leaders in the countries will learn this lesson quickly.

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