The deterioration of the economy threatens the chairs of Arab leaders in these countries!

Yemen News: Shahara Net – Director

Saudi ministers ended their optimistic vision of Saudi Arabia's economic prospects for 2019 at a conference in Riyadh last December, until the surprise of a man of 39, business sitting in the audience.

Abdul Aziz al-Ajlan, owner of a large garment company, and after congratulating the officials for their expectations, politely explained the extent of the point of view of those responsible for the truth. "Many SMEs are closed, we see companies firing Saudis."

Low crude prices have affected four years of the Saudi economy – the largest economy in the Arab world – and other oil exporters, adding to the region's hardships since 2011, says writer Ala Shaheen. The revolutions of the Arab Spring swept the Middle East, overthrowing some ruling regimes and destroying economies. Most oil-rich states in the Gulf have managed to overcome the worst and have spent a lot of money fighting disorders.

Now, four years after the fall in crude oil prices, these countries have begun to face financial challenges. The International Monetary Fund ranks the Middle East and North Africa among the worst regions in the world in terms of economic performance since 2011, similar to Latin America. The IMF predicts that the region will be unique for this title in the coming period.

The author points out that the leaders of the countries of the region are facing similar problems, whether they are rich or poor. This is the high youth unemployment rate, the increasing use of debt and the government's inflated payroll. These leaders face difficulties in implementing long-term reforms, as every painful step in the reform process may provoke public discontent.

Regional leaders may see the worst-case scenario unfold in Syria, Libya and Yemen, where instability eventually led to civil war. Addressing these economic challenges "is politically costly," said Alia Moubayed, general manager of investments for the Middle East at Jefferies International in London. In addition, Arab governments – especially the Gulf states – do not have skilled bureaucrats capable of carrying out technical reforms, she said.

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To overcome this problem, many of these countries are seeking outside help. For poor countries, this often means the IMF, which has done a lot in the region since the Arab Spring. The International Monetary Fund has lending to Egypt, Iraq, Jordan, Morocco and Tunisia, and the IMF is subject to the austerity of its funding programs, which, according to its officials, is wrong.

Tens of thousands of Tunisian officials went on strike in January demanding higher wages and protesting cuts in spending. The General Union of Tunisian Workers accused the government of committing the great sin of being "more receptive" to IMF conditions than Zine El Abidine Ben Ali, the first dictator overthrown by the revolutions of the Arab Spring. Prime Minister Yusuf's response to the demonstrators was that to increase their salaries, the country had to borrow more.

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Egyptian economist Samir Radwan, Egyptian prime minister after the January 25 revolution, understands what this type of political turmoil means. He added that, as most young citizens demand swift and immediate change, Arab leaders "do not enjoy the luxury of time". "When I walk down the street, people tell me that if they can not get anything now, they will not be able to get it later." There is a lack of confidence. "

Radwan remained in office for less than a year and reached a preliminary agreement for a loan of $ 3.2 billion from the International Monetary Fund (IMF), but the Egyptian military rejected the $ 1 billion. because he did not want to increase the public debt. But after five years of chaos and the coming to power of another military, Egypt has recorded a large dollar deficit and ended up borrowing $ 12 billion from the International Monetary Fund. Egypt had to stop supporting its monetary part of the loan agreement, which led to a drop in the Egyptian pound and a rise in inflation of over 30%.

In Saudi Arabia, there is enough money from oil for the kingdom to need IMF loans. However, foreign consultants were invited to prepare plans for economic change and faced the same type of criticism for the development of rigid systems that were not designed specifically for the Kingdom. While demonstrations are banned in Saudi Arabia, Saudi leaders are still exposed to popular reactions, especially after the Gamal Khashoggi crisis. The Saudi writer and critic killed government agents, angering the kingdom's allies and questioning the current stability of the work of its current leader, Crown Prince Mohammed bin Salman.

The Saudi Crown Prince, the architect of the reform proposals aimed at removing the dependence of the Saudi economy on oil revenues and government sponsorship, defended his grand ambitions in an interview with Bloomberg on October 3rd. "If the ceiling of your ambitions is low, you have an easy goal, which means that no one will try to do it." But after issuing new taxes and reducing subsidies in early a bit of discontent with social media for the Saudi government to return to normal, pledging billions of dollars in aid to offset this austerity.

Some economists believe that reforms such as the one Prince Mohammed bin Salman wanted to implement should have been long overdue. A study by the International Monetary Fund found that countries are more successful in reducing their dependence on oil when they try to do so as oil revenues rise, confirming the principle that the best time to set the ceiling is when time is clear.

According to the author, even the rich Gulf governments have suffered from a large budget deficit since the fall in oil prices. It is true that these governments do not borrow from the International Monetary Fund, but increasingly exploit the global bond markets to fill the gap. In general, countries in the Middle East and North Africa (MENA) have accumulated their external debt faster than their counterparts in other emerging markets since 2014, according to the International Monetary Fund.

Towards the worst

In the current tumultuous climate, some countries have had bad impressions, particularly with fragile public revenues, the author said. Bahrain, the only Gulf country to have organized large-scale protests in 2011, came close to a debt crisis last year and had to resort to Saudis, who set up a $ 10 billion bailout package. of dollars. The war in Syria has also destroyed the economies of neighboring countries, Jordan and Lebanon – one of the most indebted Arab countries – after the arrival of millions of refugees.

Latin American countries share many of these challenges with the Middle East, with the exception of wars. But there is a radically different difference: in most Latin countries, when people are not happy with the economic conditions, they can elect a new government to manage things differently. This has occurred in the three largest economies of the region in recent years, with marked political changes from left to right in Brazil and Argentina and from right to left in Mexico.

The conclusion of real elections is rare in the Arab world, which governs most of its kings and military leaders. Demonstrations – sometimes violent ones – were the main way to make changes. There are few signs that Middle Eastern leaders have managed to obtain until now: "It's not just about the economy, it's about meeting expectations." and to face fears, "said former Egyptian Minister Samir Radwan. Low oil prices have caused an economic slowdown in the Middle East that regional leaders can not manage or overcome.