x Abu Dhabi, UAEWednesday 26 July 2017

Around the world, people act out economic anger

Economic systems around the world, both controlled and market-driven, have left millions struggling, even desperate. No wonder people in so many places are expressing their anger.

If all politics is local, all economics is global: this week's panic on stock markets knows no bounds. Rage at economic systems that offer them little hope of a better life has driven millions of ordinary citizens onto city streets from London and Cairo to Santiago and Tel Aviv.

The faltering economies of the US and Europe have also changed the geopolitical rules, dimming the prospect for western military intervention in global trouble spots and hastening the end of existing expeditionary deployments in Iraq, Afghanistan and Libya.

The scale and social consequences of the emerging crisis became visible this week as share prices plunged, while the streets of one of the world's great financial capitals burnt. Sure, the events in London were triggered by police shooting a young black man, but the scale of the outrage - and its character, in the form of leaderless mobs of looters with no political demands - reflected the alienation of a whole generation of inner city youth, who have no stake in the system and nothing to lose by breaking its rules. (The rioters also showed the power of mobile phones and social networking in the hands of a self-conscious insurrection.)

As nihilistic violence raged, City of London investors joined their American, European and Asian counterparts in a massive sell-off that wiped out billions of dollars in capital amid growing recognition of the scale of Europe's debt crisis and the depths of the US slump.

The onset of austerity had sparked protests across Europe through the spring, and those are likely to be intensified by deteriorating economic prospects.

Even Israel, whose leader boasted in February that his was the only country in the Middle East to escape protests, has been shaken out of its complacency not by the prospect of a Palestinian move for statehood, but by the cost of living.

Israel's government has cut taxes on the wealthiest - to whom most of the benefits of the recent economic boom accrued - and services to those most in need. As housing costs increased six-fold in just two decades, it has become clear to many that while the state continues to fund and subsidise much of the settlement enterprise, the social-democratic communal spirit that dominated Israel's first three decades has given way, within the 1967 borders, to the predatory capitalist ethos championed by Mr Netanyahu's party.

The result is hundreds of thousands of people marching for social justice (though without addressing the occupation), and threatening the survival of Mr Netanyahu's government, in self-conscious emulation of the Egyptian rebellion.

Of course, it was the same tinder of economic despair that ignited the Arab Spring - a whole generation confined to economic circumstances so desperate that casting off the shackles of authoritarianism was a matter of necessity, even survival, for millions.

But getting rid of Hosni Mubarak has not solved, or even begun to address, the sources of Egypt's economic despair. Forty per cent of Egyptians live on less than $2 a day; even those with steady jobs are struggling to survive as prices rise.

While the political debate swirls around issues of justice for Mr Mubarak and his cronies, Islamists vs secularists, the role of the military and electoral arrangements, the economic crisis may be escalating. Unemployment has risen, and Egypt's foreign currency reserves have been depleted.

That's a precarious position for a country that imports half of its food. The military government is borrowing from Arab states and hopes to head off crisis by direct payoffs to working people (as Arab strongmen have long done).

The economic crisis that swept away Mr Mubarak and Zine El Abidine Ben Ali of Tunisia may yet threaten their successors. The GDPs of Egypt and Tunisia - and of Jordan, Lebanon, Morocco and Syria - are projected by some estimates to shrink by 0.5 per cent this year. And if economic despair prompted Egyptians and Tunisians to stand up to dictators willing to use violence against dissenters, it's hard to imagine them sucking it up at the behest of ostensibly more accountable regimes.

The global downturn may have helped Libya's Muammar Qaddafi cling to power, by setting strict limits on the resources Nato was willing to commit there. But the burden on all Libyans of a war estimated to have cost the country $50 billion so far has been heavy and will exacerbate post-war tensions.

Syria's President Bashar Al Assad, too, may be spared foreign intervention as other priorities now make western leaders more cautious.

But the turmoil currently gripping the country could see the economy shrink by as much as 3 per cent, scuppering hopes of attracting the foreign investment essential to help Syria reverse its massive youth unemployment. Bashar Al Assad is depleting his country's reserves to shore up his power, but the effect of a deteriorating economy will not only spur further protests, but will also prompt some of the business elites that have traditionally backed the regime to begin considering alternatives.

So as the looming global economic winter casts a chilly shadow over the faltering Arab Spring, it dims the prospects for foreign intervention, but also exacerbates the pain that spurred people to rebellion in the first place. The one difference may be that just as the stock market collapse crossed most national borders this week, the "contagion" of rebellion, too, is spreading far beyond the Arab world.

 

Karon is an analyst based in New York. Follow him on Twitter @tonykaron