The Revolution Blows Up
Ferguson, Niall, Newsweek
Byline: Niall Ferguson
Egypt's stock market is tanking and its rich are taking their money to Zurich. Will an economic plunge ruin the Arab Spring?
I recently sat at the desk where John Maynard Keynes wrote The Economic Consequences of the Peace, his coruscating 1919 polemic against the Versailles Treaty. I asked myself what Keynes would be writing if he were with us today. I think the answer is The Economic Consequences of the Arab Spring.
The point of Keynes's original tract was that the victors of the First World War were bungling the peace. The punitive reparations they were demanding of Germany, he argued, would plunge that country into an economic crisis. After that would come the political backlash.
"If we aim deliberately at the impoverishment of Central Europe," Keynes concluded prophetically, "vengeance, I dare predict, will not limp. Nothing can then delay for very long that final civil war between the forces of reaction and the despairing convulsions of revolution, before which the -horrors of the late German war will fade into nothing."
True, we are not demanding reparations of the people of the Middle East and North Africa. But ask yourself: what are we doing today to help them achieve a successful transition to liberty and prosperity? The answer is, not enough.
It is now nearly six months since the Tunisian street vendor Mohamed Bouazizi made himself the fuse for a regionwide revolutionary explosion. His self-immolation not only toppled Tunisian President Zine al-Abidine Ben Ali, but also his Egyptian counterpart, Hosni Mubarak. A wave of protest swept through Algeria, Bahrain, Jordan, and Syria. Rebellion turned into full-blown civil war in Libya. The same seems close to happening in Yemen.
Western journalists flocked to Cairo's Tahrir Square and wrote euphoric articles echoing William Wordsworth's lines on the French Revolution: "Bliss was it in that dawn to be alive, But to be young was very heaven!" With a blithe disregard for historical accuracy, they dubbed it the Arab Spring, an allusion to the (unsuccessful) 1968 Czech uprising against Soviet communism.
Well, it's not so blissful now, and least of all for the youthful Arabs who began this revolution.
This crisis had economic origins. Young people took to the streets because of rising food prices, high unemployment, and the corruption that pervades economic life in the region. Expensive food has been a global phenomenon in the last two years. So the key to the revolution was the disproportionately high unemployment of young Arabs and their dissatisfaction with a parasitical state. Last year 90 percent of the unemployed in Egypt were young (15 to 24). The unemployment rate among high-school and college graduates in Tunisia was 24 percent, far above the official rate.
For some countries in the region the revolution has brought an economic windfall in the form of sharply higher oil prices. The oil exporters of the Gulf Cooperation Council (Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman, and Bahrain) have thus far been earning enough from their black gold to buy off or coerce their populations into behaving themselves--though oil alone is no guarantee of stability, as is clear in Libya and Yemen. …