Jan. 17 (Bloomberg) -- The violent ouster of Tunisia’s Zine El Abidine Ben Ali last week may undermine rulers across the region who share his authoritarian regime model.
The rising living standards Ben Ali delivered during 23 years in power helped blunt resentment at his family’s wealth and his habit of throwing critics in jail, according to analysts including U.S. diplomats who wrote a cable published by WikiLeaks in December. The month-long protests in Tunisia initially targeted increasing food costs and unemployment, showing how rising global commodity prices and struggling export markets have made it harder for leaders such as Ben Ali to placate their growing populations.
By the time Ben Ali fled Jan. 14 after at least 78 deaths, the protests had morphed into an uprising against what his opponents saw as the political ills of his government: nepotism, corruption, repression of critics and human-rights abuses. Such charges are routinely leveled by opposition movements in other North African nations including Egypt and Algeria.
“Events in Tunisia have certainly given food for thought for regimes in the region,” said Hugh Roberts, a Cairo-based North Africa specialist and author of “The Battlefield: Algeria 1988-2002.” “The thinking is that if it happened in Tunisia, it could happen elsewhere.”
Protests in the capital, Tunis, continued today as about 1,000 people including union leaders gathered to demand that Ben Ali’s party be excluded from any successor administration. Prime Minister Mohamed Ghannouchi, a Ben Ali appointee, said on state television today that he’ll keep the post in a provisional administration that will include at least two opposition leaders, pending elections to be held under international supervision. Political prisoners will be freed, he said.
Ghannouchi and his allies are “the other face of the former regime,” Taieb Bouaicha, former secretary-general of the General Union for Secondary Education, said in an interview at the rally.
Investors in Egypt have shown they’re alert to the risk of contagion. The benchmark EGX30 index fell the most since June, declining 2.4 percent to extend a 1 percent drop yesterday. Last week’s 13 percent slump on Tunisia’s Tunindex was the biggest in at least a decade, Bloomberg data showed, and the bourse today suspended trading and said it will resume tomorrow.
‘Might Happen Here’
“People are selling because they think the same might happen here,” said Alia Khalil, a senior equity trader at Cairo-based Pharos Holding for Financial Investments.
Egypt, Algeria and Libya all rank in the bottom half, well below 65th-placed Tunisia, in the latest survey of corruption perceptions in 180 nations by Berlin-based Transparency International. All Arab countries except Lebanon and Iraq are classified as authoritarian regimes in the Economist Intelligence Unit’s 2010 Democracy Index.
Economic challenges, especially unemployment, are also shared across much of the region. The International Monetary Fund estimated in an October report that Tunisia’s jobless rate reached 13.2 percent last year, rising above 15 percent among university graduates.
“The risk of a spillover of Tunisia’s crisis to the rest of the Middle East and North Africa is not negligible,” Barclays Capital wrote in a report today. “Unemployment rates in the region, notably among the youth, are some of the highest in the world, while inflation is running at elevated levels, and political freedoms remain generally constrained.” Barclays forecast “some re-pricing in countries where political stability is considered fragile.”
Creating jobs to ease social tensions is made harder by the debt crisis dragging on economic growth in the European Union, which is “by far Tunisia’s largest partner in terms of exports, tourism receipts, workers’ remittances and foreign direct investment,” the IMF said.
World food prices are adding to the pressure, rising to a record in December on higher sugar, grain and oilseed costs, according to the United Nations. They have exceeded levels reached in 2008, when skyrocketing food prices sparked protests and riots in Egypt and almost three dozen other nations.
The 82-year-old Egyptian President Hosni Mubarak, in power for three decades, hasn’t said whether he’ll seek re-election when his term ends this year. The government in October announced additional spending of as much as 3.5 billion pounds ($600 million) to cover the country’s rising food bill, increasing the strain on a budget deficit that widened to 8.1 percent of gross domestic product in the fiscal year that ended in June.
‘Uprisings Are Contagious’
“The people cannot live according to the same old model at a time when the ruling regime is unable to fulfill the need of its citizens,” Osama El-Ghazali Harb, an Egyptian opposition leader, wrote in an editorial yesterday in Al Masry Al Youm newspaper. “Fortunately, revolutions and popular uprisings are contagious, and this is a historical fact.”
Energy companies are among those with a stake in the region’s stability. BP Plc is the biggest investor in Algeria, according to its website. The company is seeking to raise $21 billion to pay for the cleanup in the Gulf of Mexico, and Algeria’s government said last month it’s examining the possibility that assets in the country may be part of that sale.
The conditions that sparked revolt in Tunisia aren’t entirely replicated in its neighbors, which allow disenchanted publics more room to vent their anger, lessening the risk of a political chain-reaction, said Amr Hamzawy, Beirut-based research director and senior associate at the Carnegie Endowment for International Peace.
“The security grip and the repressive apparatus of Ben Ali were unmatched,” he said. “Egypt, Morocco and Algeria have always had a degree of freedom of expression and freedom of association.” Tunisia also has a bigger and better-educated middle class, which led the confrontation with Ben Ali, he said.
Persian Gulf countries mostly have more financial firepower to subsidize living standards. While Saudi Arabia and the United Arab Emirates both rank below Tunisia on the EIU’s Democracy Index, they hold more than 27 percent of the world’s oil reserves between them.
Some of Tunisia’s neighbors are taking steps to forestall popular unrest stemming from economic woes. Jordan and Libya have cut the prices of basic food stuffs, and Syria yesterday doubled heating allowances for 2 million state workers.
Other nations are experiencing protests too. In Algeria, three people were killed and 420 injured in clashes with police this month during rallies against high food prices and a lack of public housing. Three men set themselves on fire, emulating the Tunisian university graduate whose self-immolation a month ago began the wave of demonstrations that culminated in the fall of Ben Ali, El Khabar newspaper reported. An Egyptian set himself on fire in front of parliament today, Al Masry said.
Protesters rallied in Jordan yesterday for the second time in three days demanding the resignation of Prime Minister Samir Rifai because of falling living standards. In Sudan, opposition parties in the north have called for mass rallies following the example of Tunisia to protest austerity measures that increased fuel and sugar prices.
Regional rulers must take political measures as well as economic ones, U.S. Secretary of State Hillary Clinton said last week. They need to go beyond the “timid” steps they have taken so far to broaden public participation in “stagnant,” political systems and alleviate the frustration of youthful populations, she told a conference in Qatar.
The U.S. numbers Saudi Arabia and Egypt -- countries where the main opposition to regimes comes from Islamic groups critical of their alliance with America -- among key supporters in a region where it’s seeking to halt Iran’s nuclear development and broker peace between Israelis and Palestinians.
For all the similarities and distinctions among the region’s political and economic systems, predicting which of them -- if any -- will follow Tunisia into turmoil is almost impossible, Carnegie’s Hamzawy said, noting that a month ago, “nobody had any expectations” of revolution in Tunisia.
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