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WASHINGTON, Oct 12 2012 (IPS) - A failure to focus on small-scale economics could be the most significant obstacle to stability in North Africa in the aftermath of the Arab Spring, economists, diplomats and development workers warned here on Friday.
A year and a half since popular revolts led to a historic wave of pro-democracy optimism, the political transitions in Arab Spring countries remain beset by sectarian factionalism and rusty or nascent governance institutions. Yet such issues are being further hindered by the stuttering global economy, particularly in Europe, and a lack of focus by policymakers on the informal sector.
“Remember, almost all the self-immolators during the Arab Spring uprisings were informal-sector actors,” William Lawrence, North Africa director with the International Crisis Group (ICG), a watchdog, said in Washington on Friday.
“Until these governments stop seeing the informal sector as the enemy, and until they decide to turn to this sector for taxes and sustainable jobs, you’re going to have a terrible economic situation in all of these countries. Instead, we’re seeing the exact opposite, a clampdown on the informal sector.”
One key example in this regard is Algeria, the largest country in North Africa. Here, the informal sector has doubled in size over the past decade; according to official figures released in July, it now stands at nearly four million.
“Now, the new government is trying to do away with the informal sector entirely, saying that it is going to be eradicated by next July!” Yahia Zoubir, a professor with the Marseille School of Management, said at a daylong conference on the Maghreb, or northwestern Africa, here on Friday. “If there’s no substitute for that, and if the economy in general continues like this, we’re in for trouble.”
Zoubir says that such warnings would apply to Algeria’s neighbours as well, including Libya and Tunisia.
“The free market cannot create rural jobs; the solution is not going to be in agriculture,” Lawrence says. “Today, a major source of employment is not the private sector, which needs to perform better; it also isn’t public sector, which needs to perform better.”
Instead, he says, it’s the informal sector and the small and medium enterprises that are providing the critical bulk of work in these countries.
Old elite dominance
Such policy advice flies in the face of both the traditional cronyism that has dominated North African countries for decades, as well as the directives focused upon by international finance corporations. Currently, for instance, the World Bank is emphasising the importance of large companies in creating jobs and spurring economic growth, as such companies typically dominate exports.
But Mustapha Nabli, the former governor of the Tunisian Central Bank, suggests caution in this regard.
“Exports are only part of the story,” he said, speaking at the Center for Strategic and International Studies (CSIS), a Washington think tank, on Friday. “You have the domestic market as well, and there is a tremendous amount of dynamism for exports coming from small and medium enterprises.”
Moving away from the elite dominance of the private sector was also an important facet of the Arab Spring unrest that began in Tunisia, Nabli says, but this is a point that has gotten overlooked as the political transitions have progressed.
“The old regime in Tunisia was trying to control all of the private sector, and this was one of the reasons for revolution in Tunisia,” he says. “When the youth revolted, it was clearly about jobs but also about corruption, about the corruption that was endemic in the private – not the public – sector.”
Yet even as the countries of North Africa and beyond work to consolidate and bring order to their own domestic situations, however, developing countries across the globe are increasingly being buffeted by the austerity measures being imposed in Europe and the general downturn in the world economy.
Today, Nabli says, the “engine of growth” across North Africa “has the blues – it is not ready to take risks. The big international firms are waiting – not ready to move.” While the economies of the region largely weathered the downturn for many months, Nabli says that starting early this year the situation changed, with massive job losses having since transpired.
“Europe is really destroying jobs, so you need to help fix Europe,” he says. “The U.S. should be doing something but we’re not seeing the U.S. do much. But realise that by fixing Europe you’re helping us – this will help the democratic transition, and by bringing stability you can create jobs. You have to get your priorities right.”
Indeed, while the U.S. government had begun focusing on policies aimed at economic stability and jobs creation, the focus in recent years has shifted increasingly to counterterrorism. This is a trend that appears only to be strengthening with the deterioration of the chaotic situation in northern Mali, coupled with the recent attack on U.S. diplomatic installations in Libya that killed a U.S. ambassador.
On Friday, U.S. Secretary of State Hillary Clinton publicly addressed the Libya attacks head on for the first time.
“Recent events have raised questions about what lies ahead for the region … scenes of anger and violence have led Americans to ask what is happening to the promise of the Arab Spring,” Clinton said at CSIS.
She noted that the United States is currently “stepping up counterterrorism efforts”, particularly aimed at Al Qaeda in the Islamic Maghreb, a group Clinton has recently linked between strongholds in northern Mali and the Libya attacks.
Also on Friday, the United Nations Security Council approved a resolution that could pave the way for a foreign military intervention in Mali, requesting a detailed military plan from U.N. Secretary-General Ban Ki-moon within 45 days. Although Washington has been tentative on supporting a full military intervention, in recent days U.S. officials have stated that the recent military success in Somalia could provide a model for dealing with the Mali situation.
Yet ICG’s Lawrence worries that Washington “tends to overemphasis counterterrorism”. He notes that U.S. policies are already highly unpopular in northern Africa, and calls for a more holistic response – “economics first, security second, justice third”.
Putting two of the region’s largest unemployed groups – women and youths – to work on their countries’ problems would certainly be one place to start. North Africa has the lowest rate of labour participation among women anywhere in the world – and the highest rate of unemployment among those women who are in the labour force.
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