The Arab spring one year on

This is my latest Perspective column for Fund Strategy.

The Arab spring that erupted late last year reintroduced the concept of political risk to emerging economies. For many years western investors were almost solely interested in the business and market prospects of the countries in which they invested. They paid little attention to the potential for political turmoil because, on the whole, developing countries were stable.

Such stability appeared particularly pervasive in the Middle East. For many years the Arab countries, republics as well as monarchies, were ruled by strong, autocratic leaders. Western experts often talked of an “authoritarian bargain” in which Arab citizens eschewed political rights in return for basic welfare provision.

Mass protests that erupted in Tunisia in December 2010, and shortly afterwards in Egypt, changed all that. It became apparent that huge resentments were bubbling under the surface. The population resented their living standards being squeezed by rising food prices. They were also increasingly calling into question the legitimacy of their elderly rulers.

Recent months have seen the toppling of the regime of Muammar Qaddafi in Libya by a combination of internal opposition and western military intervention. Other countries in the Arab world, most notably Syria, have suffered bloody clashes between the security forces and protestors.

Untangling the events further is more tricky. The rhetoric of “revolution” tends to obscure the character of recent developments. George Lawson, a lecturer in international relations at the London School of Economics, argues that the changes in the Arab world have little in common with, say, the Russian Revolution of 1917. “They do not seek a radical transformation of their economies,” he says. Nor do they espouse a new ideology.

Instead he refers to them as “negotiated revolutions” in which the preference is for a return to what is regarded as normality. If anything they follow the model of eastern Europe in 1989. Western leaders have generally welcomed such moderate shifts although it should be noted they were initially reluctant to support the ousting of Mubarak.

To understand recent developments it is necessary to examine the interaction between Arab rulers and the opposition. In essence the regimes have remained more or less intact, despite some ditching their old figureheads, thanks more to the limitations of the opposition than to their own coherence.

It is clear that the Arab regimes have struggled to retain their grip on power. The speed with which Mubarak and Ben Ali were dispatched is a measure of their unpopularity. Other regimes, such as Bahrain and Syria, have relied on the use of extensive force to avoid similar moves.

But even those regimes that have made concessions have not disintegrated completely. In Egypt the military is still in control, while in Tunisia figures from the old regime remain influential.

In an important respect Libya follows the Egyptian and Tunisian model more closely than is often realised. The National Transitional Council is headed by Mustafa Jalil, a former justice minister under Qaddafi. It looks like western military intervention has helped to oust the former leader while maintaining, or perhaps even strengthening, other elements of autocratic rule.

The minimal character of the transformations so far has more to do with the weakness of the opposition than the strength of the regimes. Typically the protestors have made a virtue out of being leaderless and have often lacked clear demands. As Karl Sharro, a commentator on the Middle East, has argued: “The lack of strong and authoritative leaderships has weakened the uprisings’ ability to produce coherent demands and mounting serious bids for power.”

In his view the opposition’s lack of coherence has also limited its ability to spread further: “The lack of clear political objectives and ideas has also acted as a barrier to the spread of the uprisings and to encouraging more people to join up. The lack of vision is the strongest barrier for the spread of the popular discontent, as many still perceive the uprisings as a leap in the dark.”

This perspective suggests that the relative stabilisation that has occurred since the early days of the Arab spring could also prove illusory. The regimes have managed to limit the shifts in power but the underlying grievances remain. All of the Arab regimes are, to a greater or lesser extent, lacking in legitimacy, while their record of economic development is often poor.

If the opposition becomes more politically coherent it is likely that developments so far will only represent the first round of the Arab spring.

[Box] A tumultuous year

17 December 2010. Protests erupt in Tunisia after Muhammad Bouazizi sets himself on fire after police confiscate his fruit and vegetable stall. He is reportedly an unemployed graduate.

14 January 2011. President Zine el-Abidine Ben Ali flees Tunisia for Saudi Arabia after weeks of mass protests.

11 February. Hosni Mubarak steps down as Egyptian president after holding the role since 1981. The move follows weeks of mass protests that often met with violent police repression.

14 March. Saudi Arabia and other gulf states send in troops to prop up the Sunni al-Khalifa monarchy in Bahrain.

17 March. United Nations approves no-fly zone over Libya after the regime kills many protestors.

23 March. 15 killed in Syrian protests. Over the following months there are numerous bloody clashes between protestors and the regime.

24 April. Nato air strike on the compound of Muammar Qaddafi.

3 June. President Ali Abdullah Saleh of Yemen is wounded during an attack on his palace.

21 October. Qaddafi is captured and killed by rebels.

27 October. The moderate Islamic Ennahda party wins parliamentary elections in Tunisia.

31 October. Nato ends its seven-month bombing campaign of Libya after reportedly completing nearly 10,000 strike sorties.