Business and the Arab Spring
Beginning in 2011, Arab Spring movements brought better business opportunities to Egypt, Libya, and Tunisia, but the revolutions are also having negative effects. The revolution allowed people to open up business and operate without laws interrupting them. Although the lack of laws and order is starting to work against them. Tourist are scared to come to the middle east due to recent activities. There is little form and regulation which leads to confusion among business men. “The economic damage caused by the Arab Spring has not faded. But a positive result of the turmoil is that in some ways, conditions for entrepreneurs are improving, officials and businessmen say.” (Thomson Reuters 2012). With the remains of unemployed government workers along with citizens loitering around the streets with no laws to keep them in line, average people and tourist are scared to walk among them in the business centers of the Arabian countries.
The revolution did a lot of good for the Arab people especially when it came to business. The revolution did great things for business because the Arabs suffered from high unemployment and low minimum wage. In return these people are eager to get going and make a life for themselves and their people. “Investors historically targeted well-established companies that had very low risk and provided high returns. But now, after the Arab Spring, investors are pouring the same amounts of money into multiple smaller companies, betting a few of them will see a remarkable success story.” (Arab Spring Warms Business Climate) In previous years authorities did not allow small entrepreneurs to start their business because they served as threats to the businessmen who served in government. For example, Unfinished Business said, “The toppling of dictators could open up the private sector, once reserved for those with ties to the ruling circle.” Due to laws, untruthful business, and greedy government leaders the Arabian people never stood a chance for economical freedom, although with recent efforts they have a larger chance at success then ever.
Although the revolution brought some great business to Arabian countries it also brought bad business. One issue is that two years after the revolution there is not one Arab country that is on the way to a stable, democratic government. The issue with this is that everyone is stuck standing around waiting. People are ready to invest in these countries although they are afraid to due to the risk of them failing from a lack of government structure. The stocks have not been doing well at all, for example, “Foreign capital has been fleeing the region since December 2010 when protests began in Tunisia. The Dow Jones MENA index plummeted from 558 in late 2010 to a low of 460 in March. Lately it's been around 470.” (Investing after the Arab Spring: Unfinished Business) Currently business men are waiting for election results to come in before they make their moves. A business man interviewed by CCN said “"I'd rather be a little late, than too early." (Investing after the Arab Spring: Unfinished Business)
Egypt was the second country to get involved in the Arab Spring, and is currently serving as a role model for other Arabic countries, although their economy is struggling due the lack of government. It is currently the has the most diversified economy, the best financial institutions, and is the most populated Arab country. After the revolution Tunisia and Libya were too damaged to have any advantage of taking over the outside investors which led to them investing in Egypt. Although, “Western investors, who cheered the revolution, have yet to embrace Egypt as an investment opportunity, largely because of political uncertainty that is, in turn, paralyzing the country's economy.” (Peter Carbonara) Investors are scared to invest because of the uncertainty in the future of the government. Unemployment has risen by forty percent since the Arab spring which is also keeping investors out. Another economic issue is that tourism accounts for a major amount of the countries income, but with current war activities tourism rates have dropped dramatically. “International arrivals were 35% lower in April this year than the previous April, according to the government. In the first quarter, the year-on-year drop was a calamitous 46%; this cost Egypt an estimated $2 billion.” With Egypt dropping from being worth billions to millions with in the last five years it is going to be a long but slow recovery for the economy.
Libya is another Arab country that is suffering from the revolution financially, although with the oil they have to export, they could be onto an economic success story. After the revolution Libya's economy retracted by fifty percent due to the war stopping oil production. “A former Libyan bank governor reckons the country suffered as much as $15 billion in damage during the conflict to oust Colonel Muammar Qaddafi.” (Unfinished Business) Although currently oil businessmen are tripping over each other to what could be an economical success story. Before the revolution, like most Arabic countries, businessmen were scared to do business due to the lack of government. “The planned liberalisation of Libyan commercial laws is aimed at enticing foreign investment.” (Business law and finance in Libya after the 2011 revolution) As long as they can form a democratic government that will allow them to grow, they will become a very successful country.
Tunisia had started the Arab Spring in 2011 when a upset business owner had set himself on fire in protest of the government, but now it seems the revolution may have done more harm then good. Tunisia has a well educated workforce yet they still suffer from high unemployment due to the fact that investors are worried about business because of the lack of current government structure. Investors currently have no predictability, and “Investors need clarity on the future” in order for them to market and pitch businesses.(Mahmoud Ben Romdhane) In Bizerte, Tunisias poorest city, Alumni Group built a new factory which could increase employment by the thousands, but with the amount of active rioting and violence investors are worried to enter the country. In 2012, “A Tunisian analyst reckons 120 foreign firms shut up shop, cutting 40,000 jobs. Yazaki, a Japanese cable manufacturer, pulled out of a poor rural region.” (Unfinished Business) Currently over eighteen percent of citizens cannot find employment due the government confiscation of more than 300 companies prior to the revolution. Fortunately, Tunisia is starting to form a government and a prime minister is set in place, which leaves Tunisia in high hopes.
The efforts of the Arab Spring did not allow citizens to see an immediate positive economic turn out, instead it plummeted the economic state. Right now the largest road block is the lack of government that is scaring off investors. Once they create and begin to maintain a stable government structure these countries natural resources and the absolute need for employment will cause investing and production to succeed. Companies such as IMF are standing waiting with billions of dollars for loans and technical assistance to rebuild foreign reserves with countries such as Egypt, and Tunisia. The success of the these countries lie with in their people to form a democratic government that will work and allow them to flourish.
The Arab Spring did a lot more than just give the citizens of Egypt, Tunisia, and Libya freedom, it also led to a economic decline, and a huge challenge to where their government should be heading. Egypt, who joined the Arab Spring second, is already seeing improvements from the revolution, although just a year ago Egypt was suffering from the economic stress that Tunisia and Libya are feeling today. Libya prior to the revolution made most of the money from the natural oil they have, although due to war shutting down all of the oil business they are struggling to make a strong comeback. Tunisia, the country that started the revolution is the country struggling the most to make a comeback. Overall the Arab Spring will be a success but they have a long legal road ahead of them that will allow them to fully achieve what the citizens set out to do.
Citations
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Luongo, Michael T. "A Rush to Do Business in the Middle East." The New York Times. The New York Times, 16 July 2012. Web. 10 Apr. 2014.
Petrou, Michael. "Tunisia Is Becoming the Lone Arab Spring Success Story."Macleansca. Macleans, 24 Feb. 2014. Web. 10 Apr. 2014.
Shihadeh, Amir, and The Opinions Expressed in This Commentary Are Solely Those of Amir Shihadeh. "How Unrest of Arab Spring Sparked Innovation and Creativity."CNN. Cable News Network, 24 Jan. 2014. Web. 10 Apr. 2014.
Totten, Micheal J. "Arab Spring One Year On: Where Are We Now? | Middle East Opinion - UAE, Dubai, GCC News, Business, Analysis." MidEastPosts.com. Mid East Post, 2 Mar. 2012. Web. 10 Apr. 2014.
"Unfinished Business." The Economist. The Economist Newspaper, 04 Feb. 2012. Web. 10 Apr. 2014.
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