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What policies were used:

- SAP Policies:

In the early 1980s, financial discourse spread warnings of an impending financial crisis in the MENA region. Financial institutions claimed that the rapid expansion of the region’s labor force could not be satisfied by its slow employment growth, predicting skyrocketing unemployment levels and enormous social discontent. It was argued that only economic reform could prevent this inevitable economic crisis, completely ignoring the Western-imposed dependency on external markets and twenty years of occupation and conflict. This culminated in the adoption of IMF-sponsored Structural Adjustment Packages (SAPs) which aimed to rapidly accelerate economic growth across the MENA region. Open markets and the removal of barriers to the private sector became central parts of the SAP policies mainly dominated by Egypt, Morocco and Tunisia.

- Egypt case study:

Egypt quickly emerged as the region’s clear leader in terms of privatization mainly because of its earlier 1974 Infitah policy which, in the spirit of neoliberalism, opened the doors to private sector investment and capital liberalization. In the 1980s, under Anwar Sadat, Egypt began to sell its state assets and terminate the state-owned companies subsidies, encouraging them to autonomously compete on the market. These restructuring processes were fueled by taking out loans from international institutions which steadily increased Egypt state debt. In addition, Egypt was the first country in the Global South to attempt the so-called Employees Shareholders Associations (ESAs). These were pushed by USAID and privatized the Transport and Engineering Company (TRENCO), a publicly owned tire producing company with a big share in the Egyptian market. However, the supposed promise to democratize Egyptian capital ownership was never fully followed through as ESAs offloaded the country’s debt burden onto the workers who only received small proportions of the company’s share. By the 1990s, almost all Egyptian privatization processes utilized employee ownership to achieve state divestment. This only accelerated in the early 2000s and by 2008, privatization had taken over the country’s telecommunications, banking, and real estate sectors. As a result, Egypt recorded the largest number of privatized firms across the region, leading to the World Bank terming it the “region’s top reformer”.

- Market deregulation:

In the 2000s, the IMF’s loan packages identified labor market deregulation as a top priority, which followed the idea that if wages were lowered, investment would become more attractive to the private sector. This erosion of public sector working conditions was closely related to the ongoing privatization process across the MENA region. Hence, private sector employers were able to lower their wages and still attract workers, who had no choice but to accept. Egypt, Jordan, Morocco, and Tunisia all followed this deregulation process, introducing temporary contracts and making it easier to fire public sector workers, sparking controversy and protests.

- Public-Private Partnerships (PPPs):

MENA’s privatization process focused on the use of Public-Private Partnerships (PPPs), arrangements between government agencies and private-sector companies to complete public projects such as constructing power plants or distributing water. The country of Jordan moved fastest with 40% of its population receiving drinking water from private providers by 2006. Nevertheless, many essential services continue to be run by MENA governments and international financial institutions such as the EIB have since identified PPPs as a strategic avenue to further deepen neoliberalism in the region.

- Opening to the world market:

By 2004, Tunisia, Egypt, Morocco and Jordan had all joined the WTO and established Association Agreements with the EU or FTAs with the United States. Capital flows were quickly drawn towards MENA’s relatively cheap labor which increased competition of domestic capital. This accelerated the neoliberal shift and allowed the region’s economy to transform into private, market and export-oriented activities. The four countries proceeded to cut tariffs and eliminate nontariff barriers as well as reducing regulations to increase FDI into the region. However, the accession of the WTO also flooded the countries’ domestic markets with cheap textiles, massively damaging domestic companies. For instance, in Egypt, clothing imports increased by 500% while domestic production stagnated, further deteriorating labor rights and wages.

- Restructuring of financial markets:

Lastly, IFIs advocated for a removal of government market control, opening up the banking sector to foreign competition and introducing mortgage, bond and equity markets. Such liberalization of credit resulted in the expansion of financial institutions which became increasingly interconnected with the industry. In essence, financial markets brought all the components of the neoliberal project together by strengthening the power of the biggest conglomerates over every aspect of the region’s social life.

Social & economic impacts of these policies:

- Social:

Since the gradual implementation of neoliberal policies all across the MENA region, basic economic and social rights have been gradually eroded. While the Washington Consensus predicted enormous economic growth between 1980 and 2000, the MENA region actually experienced economic stagnation, resulting in “the lost decades”. Though growth accelerated massively between 2003 and 2008, it came to the detriment of the region’s youth classes and women. The aforementioned privatization and deregulation policies drastically reduced wages as well as employment securities. This was reflected in the region’s continuously high unemployment statistics, with Jordan, Tunisia, Morocco and Egypt respectively registering over 14.1, 14.6, 11 and 10 percent. Furthermore, around 30 percent of young people remained jobless in these countries for the majority of the decade, with university graduates particularly struggling to find work. This trend continued well into the 2000s as Egypt’s largest category of unemployed people was made up of female university graduates. As MENA’s unemployment rates and informal sectors expanded, poverty skyrocketed. In 2006, 40% of Egyptians and Moroccans as well as 24% of Tunesians lived below the poverty line (Hanieh). These rates have decreased significantly in recent years and in 2015, only 15% of Egyptians and Tunesians and less than 5% of Moroccans still lived below the poverty line. Nevertheless, it is clear that MENA’s neoliberal policies and public spending cuts negatively impacted social conditions all across the region (Hanieh). Such policies were met with repeated waves of protest such as demonstrations and strikes. To overcome these protests and successfully implement neoliberalism, dictatorships and authoritarian regimes rose up (Wurzel, 2009). Tunisia’s Ben Ali, who was backed by Europe, the US and the World Bank, truly commenced the country’s neoliberalism era. Similarly, Egypt’s Mubarak expanded the infitah policies and was swiftly endorsed by the World Bank and the IMF. These dictators were able to turn to their military and security forces to extinguish MENA’s widespread protests and implement their neoliberal reforms. This symbiosis of authoritarian power and neoliberal governance across MENA continued to deteriorate the social conditions of its population and its long-term impact can still be felt today.

- Economic:

While neoliberalism had an indisputable, negative effect on MENA, it did eventually facilitate significant economic growth. The region’s cheap labor and informal workforce encouraged the increase in domestic capital and provided profitable opportunities for foreign investors. For instance, Morocco, Egypt, Tunisia, and Jordan’s annual GDP growth rate averaged over 5 percent between 2003 and 2008. Nevertheless, the region’s wealth became concentrated in the hands of a wealthy domestic capitalist class that soon claimed ownership of the major economic sectors. In essence, neoliberalism effectively redistributed wealth from the region’s poorest to the most wealthy classes of society, which had always remained at the core of the neoliberal project in the region. This development remains a crucial element when assessing the revolutionary dynamics of the Arab Spring in 2011.