Usually an “around the Revolution” entry on this blog refers to left-wing Bolivarian governments on this continent. Here, though, it refers to Libya, Bahrain, Egypt, and Yemen. It will be brief: these are just observations; I have a bad head cold and a boatload of work. (See Laffer blogging.)
In Libya, it is surprising how quickly government forces withdrew from the east in the face of Allied airstrikes. The rebels still seem like a mob, by all accounts. The rapid withdrawal seems like a sign that discipline inside government forces is cracking, but that does not necessarily mean that the regime is about to fall. Gaddafi has a lot of support in Sirte; if his army holds together enough to crack Misurata (which will not be easy with Allied planes overhead) and hold Sirte, then he will probably hold on for a while. On the other hand, my prediction that oil would soon start flowing again seems to have been correct. The rebels now control export facilities with a capacity of 827,000 bpd, and it appears as though Qatar is willing to help with marketing. Oil markets reacted as you would expect. Ironically, it looks as though Chinese and Indian oil companies may in fact help, by being willing to purchase rebel oil without fear of what might happen to their interests in Gaddafi-held territory. That is the exact opposite of what observers expected when the violence first erupted.
I would very much like to go to Benghazi to see how Agoco is faring.
In Bahrain, 11 members of Wifaq have resigned from parliament, which is not a good sign. The party seemed to be willing to compromise in its conditions for talks with the government: all they want now is the release of 250 detainees. the idea of Kuwaiti-brokered talks now seems off the table. Reports are vague about the presence of GCC troops. There are reports that the Saudis are running checkpoints, but those should be taken with a grain of salt. Saudi troops wear the old U.S. three-color DCU pattern (on the right below), whereas Bahraini defense forces wear British-style camoflague patterns (on the left). Unless you are familiar with the uniforms, it is not easy to tell them apart.
The unrest is not good for the economy. The Grand Prix has been cancelled, as have other events. The 2008 race contributed $600 million to the economy, or 2.9% of GDP. Combine that with the proliferation of cancelled events and collapse of tourism, and Bahrain has a problem. The central bank has leaned on local banks to go easy on businesses affected by the slowdown. (It also insists that the financial industry is stable, but it would.) More importantly, on March 10 the Gulf Cooperation Council (GCC) announced a $10 billion fund for housing and infrastructure. Bahrain intends to use the money to build 50,000 new homes at a cost of $5.3 billion over the next five years.
The goal is, of course, political. According to the Economist Intelligence Unit, there are currently 46,000 people on the waiting list for government-subsidized housing. One grievance is that newly-naturalized Sunnis from places like Syria and Pakistan are alleged to get priority; true or not, the government hopes that speeding up the pace of modern housing construction will ease the political conflict. (The government is almost certainly wrong, of course.)
In addition to the housing program, the government is planning a 1% levy on salaries to fund an unemployment insurance scheme, plus a tax on employers for each expat they employ, to finance training for locals. In 2009, the government gave expats the freedom to change jobs, with the aim of raising the cost of employing them versus native Bahrainis.
Unsurprisingly, the political effect of the change was the reverse, adding to Shia grievances. For what it is worth, the markets have perceived a big increase in the risk of Bahraini sovereign debt, but they have perceived that for most of the Middle East and North Africa, including Egypt and Morocco. The interior minister, Rashid bin Abdullah bin Ahmed al-Khalifa, has said that his ministry will “speed up plans” to hire 20,000 new employees, and the King has ordered various ministries to increase employment.
For what it is worth, I do not think that the initiatives are going to work. Bahrain needs to address Shia political grievances. My colleague, Victor Menaldo, has a paper showing that Arab monarchies have been surprisingly resilient to political shocks: very worth reading. It’s implication is that Bahrain will make it through, but it isn’t clear that Bahrain fits the model.
So what about Egypt? Well, here I am going to turn the floor over to Victor (and his colleague, Mike Albertus) once more, from their op-ed in USA Today: “Research that we’ve conducted on the relationship between revolutions and democracy demonstrates that less than a majority of revolutions end in democracy. Surprisingly, however, we also find that the democracies that tend to survive the test of time are those born in revolution.”
Finally, Yemen. All I have to say here are that the reports are terrifying. Abandoned ammunition dumps is not a good sign.