The Arab Spring
The social impact of the neo-liberal era was not favourable, with poverty and unemployment remaining relatively high and inequalities sharpening. Although the IMF and the World Bank provided a more positive picture, there was a widespread negative perception of the impact of neo-liberal reforms in the NA region by the majority of the population.
But more than neoliberal economics, the widespread nature of corruption, nepotism and rent seeking, as well as repression, have contributed most to negative perceptions. There was little open criticism of economic policies implemented by the incumbent regimes before the Arab Spring. What were criticized most openly were the perceived injustices, large inequalities, widespread corruption, nepotism, and rent seeking activities that failed to create a level playing field and benefited most the ‘establishment's elite' and the ‘establishment's' insiders' (UNDP, 2012).Most Egyptians did not riot in 2011 against the IMF and the World Bank as they did in the mid-1970s. But they opposed and criticized openly ‘The corruption of the Egyptian government', the fact that ‘Mubarak's... younger son Gamal, a former investment banker had filled the cabinet with his inner circle of businessmen friends', that ‘Mubarak's cronies were seen to be the beneficiaries' of neo-liberal reforms, and ‘The wish of his wife to have her son succeed Mubarak is what really led to his downfall'. The fact that neo-liberal reforms ‘failed to alleviate poverty' and that the growth rate ‘widened the gap between rich and poor' did not help. All of this led ‘Ultimately [to] a sense of economic injustice [that] helped create the conditions for the 18-day uprising that unseated Mubarak' (Knell, 2013). The neo-liberal reforms were also implemented undemocratically, following a long tradition of centralized economic activity and decision-making processes.
Islamists were a main beneficiary of the Arab Spring, although they played a small role in its initiation. In Tunisia, Morocco, and Egypt until President Mohammed Morsi, who won elections in June 2012, was removed from office in July 2013, Islamists went as far as winning elections and constituting governments for the first time in their history. The arrival of political Islam to power in Tunisia, Morocco, and Egypt led some to speculate regarding the emergence of an ‘Islamic economy' in the region, which would place morality, equity, the well-being of society, an open trade system, and stability as key policy objectives (Arab News, 2014).
As one source explained, Islamic economics is ‘that branch of knowledge which helps to realize human well-being through an allocation and distribution of scarce resources that is in conformity with Islamic teachings without unduly curbing individual freedom or creating continued macroeconomic and ecological imbalances' (Islamic Economics, 2013). Islam is a religion that was initially born in a territory with limited agricultural potential. This led to more emphasis on generating commercial possibilities, such as trade and finance. Commerce acquires a special significance in Islam and is considered a blessed activity. This is because the prophet himself, many of his companions, and several eminent Muslim scholars were successful businessmen. In many ways the Islamic economic system ‘is very close to today's free market... or liberal economy' (Islamic Economics, 2013).
However, Islamic economic thought is different from neo-liberal economics in that Islam is not just a religion, but also a way of life. Islamist economists list five points which distinguishes their system from other economic ideologies: Forbidding interest (usury or riba’ in Arabic); forbidding earnings from gambling, lotteries, and the production, sale, and distribution of alcohol; forbidding hoarding food and other basic necessities; Muslims must pay zakat (almsgiving); and Muslims are encouraged to give constantly to charity.
The arrival of political Islam after 2010 raised possibilities of introducing an Islamic economic system along these lines.However, the outbreak of the Arab Spring did not usher in a new era of ‘Islamic economics’, one that could compete with or substitute neo-liberal economic policies. On the contrary, there has been a continuation of past pro-market policies. The Moroccan Justice and Development Islamic Party, the Tunisian al-Nahad Party and the Egyptian Muslim Brotherhood all continued collaboration with the IMF and World Bank, and did not sever relations with them, as some had predicted. Egypt had been negotiating with the IMF for three years over a proposed $4.8bn loan, and President Morsi continued to negotiate and held the Fund responsible for delays in implementation. These developments should not come as a surprise, as Islamists are not anti-free market economics in general. Islamist movements in the Arab world lacked a distinctive economic development ideology to promote in place of neo-liberalism. As Kadri (2012, 2) recently wrote: ‘The neo-liberal phase of development has not ended with the beginning of the Arab Spring. If anything, many of the dispossessing policies of the past have gained momentum under newly elected Islamic governments’. However, all NA states have re-introduced some form of social protection since the eruption of the Arab Spring.