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Spring Tide

Spring Tide

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Spring Tide

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  1. Spring Tide Will the Arab risings yield democracy, dictatorship or disorder? David Butter Middle East Director Aidan Manktelow Risk Briefing Manager June 2011

  2. About the Economist Intelligence Unit (EIU) • Research arm of The Economist Group for business executives • Analysts and industry specialists worldwide covering • Analysis and forecasting for over 200 countries and territories • Risk assessment • Industry data and trends: automotive, consumer goods, energy, financial services, healthcare, technology • Market sizing • Custom client research • Visit www.eiu.com to register for free macroeconomic information on 187 countries

  3. Today’s Presenters David Butter Middle East DirectorEconomist Intelligence Unit Aidan Manktelow Risk Briefing ManagerEconomist Intelligence Unit

  4. Introduction: Arab activism Political upheaval has extended across the Arab world. Most dramatic change for the region since end of colonialism. The region’s political stability is no more. Key questions: Will the region experience a wave of democratisation? What will political change mean for the economic outlook?

  5. Political outlook: Two steps forward, one step back A meagre democratic harvest Reforms result in creation of democratic structures in some countries… …but fail to deliver genuine accountability or popular participation. Most countries shift to some form of hybrid regime. Survival of authoritarianism Efforts to build democratic institutions derailed. Authoritarian rule remains the norm. Democratic breakthrough Egypt and Tunisia provide positive examples. Representative democracy (with weaknesses) takes root throughout region. 60% 20% 20%

  6. Scenario 1: A meagre democratic harvest Egypt and Tunisia are key test cases. The two countries are taking different constitutional roads. Islamists will have a higher profile in Egypt than in Tunisia. Revolutionary forces are fragmented. 60% • Challenge of rebuilding the state will be tougher where removing the previous regime has involved bloodshed and destruction. • Libya: Qadhafi rump regime unlikely to survive for long. • Yemen: on the brink of civil war. • Syria: regime survival likely, but a chance Assad could be overthrown.

  7. Scenario 1: A meagre democratic harvest Algeria, Jordan, Morocco and Oman. Lower-level protests and promises of constitutional change. Unlikely to shift fundamental power structures in Jordan, Morocco, Oman. Algeria more unpredictable. Regimes in GCC likely to resist reform. Overall: gridlock politics. Transition to hybrid regimes in most states. Unlikely to lead to effective government. 60%

  8. Scenario 2: Survival of authoritarianism Failure of revolutions in Egypt and Tunisia would undermine their appeal. The army could take power again in Egypt after an initial handover. Or stakeholders of former regimes could stage a gradual counter-revolution. Bahrain’s Sheikh Khalifa now sees any attempt to bring democracy as a recipe for instability. 20% • Other possible deterrents to change: • Chaotic politics in Egypt and Tunisia. • Drawn-out civil war in Libya. • Prolonged stand-off in Syria.

  9. Scenario 3: Democratic breakthrough Crucial that process of change in Egypt proves robust Constructive coalition politics not impossible. Much will depend on Muslim Brotherhood. Huge encouragement for opposition forces elsewhere Egypt could provide safe haven for opposition groups from Syria etc. Iraq shows appetite for democratic governance 20% • With robust democratic systems in place in Egypt, Tunisia, Libya, Yemen and Syria, other states would face mounting pressure. • Only a matter of time before Gulf Arab states would have to follow.

  10. Short-term economic impact: Oil producers benefit…

  11. …and non-oil economies suffer

  12. What a difference a spring makes

  13. Poor long-term performance…

  14. …has led to relative stagnation

  15. Democratisation could improve growth drivers

  16. Conclusion: Two cheers for Arab democracy Some degree of political reform is likely across the Arab world… …although there is a considerable risk that movement for democratic change is checked or reversed. Significant long-term economic payoff only if democracy takes root. A reminder that autocracies have inherent structural weaknesses A regime’s longevity should not be confused with stability. The revolutionary movement in the region has a legitimacy that will endure.

  17. Questions and Answers

  18. Download the free white paper Spring Tide: Will the Arab risings yield democracy, dictatorship or disorder? Download your copy today: http://www.eiu.com/arabspringtide

  19. Thank you. Contact for more information: Holly DonahueSenior Marketing ManagerEconomist Intelligence Unithollydonahue@economist.com+1 212 541 0596