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Babylon & Beyond

Observations from Iraq, Iran,
Israel, the Arab world and beyond

Category: Economics

WEST BANK: Political upheaval in Tunisia spurs Palestinian leaders to issue reassurances on own economy

January 16, 2011 |  2:04 pm

The factors that led to the popular upheaval in Tunisia set off alarm bells throughout the Arab world, and the Palestinian Authority was no different.

Palestinian Authority Prime Minister Salam Fayyad spent more than two hours on Sunday talking to 40 Palestinian journalists at his Ramallah office about the economic situation and living conditions in the West Bank and Gaza Strip.

The message he wanted to send to 2.5 million Palestinians in the West Bank and Gaza Strip was that economic conditions were good in spite of reports on the rise in consumer prices and relatively high unemployment and poverty figures.

The Palestinian Central Bureau of Statistics said in a recent report that the consumer price index for 2010 increased by 3.75% compared with the previous year.

The economic situation and the standard of living in the Palestinian areas are a constant concern of the Palestinian Authority, Fayyad said.

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ISRAEL: Poor diplomacy strikes foreign relations

January 10, 2011 | 10:42 pm

Israel's foreign relations are suffering these days from an outbreak of poor diplomacy. Not necessarily bad; just poor.

Ladies_tailors_strikers Foreign Ministry employees say they are just that, poor. Their basic salaries have been devalued by about 40% since last being updated in the early 1990s, and many of them rely on help from welfare services, say activists from the ministry workers' union.

The diplomats have years of experience, a stack of academic degrees and high motivation to serve. They also have families to feed and pensions to fund, and say neither is doable on their paychecks, which some revealed on a popular news site. Only an idealist or a fool would join the foreign service under these conditions, they said. Finance Ministry officials said the paychecks didn't reflect considerable extras.

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ALGERIA: 2 dead, hundreds injured in riots over food prices

January 8, 2011 |  8:57 am

Algeria-riots

At least two people were reportedly killed and 420 injured in several days of rioting across Algeria sparked by dramatic hikes in food prices as well as persistent unemployment.

One was a young man who was shot dead when "he tried to intrude into a police station" in the town of Ain Lahdjel, 150 miles south of the capital of Algiers, and another died in a hospital in the city of Bousmaïl; "the conditions of his death remain unclear," Interior Minister Daho Ould Kabila told the official Algerian Press Service on Saturday.

The minister, speaking to state radio, said 320 of those injured were among the security forces and fewer than a hundred were protesters.

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TUNISIA: Dependence on Europe fuels unemployment crisis and protests

December 27, 2010 |  7:38 am

Tunisia-protests

The recent suicide of an unemployed 24-year-old man in Tunisia -- who electrocuted himself by touching a high-voltage electrical pole after shouting "no for misery, no for unemployment" — and the ensuing unrest are signs of the frustration and despair felt by the country's youth as Tunisia's economy slows.

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[Editor's note: Analysts of the Carnegie Endowment for International Peace are included among contributors to Babylon & Beyond. Carnegie is renowned for its political, economic and social analysis of the Middle East. The views represented are the author's own.]

Even as the level of education among job seekers in Tunisia has improved, the government has failed to make policies guaranteeing enough job creation to absorb new entrants to the labor market, especially among those with university degrees.

As a result, Tunisia has one of the highest levels of unemployment among Arab states: more than 14% overall and 30% among those between age 15 and 29.

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ISRAEL: Neighbors watchful as Israel demarcates maritime borders with Cyprus

December 26, 2010 |  9:46 pm

Levant basin Huge gas fields discovered recently under the Mediterranean seabed have raised high hopes in Israel, a small, high-consumption country seeking alternative energy resources and a greater degree of
  independence from imports.

In a different geopolitical reality, the discovery could benefit the whole region — if it was on speaking terms. Everyone wants to tap natural resources — but this one taps into standing regional squabbles.

Israel and Lebanon, for example. The deposits extend into areas controlled by Lebanon, and it has accused Israel of moving in on its natural resources. Not so, says  Israel, which maintains that the fields lie between its territory and Cyprus.  Israel's minister of national infrastructures, Uzi Landau, even said Israel would "not hesitate to use force" to protect the fields and uphold international maritime law.

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EGYPT: Policymakers ignore increasingly disaffected youth

December 26, 2010 |  9:09 am

Egyptian youths represent two-thirds of the country’s population and share a sense of detachment from, and lack of trust in, Egypt’s political life. They dream of a decent and stable job, affordable housing and good health services. Unfortunately for many of them, these dreams will never become reality.

Carnegie logo Unemployment is the primary issue for Egypt’s young people. Nine out of 10 jobless in Egypt are under age 30, with women disproportionately unemployed. A large mismatch between job opportunities and education provided by schools and universities is mostly responsible.

Even though the young are more educated than other job seekers, most jobs in Egypt are of poor quality, offered as part of the informal sector, and attract less-educated workers. Migration is increasingly seen as the solution to unemployment among the highly educated; those from unprivileged families usually end up with a poor education and bad jobs.

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TUNISIA: Protester killed as anti-government demonstrations escalate

December 26, 2010 |  5:35 am

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One person was killed and others injured when Tunisia's National Guard members opened fire on angry protesters in the town of Menzel Bouzaiene over the weekend.

The state-run news agency TAP quoted an unnamed security official as saying that guard members were forced to use their weapons in self-defense after "a group of individuals set ablaze a railway engine and set fire to three National Guard vehicles before raiding the city's National Guard station."

The source added that several guard members were burned, including two who fell into a coma. Mohamed Fadel, leader of the secondary school union in Menzel Bouzaiene, identified the man who died as Mohamed Ammari, 18.

"Several thousands took part in the riot. Many arrests have been made and the whole town, which is located in the governorate of Sidi Bouzid, has been sealed off by security officers," Fadel told Agence France-Presse.

The death comes as riots and demonstrations against unemployment and poor living conditions entered their ninth day in Sidi Bouzid. Unrest scattered across the region after the suicide attempts of two young persons last week.

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ISRAEL: African immigrants caught between Israeli government and society

December 23, 2010 |  7:06 am

Israeli officials frequently say Israel is the only First World economy that can be reached on foot from the Third World: You can walk from Africa straight to Tel Aviv. Tens of thousands have done just that -- and if the country doesn't do something about it, many more will, officials warn. 

The large pockets of foreign communities grow in different ways. Foreign workers, like Filipino nursing professionals, come in the front door but stay through the window, overstaying their work permits and settling down.

Most Africans do it the other way around. They climb in through the window of the long, sprawling and largely open border with Egypt and then knock on the door for asylum. About 15,000 African hopefuls have entered the country this year, roughly double the amount of last year. 

The government is determined to stop the influx. For starters, it is fencing off its 150-mile border with Egypt. Work began last month

The border fence will cost about $370 million, but government indecision on immigration matters is costing dearly. Fear of the impact on politics, religion, demography, diplomacy and the economy has paralyzed decision-makers, negating a cohesive immigration policy. Years of Band-Aid solutions have produced a situation that is rapidly approaching a crisis.

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IRAN: A daily balancing act as energy subsidies are removed

December 22, 2010 |  7:32 am

Iran-cylinder-ahvaz2Ordinary Iranians just trying to make ends meet had to contend with sharply increased costs for fuel and other goods this week.

Authorities removed decades-old subsidies as part of an attempt to reduce the government's budget in the face of hard-hitting sanctions over Iran's nuclear program.

The removal of the subsidies has increased prices for a range of goods -- diesel as well as bread -- and is expected to jack up shipping costs for virtually everything else.

Authorities describe the plan as an attempt to remove subsidies that benefit Iranians of all economic classes and redirect money toward those who really need help.

The plan may work eventually, but for now it has created economic uncertainty among the middle and working classes.

-- Los Angeles Times

Photo: A woman in the southeastern Iranian city of Ahvaz balances a fuel cylinder full of natural gas on her head. Credit: Mohammad-reza Dehdari / Fars News Agency


EGYPT: An economy haunted by inflation, tax shortfalls, unemployment, poverty and corruption

December 18, 2010 |  9:15 am

Egypt-economy

Beyond the political uncertainty that increased with recent parliamentary elections, Egypt faces many economic, social and institutional challenges undermining its future.

Carnegie logo Addressing these challenges is imperative; otherwise, the spread of poverty to large segments of the Egyptian population, cloudy economic prospects and feelings of marginalization after the election could lead to greater social upheaval.

Five challenges pose the most immediate threats to Egypt.

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AFGHANISTAN: Taliban accused of forcing farmers to grow opium poppy instead of saffron

December 15, 2010 |  7:28 am

Iran_saffron_threads

It is as pricey as precious metals or illicit drugs, and in some kitchens it is increasingly becoming even more valued. Saffron, a spice that grows in Afghanistan, could be a solution for farmers who want to make ends meet without growing poppy flowers that can be turned into opium and heroin that enrich and empower drug barons.

But this week, the spokesman for the NATO-led coalition in Afghanistan spoke of a "disturbing trend" in the western portion of the country: The Taliban is forcing farmers to stop growing the savory spice and switch to more nefarious crops. 

"Insurgents are pressuring Herat farmers to switch to growing poppy instead of saffron so they can use the money from drug sales to fund their operations," German army Gen. Josef Blotz told reporters Monday. "In areas north of Herat city, insurgents have destroyed fields planted with saffron, and last month they attacked two trucks carrying saffron bulbs for planting and killed the truckers who were delivering them."

A Taliban spokesman reached by telephone Wednesday denied the charge.

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EGYPT: Inflation rates hit lowest figures in 15 months

December 10, 2010 |  7:17 am

51807-egyptian-women

Consumer inflation in Egypt has fallen to its lowest rate in 15 months, to 10.2% in November, compared to 11.7% the previous month, the state's Central Agency for Public Mobilization and Statistics announced this week.

The decrease has given the Egyptian Central Bank room to keep its benchmark interest rates unchanged in December to support economic growth. The food and beverage index shrunk 2.24% compared to a decline of 0.16% last month, leading to a decrease in the annual food price inflation to 17.1% year-over-year in November from 19.9% in October.

Egypt's economy has expanded 5.6% in the third quarter of the current fiscal year after the 5.4% increase achieved during the previous three months. Economists predict that the most populous Arab country will reach a 5.5% GDP growth in the fiscal year 2010/2011.

Nonetheless, such growth is still below the 7% achieved during the three fiscal years through June 2008, which was halted by the global financial turmoil that affected revenue from the Suez Canal, tourism and foreign direct investment.

-- Amro Hassan in Cairo

Photo: A woman shopping for vegetables in Cairo. Credit: Reuters




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