Jubilation in Cairo tempered by fears of wider unrest

Image: Opposition protesters celebrate Egypt's President Hosni Mubarak's resignation, from their stronghold of Tahrir Square in Cairo
Opposition protesters celebrate Egypt's President Hosni Mubarak's resignation in Tahrir Square in Cairo Friday.Suhaib Salem / Reuters

As jubilation spread from the streets of Cairo throughout the Middle East Friday, neighboring governments grappled with the prospect of widening popular uprisings that have claimed two Arab dictators in less than a month.

In Tunisia, cries of joy and a thunderous honking of horns greeted the news that Egyptian president Hosni Mubarak had stepped down. Last month, a popular uprising there forced dictator Zine El Abidine Ben Ali into exile and sparked the Egyptian protests.

In Beirut, fireworks erupted over the capital only moments after the Egypt's Vice President Omar Suleiman announced that Mubarak would hand over power to the military.

In Jordan, King Abdullah II swore in a new cabinet Thursday after nationwide protests brought promises to launch political reforms, although the opposition dismissed the move as insufficient.

Last week, Syrian President Bashar al-Assad told The Wall Street Journal that he will push for more political reforms in his country, acknowledging that the north African protests are ushering in a "new era" in the Middle East.

"This is the popular demonstration that proves any leader can be toppled," said Eugene Rogan, the director of the Middle East Center at St. Antony's College in Oxford. "For all the other rulers in the region, it's a very sobering moment."

The popular uprisings in Tunisia and Egypt are at their hearts about crushing poverty and hopelessness — especially among young college grads and a shrinking middle class chafing under autocratic rule rife with corruption.

The turmoil has been fueled by a complex mix of economic, political and social dynamics. The same conditions exist, in varying degrees, in other countries across the region. But analysts say it is hard to predict where or whether the next "domino" might fall.

“It’s very dangerous to paint the Middle East as one monolith with one broad paintbrush,” said Firas Maksad, political consultant at DLA Piper. “They’re 22 countries in very different stages of political social and economic development.”

The conditions that led to revolt in Tunisia and Egypt have been simmering for decades, including corruption among entrenched leadership, widening wealth inequality and a shrinking middle class. More recently, tensions have been stoked by a volatile combination of high unemployment, rising prices and the emergence of a younger generation frustrated with a bleak economic future.

But while many other countries in the region share some or all of these conditions, the risk of widening social turmoil varies widely from one nation to the next.

A gaping wealth divide is one of the most powerful forces threatening stability – both within individual countries and between nations.

Oil-rich states with relatively small populations have been able to provide generous government services and employment that should bolster political stability. In Qatar, for example, per capita GDP was an estimated $145,000 last year and the jobless rate a mere 0.5 percent.

In Yemen, by contrast, per capita GDP was only $2,600 and more than third of the population is unemployed, according to the latest data available from the CIA World Factbook. Yemen’s population is also the youngest in the region — with a median age of just under 18, compared with 24 in Egypt and 36.8 in the United States.

Yemeni President Ali Abdullah Saleh told parliament last week he would not seek another term in office or hand power to his son — an apparent reaction to protests in his impoverished nation that have been inspired by the revolts in Tunisia and Egypt.

Countries with a large population of young people out of work are among the most vulnerable, say analysts.

“There is such a high level of unemployment — especially youth unemployment — and such a high level of inequality in these countries that creates a social situation that may end in unrest,” Dominique Strauss-Kahn, managing director of the International Monetary Fund, told CNBC. “One of the outcomes of this crisis is that in many countries, the tensions between the different parts of these countries have increased.”

Jordan – with a median age of under 22 and a jobless rate of more than 13 percent – is also suffering high youth unemployment. So is Syria, where the median age is 21.5 and the jobless rate is 8.3 percent, and Iraq, where the median age is 20.6 and the jobless rate is over 15 percent.

Government corruption — cited by Egyptian protestors as a catalyst for upheaval — also varies widely in the region. Gulf oil countries like Oman and the United Arab Emirates score relatively well on corruption, while Iraq, Libya, Yemen, Iran, Lebanon and Syria are considered the most corrupt, according to Transparency International, which ranks Middle Eastern countries based on expert opinions and surveys.

The uprisings in Egypt and Tunisia have been relatively unified, in part because the populations of those countries are relatively homogenous. Countries with wider sectarian divisions could produce more violent confrontations, according to Jon Alterman, a senior fellow in the Middle East Program of the Center for Strategic and International Studies.

“Jordan would be much bloodier than Egypt because you have a division between East Bank Jordanians and Palestinians — which would rapidly turn into widespread Jordanian on Jordanian violence," he said.

But ethnic divisions can also provide a check on the power of any one group, according to Daniel Goure, a Middle East analyst at the Lexington Institute.

“It’s not always a question of stability," he said. “Sometimes it’s more a question of whether they can beat any opposition. Essentially these minorities have learned that if you don’t hang together you hang separately.”

For the moment, wealthier Gulf states seem better positioned to weather the ripple effect of the upheaval that has gripped their neighbors to the west. Those include Bahrain, Kuwait and the United Arab Emirates, each with per capita GDP of $40,000 or more.

“That’s not to say that these countries have nothing to worry about,” said Alterman. “A number of them have boosted government salaries and taken other steps to try to show deference to their population in the last several weeks.”

Oil-rich Libya recently announced it had set up a $24 billion fund for investment and local development that will focus on providing housing for a rapidly growing population. The move follows cuts in taxes levied on food prices.

Rising prices were cited by protestors in Tunisian and Egypt in their demands for a regime change; Middle East countries with high levels of inflation face similar unrest threats. Like Egypt, Yemen and Iran are also coping with double digit inflation rates. In the short run, food prices are expected to continue to move higher — a problem that the ongoing turmoil could make worse.

"If these governments now react to these demonstrations and riots by scrambling to buy even more grain in the global markets, these prices are going to go higher - which will create more political instability," Edward Yardeni, the President and Chief Investment Strategist of Yardeni Research.

While the conditions fostering unrest vary widely, so does the potential global impact of any widening of social unrest in the region. As one of the strongest U.S. allies, Egypt plays a critical role in maintaining security in the region – from the movement of troops and equipment through the Suez Canal to a 30 year peace treaty with Israel.

As the U.S. continues to try to stabilize Iraq, Saudi Arabia remains its most important ally and a critical lynchpin in maintaining stability. For now, the threat of unrest there appears low, according to analysts

“That’s partly because so many people work for the government and partly because so much of the middle class is foreign workers,” said Alterman. “They don’t have the opportunity to revolt because at the first sign of trouble they’re deported.”