How Poverty and Inequality Are Devastating the Middle East

Hundreds of millions of people are ensnared in a cycle of poverty, despair, and hopelessness that will haunt the region for generations to come

By Rami G. Khouri September 12, 2019
Carnegie Reporter Fall 2019Arab Region Transitions
None

KEY TAKEAWAYS

• Poverty rates in the Middle East are as much as four times higher than previously assumed

• About 250 million people out of 400 million across 10 Arab countries, or two-thirds of the total population, were classified as poor or vulnerable

• “Mass pauperization” in the Middle East makes the region the most unequal in the world

• A poor family in the Middle East today will remain poor for several generations

• With governments in the Middle East unable to deliver basic services and opportunities, young people are turning to religious, sectarian, and ethnic organizations like Hezbollah and the Muslim Brotherhood to fill the void

News reports and political leaders’ statements on refugees, terrorism, migrants, and sectarian wars tend to dominate discussions about conditions in the Middle East. The actual situation is actually far worse, because deep below these surface manifestations of our distress lurks a much more destructive force that contributes to the terrible events we witness daily — a force that has started to tear the region apart from the inside. Poverty and inequality are the twin anchors of an inexorably damaging dynamic that ultimately sends tens of millions of families into agonizing cycles of vulnerability, helplessness, marginalization, and, in many cases, alienation from their state and society.

The absolute extent of poverty and inequality in Arab lands has been quantified in recent years, thanks to research by organizations like the United Nations Development Programme (UNDP), the World Bank, and the United Nations Economic and Social Commission for Western Asia (ESCWA), as well as research supported by Carnegie Corporation of New York. As we are learning, rates of poverty and vulnerability in the Arab region are much higher than had been previously thought.

These new insights come from the Multidimensional Poverty Index (MPI), which gauges poverty and vulnerability more accurately than previously used measures that relied upon income or daily per capita expenditures to make assessments. Published by UNDP and the Oxford Poverty and Human Development Initiative (OPHI), the MPI captures families’ actual total life conditions because it expands on family spending to account for other key well-being indicators in health, education, and living standards (such as nutrition, child mortality, years of schooling,  sanitation, electricity, drinking water, and assets, among other factors).

According to ESCWA data, 116 million people across 10 Arab countries, or 41 percent of the total population, were classified as poor, while another 25 percent were vulnerable to poverty.

MPI analyses reveal poverty rates as much as four times higher than previously assumed, partly because MPI looks at a country’s wealthiest along with its poorest; earlier daily expenditure measures often missed the whole picture, according to ESCWA economist Khalid Abu-Ismail, who heads a Beirut-based team of researchers that has been exploring every dimension of this issue for several years now. As Abu-Ismail pointed out in a recent interview, according to ESCWA data, 116 million people across 10 Arab countries, or 41 percent of the total population, were classified as poor, while another 25 percent were vulnerable to poverty. This translates to an estimated 250 million people who may be poor or vulnerable out of a population of 400 million. (A family is considered vulnerable if its income barely covers essential life needs, but any drop in income or increase in costs would plunge it into poverty.) That figure represents two-thirds of the total Arab population.

Arab Social Sciences: Building Capacity — On the Ground

“The future of the region will be made in the region,” says Vartan Gregorian, president of Carnegie Corporation of New York. As a knowledge-sector foundation, the Corporation aims to expand the activity, connection, and impact of social science expertise in the Arab region across a range of critical topics shaping its future, primarily through its Transnational Movements and the Arab Region program... 

Read more

These levels of family economic stress are confirmed by separate findings in regional surveys. Regular surveys of Arab individuals’ political/social attitudes and their living conditions across the entire region have been conducted by the Arab Barometer consortium of American and Arab universities and research centers, a Corporation grantee, and by the Doha-based Arab Center for Research and Policy Studies. These surveys reveal that since 2010, the percentage of families across the region that cannot afford to cover their basic monthly needs, or that can do so only by borrowing or seeking aid, fluctuates between 70 and 85 percent of all families. These indicators of mass pauperization and vulnerability also show that the middle class in non-oil producing Arab states is shrinking. As middle-income families slide into vulnerability, vulnerable families in turn fall into poverty.*

Mass poverty also means that the Middle East is the most unequal region in the world, with the top 10 percent of its people accounting for 64 percent of wealth.** Inequality cuts across virtually every sector of life and society, including the rural/urban divide, gender, income, and ethnicity, because in the Middle East inequality is a deeply engrained structural problem rather than the fleeting result of short-term economic stresses.

Mass pauperization in the Arab world means that several hundred million individuals find themselves with poor basic sustenance, no political power or voice, and little hope for improvement in their lives. Their desperation is heightened by parallel dangers to society as a whole, such as widening corruption and massive environmental abuse. The pain and bewilderment of chronically insecure families exacerbates the cascading trends that now define much of the Arab region: the gradual polarization of individual countries, fracturing along ethnic, sectarian, class, or ideological lines; the focus of central governments on their main political constituents, leading them to retreat from their responsibility to serve all citizens; and insurrections, wars, separatist movements, and political violence spread across the region — often assisted by external powers, with conflicts spilling over to other countries in the form of terrorism, refugees, and migrants.

When citizens protest declining living standards and diminishing life opportunities, most Arab governments continue to respond with stronger security measures. This approach, usually with consistent foreign support from both the East and the West, has for decades left the Arab region with tens of millions of semi-educated young people without steady jobs or steady income, languishing without hope in the dead-end informal labor market and politically impotent. In recent years we have seen that they are no longer silent. The 2010–11 Arab uprisings, the recurring demonstrations since then in half a dozen Arab countries (especially Jordan, Iraq, and Lebanon), and the latest mass citizen rebellions for civilian governance and dignity in Algeria and Sudan have been the most telling political responses to this condition. This feeling of hopelessness in the Arab world also led to the short-lived Islamic State controlling vast swaths of Syria and Iraq, the legal or illegal migration of millions of Arabs to other countries, and protracted civil wars in Yemen, Libya, and Syria.

We now also appreciate more clearly that poverty and its attendant inequalities are a long-term threat because they are intimately associated with other deficiencies in education, labor, and political rights that keep people poor, strain societies, and weaken entire countries.

Poverty’s new agony, the latest studies show, is that a poor family today will remain poor for several generations, due to the inability of economies to generate enough new jobs and the debilitating and lasting effects of family conditions on education and child welfare. We now also appreciate more clearly that poverty and its attendant inequalities are a long-term threat because they are intimately associated with other deficiencies in education, labor, and political rights that keep people poor, strain societies, and weaken entire countries. Today, the latest dangerous dimension to this trajectory is occurring before our very eyes in shattered countries like Yemen, Syria, Iraq, Libya, Somalia, and others. Desperate citizens, grasping at any available support to stay alive, open the gates to direct foreign interference in their countries, including by regional powers, which can come in the form of creating and funding militias, providing armaments, or directly engaging in warfare. Destructive direct foreign intervention is one of the most dynamic growth sectors in the Arab region, practiced by Arab governments and nonstate militant groups such as al Qaeda; non-Arab countries like Iran, Turkey, and Israel; and foreign powers like the U.S., Russia, France, and the U.K.

In the face of these troubling realities, one positive note is that we know how we got here, and with better analysis and parallel political will we can find our way out of it. Better governance and more effective public policies can turn around today’s harsh downward trends. A considerable amount of new research by Arab and international scholars is providing the foundational knowledge required to start moving down this path, including numerous analytical and policy-oriented studies by indigenous institutions and individuals supported by Carnegie Corporation of New York and other foundations.

Subscribe today to receive more stories from the Carnegie Reporter

Hillary Wiesner, director of the Transnational Movements and the Arab Region program at Carnegie Corporation of New York, has long appreciated how academic research can clarify the many contemporary drivers of sustained or intermittent conflicts. She recently explained that Corporation funding aims to build on and draw links to the region’s own expertise on a range of underlying issues like state and citizenship, inclusive economies, cities and services, employment, and education. “We all stand to benefit from in-depth analysis coupled with effective dissemination, particularly from regional scholars,” Wiesner said. “The Corporation’s support to the region’s knowledge sector aims to empower local institutions and communities — ultimately to improve outcomes and conditions in the region. We see political science and social sciences expanding significantly, thanks to professional organizations such as the Arab Council for the Social Sciences.”

Another such initiative is Alternative Policy Solutions (APS), a project based at The American University in Cairo, which produces evidence-based, participatory, and actionable policy research in the areas of socioeconomic reform, resource management, and public services. Sophisticated multisectoral research, undertaken mostly by Arab scholars in cooperation with their international colleagues, is helping us unravel the critical underpinnings of mass Arab poverty and inequality as well as the political turbulence they inevitably trigger. One of the most important research outcomes lays bare poverty’s connection to other debilitating conditions that stun tens of millions of marginalized families — often for generations to come. These include poor education, informal labor, weak state social services and social protection systems, environmental stresses, and populations that grow faster than economies.

For example, analyses of international test scores show that around half of all mid-primary and mid-secondary school students in Arab public schools do not meet basic learning outcomes in reading, writing, and mathematics. These students often drop out of school or graduate without being able to find productive work commensurate to their education, which helps explain why nearly 60 percent of Arab labor today is in the informal sector. Such workers enjoy no protections like minimum wage, maximum working hours, health insurance, or pension plans (only around 30 percent of Arab workers have pension plans). The poor education/labor informality cycle guarantees continued poverty and vulnerability for generations to come for two reasons. First, Arab governments and economies are unable to generate enough new decent jobs to reduce unemployment. New entrants to the labor market have nowhere to go. The International Monetary Fund and other organizations estimate that the Arab region must create 60 to 100 million jobs by 2030, and 27 million of those in the next five years, to make a significant dent in unemployment. For economic managers in the Arab region today, whether in the private or the public sector, this is clearly an impossible task — especially since regional economic trends, including the creation of new jobs, can be influenced by such factors as erratic performances in tourism, direct foreign investment, worker remittances, commercial trade, energy prices, and foreign aid. Second, low household education levels and poor early childhood development indicators, such as the increasingly common incidence of stunting, are signs that families will continue to suffer long-term poverty and marginalization.

Populations also continue to grow faster than the economic expansion required to meet people’s basic needs for jobs and social services. Reversing decades-old trends, fertility rates have recently risen in a few countries, translating into an estimated annual nine million births in the Arab region (nearly two million of those in Egypt alone). Many of these children will face hard life prospects, given the inability of current state policies to meet the needs of their populations, let alone the millions more people being born every year.

Poverty and inequality send tens of millions of politically powerless individuals down a one-way path to vulnerability, marginalization, helplessness, and hopelessness. That is the ultimate devastation. As a result, millions of them become alienated from their governments, which no longer provide the basic services and opportunities that they had once delivered with some sustained success. Instead, many find not only succor but essential services in established religious, ethnic, tribal, political, and professional organizations that have grown to play a more and more prominent role in state and society, often edging out government as the main animating force in how individuals interact with their state. National coherence and integrity start to fray, and powerful nonstate actors expand and come to share sovereignty with the state, whether formally like Hezbollah and Hamas, or informally like Muslim Brotherhood groups and local sectarian and tribal organizations in Yemen, Iraq, Libya, and Somalia. A few individuals consider the option of joining militant groups challenging the state and its established order through violence. Some families risk illegal migration abroad, with thousands perishing along the way — all because the risk of staying and possibly dying at home is greater than the risk of fleeing to find a new life.

Such life trajectories are the most dramatic and tragic consequence resulting from the expansion of poverty and inequality, which have now reached crisis proportions in many Arab countries. Yet, this situation still lacks the attention it deserves, and several hundred million poor and vulnerable Arabs are waiting on remedial policies as they struggle to make ends meet or to — merely — stay alive in their ever-more turbulent societies.

* According to ESCWA economists who have analyzed the issue, the middle class in non-oil producing Arab countries has shrunk from 45 percent to 33 percent of the population.
** Comparatively, the top 10 percent of the population accounts for 37 percent of the wealth in western Europe and 47 percent in the United States. See Facundo Alvaredo, Lydia Assouad, and Thomas Piketty, “Measuring Inequality in the Middle East 1990–2016: The World’s Most Unequal Region?,” Review of Income and Wealth (October 2018).
More like this