INTRODUCTION

Low- and middle-income countries (LMICs) in the Middle East and North Africa (MENA) have faced a series of interrelated crises in recent years relating to food, energy, and debt. The war in Ukraine has brought to light disparities in the region, underlining that the situation among Arab countries differs. While rising energy prices because of the conflict have resulted in a hydrocarbons windfall for oil-exporting countries, energy importers such as Egypt, Tunisia, and Lebanon have faced higher energy bills, budget constraints, and social pressures. The increase in energy prices has coincided with a food crisis in the region, which, again, the Ukraine war brought to the forefront by leading to a surge in international commodity and food prices. This has accelerated inflation and caused food shortages, fueling social tensions and political instability in several MENA countries. Meanwhile, the capacity of regional LMICs to address the situation has been severely constrained by the soaring levels of debt they have accumulated, along with rising inflation and currency devaluations.

Three of the MENA region’s LMICs—Egypt, Tunisia, and Lebanon—stand out in this regard. All face structural economic weaknesses, are highly indebted, are greatly dependent on imports of food and energy, and either have negotiated agreements with the International Monetary Fund (IMF) or are in need of one. While the political situation may vary among the three countries, politics has been a central problem in each. Egypt is experiencing illusory stability, Tunisia is being buffeted by the inconsistent decisions of a populist regime, and Lebanon is suffering from a destructive stalemate imposed by a political elite that regards reform as a threat to its power. Leaders in all three countries have engaged in damaging short-termism when addressing the imperatives of reform, with a focus on perpetuating their political survival. In contrast, while other regional LMICs, such as Morocco and Jordan, are facing many of the same problems as Egypt, Tunisia, and Lebanon, they have engaged in a more voluntarist approach toward reform, showing greater resilience to regional food and energy shocks.

The food and debt crises in the LMICs of the MENA region, compounded by the impact of energy shocks, have been thrust into the spotlight because of major events that have exacerbated them, notably the coronavirus pandemic and the Ukraine conflict. However, all these crises are primarily structural in nature and are tied to inherent weaknesses in the economies of the LMICs. For instance, although the food crisis in the MENA region has been commonly associated with the reduction in the supply of certain foods because of the war in Ukraine, it actually derives from a prolonged, enduring predicament that has engulfed the region’s food systems. Similarly, the debt crises that countries such as Egypt, Tunisia, and Lebanon are facing are rooted in the political economy and model of economic development that each of these three countries has pursued.

Because the food, energy, and debt crises are structural, they are profoundly reshaping domestic orders as well as the regional political and economic balance of power. In Egypt, Tunisia, and Lebanon, as well as other energy-importing countries, these crises have exacerbated financial tensions that are pushing incumbents into policy choice dilemmas. Regimes are reluctant to implement reforms, as these will impose social and political costs, threatening their constituencies. At the same time, refraining from carrying out reforms and structural readjustments will only aggravate these countries’ dire financial circumstances, creating unsustainable conditions. Presented with such alternatives, leaders in many countries tend to favor the status quo while seeking to dilute reforms.

From a regional geopolitical perspective, these crises have imposed economic and geopolitical realignments that are bolstering hydrocarbon exporters, while increasingly marginalizing energy-poor states. The dependency of energy-importing LMICs on hydrocarbon-exporting countries for aid has undermined their foreign policy autonomy because of the need to toe the line for their funders, or at least satisfy their demands.

Nur Arafeh is a fellow at the Malcolm H. Kerr Carnegie Middle East Center, where her work focuses on the political economy of the MENA region, business-state relations, peacebuilding strategies, the development-security nexus and Palestinian-Israeli affairs.
Hamza Meddeb is a research fellow at the Malcolm H. Kerr Carnegie Middle East Center in Beirut, where he co-leads the Political Economy Program 

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