Last week, dictatorships in three Islamic nations faced a common global enemy — inflation. With one difference: instead of suffering silently, the people hit the streets — we saw riots in Tunisia, Algeria and Jordan. This was probably expected. Dictatorships are fine as long as citizens are taken care of. But the case of Tunisia, where the country’s president Zine al-Abidine Ben Ali has had to flee to Saudi Arabia is being looked upon as a model by citizens of other Arab nations to follow. Leaders in Egypt and Saudi Arabia are probably next. Clearly, the Arab world is in turmoil.
What I find interesting is that these protests and the subsequent regime change in Tunisia (and potentially in Algeria and Jordan — though they don’t look so serious right now), are not because of human rights violations or fundamentalists taking over the country. In fact, there is nothing ‘Islamic’ about the protests in the three countries.
The culprit is simple economics — and its survival implications.
When prices go out of control, governments feel the pressure. But the inflation rate is 6.1% in Jordan, 3.5% in Tunisia, 5.7% in Algeria. These rates seem aspirational for India, where price rises are in double digits.
Inflation, as we all know, is religion-agnostic. In post Cultural Revolution secular China, with Buddhism, Taoism, and Confucianism as the dominant religions, it stands at 5.1%. In the Hindu-dominated secular India, the inflation rate hit 8.4%, with consumer price inflation at a high 12%.
But there’s a difference between the Arab nations and Chindia. In the former, the fire of inflation has all but burnt the establishment. As far as the world’s two fastest-growing economies are concerned, the revolutions and regime changes will be delayed. In China, because of a strong military. In India, because of elections.
Inflation has become the biggest enemy of a perplexed global establishment. The Indian government will need to look beyond the archaic banning of exports, restrictions on sale and throwing a corrupt IT department to raid traders. Our policymakers seem to have forgotten that India is now a trillion-dollar economy, and tools of economic policy have to evolve. These will not do.
Note to the government: will you please stop telling us that inflation will fall by such and such month? Just bring it down, and we’ll know. Stop talking it down. And learn from Tunisia.