"The Arab Spring, One Year On" By Christine Lagarde, Managing Director, International Monetary Fund

IMF News, December 6, 2011

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Canonical URL: "The Arab Spring, One Year On" By Christine Lagarde, Managing Director, International Monetary Fund

Event: Speech delivered by Christine Lagarde, Managing Director, International Monetary Fund, Washington DC, December 6, 2011. As prepared for delivery.
Core narrative:
- The Arab Spring began roughly one year earlier and represents a historic transformation across the Middle East and North Africa.
- The movement embodies “the hopes, the dreams and aspirations of a people yearning for a better way of life” including greater freedom, dignity, and fairer distribution of economic opportunities and resources.
- The transition is “risky and uncertain,” described as a delicate inflexion point between “rejecting the past” and “defining the future.”
- Setbacks have been larger than expected, with particular concern about “the deplorable loss of life in places like Libya, Syria, and Yemen.”
- Tunisia is highlighted as an example of a smooth and inclusive transition that could “light the path forward for other countries in the region.”
Notable quotations preserved verbatim:
- “Yesterday is but today's memory, and tomorrow is today's dream,” — Khalil Gibran.
- “The Arab Spring is still poised to unleash the potential of the Arab people. The potential of a better future for all.”

Key diagnostic points:
- Top-line growth figures often “looked good,” but “too many people were being left out.”
- The IMF acknowledges it warned about high youth unemployment but “did not fully anticipate the consequences of unequal access to opportunities.”
- Greater equality is linked with “greater economic stability and more sustained growth.”
Overarching economic goals of the Arab Spring:
- “Higher growth, growth that creates more jobs, and growth that is shared equitably among all strands of society.”
Immediate economic risks during transition:
- Economic slowdown across oil-importing countries is “pushing up already-high unemployment and aggravating social tensions.”
- Risks are political, economic, and financial; careful management is required.

Findings:
- “Macroeconomic and financial stability remain absolutely essential, core building blocks of any new society.”
- Governments responded to social pressures with increased subsidies, wages, and other spending to maintain social cohesion in the short term.
- These responses have widened fiscal deficits and “pushes up interest rates,” constraining private-sector credit and job creation.
Policy recommendations:
- Move toward “better and more sustainable fiscal policies.”
- Implement “more targeted social protection systems” to free resources for infrastructure, education, and health while laying foundations for inclusive growth.
- Shift away from generalized subsidies that allowed privileged groups to benefit unfairly.

Findings:
- Macroeconomic stability and inclusive growth “can—and indeed must—go hand in hand.”
- The private sector, including small and medium-sized enterprises, must lead in boosting investment, productivity, competitiveness, and job creation.
Policy recommendations:
- Governments must provide an enabling environment with “modern and transparent institutions” to encourage accountability and good governance and ensure fair and transparent rules.
- Eradicate corruption: “slay, once and for all, the dragon of corruption.”
- Break down vested interests and cozy networks of privilege that block economic potential.
- Create the necessary jobs to absorb new labor-market entrants: “There is simply no other way to create the 50-70 million jobs needed for the people joining the labor force and to reduce unemployment over the next decade.”
Framing:
- Move public debate beyond “what is wrong with the past” toward “what is right for the future.”

Responsibilities of international partners:
- Listen to reformist and hopeful voices and provide support through financing and technical assistance.
- Offer greater market access to countries in the region to help them modernize, become more competitive, and create jobs.
IMF commitments and examples of assistance:
- The IMF “stands ready to help,” offering policy advice, financial help if requested, and technical assistance.
- Specific technical assistance examples cited:
- Helping Egypt make its tax system more equitable.
- Helping Libya develop a modern system of government payments.
- Helping Tunisia improve its financial sector.
- Helping Jordan with fuel subsidy reform.

Summary:
- Despite a “darkening economic outlook and waning confidence,” the Arab Spring remains “a bright light and a beacon of hope.”
- The region is at a “critical juncture” with substantial challenges but persistent potential.
- Historical and cultural legacy invoked: “This is a region that stands at the center of human civilization. Names like Carthage and Alexandria and Damascus are forever etched in our collective consciousness.”
Closing quotation preserved verbatim:
- “March on. Do not tarry. To go forward is to move toward perfection. March on, and fear not the thorns, or the sharp stones on life's path.” — Khalil Gibran

Speech by Christine Lagarde, Managing Director, International Monetary Fund. Washington DC, December 6, 2011.