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Yemen’s state-funded thugs

President Ali Abdullah Saleh has played up the threat of al-Qaeda in Yemen to receive military aid f

One Friday in February, after the noon prayers, a straggle of Yemeni students and activists met in front of a small roundabout by Sana'a University and marched in solidarity with Egyptians who were frustrated with Hosni Mubarak's refusal to resign. Fewer than 20 people took part in this protest in Yemen's capital city; only two were women. Many carried pictures of Gamal Abdel Nasser, the late Egyptian leader and symbol of Arab nationalism. They called on the youth to awaken, and for the fall of Mubarak.

They passed throngs of people who ignored them or looked on bemused, carrying on life as usual and buying khat, the mild, stimulating narcotic that nearly all Yemenis chew. One onlooker asked another who the man in the picture was; a traffic policeman spat out that the demonstrators were sons of whores and nobodies. A Yemeni Red Crescent car followed them. I asked one of the first-aiders why they were there. "For them," he told me, gesturing at the protesters. A lone policeman on a motorcycle and two sanitation trucks full of young men with sticks and rocks also followed.

Abruptly, more security forces arrived. Some had clubs. The trucks, each holding at least 20 men, pulled up, ready to attack the demonstrators, who scattered. But Tawakul Karman, a leading female activist, smiled and shouted, "Down, down with Ali [Abdullah] Saleh!" - the president of Yemen since 1978.

The country Saleh rules is the poorest of the Arab nations. It is an uncomfortable amalgam of North and South Yemen, which were united in 1990. In the north, he has been fighting his own Zaidi Shia people, who seek autonomy, bombing their villages, displacing thousands, and then attacking the displaced civilians. In the south, too, he is at war with secessionists.

Saleh delegates control over much of Yemen to tribal sheikhs whose loyalty is tenuous. The country's powerful Saudi neighbours are deeply involved in its internal affairs; their money has purchased officials and helped to spread Wahhabi Islam. The president has used members of al-Qaeda to battle his domestic foes, yet he has also played up its threat to extort money from the Americans, who see the Muslim world only through the prism of the "war on terror".

As in Egypt, Tunisia and Bahrain, Washington has had a close relationship with Yemen's dictatorship through the crackdown on terrorism. Barack Obama increased military assistance for Yemen from $67m in 2009 to $150m in 2010. Documents released by WikiLeaks showed that the US-backed Yemeni security forces, which were supposed to be fighting al-Qaeda, were targeting Zaidis instead. I have seen evidence suggesting that they are also fighting southerners, journalists and students.

Al-Qaeda is marginal in Yemen, its activities amounting to little more than the failed Underwear Bomber attack in 2009 and a couple of package bombs that failed to detonate last year. Yet action against it has provided a pretext for suppression of dissent. Terrorism might be a primary concern of the US government and the global media, but it is far from the biggest problem facing Yemenis.

Broken promises

On 2 February, in response to the revolt in Egypt, Saleh promised not to run again in 2013 (a promise he made and broke before the 2006 elections). He also said that his son would not succeed him.

In Sana'a, as in the rest of the Arab world, it was not the establishment parties that started the revolution, but the youth. On 11 Feb­ruary, the night Mubarak resigned, thousands of Yemeni students, academics, activists and citizens gathered at the university roundabout. They shouted: "One thousand greetings to al-Jazeera!" They wanted the powerful satellite network to focus on them, as it had on the uprisings in Tunisia and Egypt.

As the demonstrators grew in number, they gathered in Tahrir ("liberation") Square, Sana'a. Most of it was blocked off by security forces and the tribal factions with which they were col­laborating. At least ten army trucks carrying dozens of men dressed as civilians soon arrived. Hundreds of reinforcements carrying sticks, knives, automatic weapons and pictures of Saleh turned up, too. These were the balataga, thugs paid by the state to crush dissent.

In a series of skirmishes, the balataga charged the youth, forcing them to flee, then sang, banged drums and danced. It was a symbolic victory: the regime had no intention of letting them occupy Tahrir, unlike in Egypt. "This is the problem," Karman told me. "They send these balataga with their knives. Since the Tunisian revolution, we have organised 11 demonstrations. The revolution is getting bigger. The [balataga] occupy Tahrir so we can't take it, but we will sleep there one day."

Big sticks

By this time, Karman had been arrested twice. Her brother, who was close to the regime and recited poetry at official events, got a phone call from Saleh. "You have to control your sister and put her under house arrest," the president said, adding an Arabic expression: "Whoever splits the stick of obedience, kill him."

“This threat and the arrests empowered the human rights movement and strengthened my will," Karman told me. She was aware of the WikiLeaks revelations about state security. "The national security bureau was founded after 11 September to fight terrorism in Yemen but it fights journalists and human rights acti­vists. It oversees terrorism instead of fighting it."

By mid-February, people from outside the activist network were joining the demonstrations. Among them was a mechanic, Muhamad Ali al-Muhamadi, who told me he did not belong to a political party and did not own a television. “I joined because I am against the regime," he said. "Humans are born free and are not animals to be guided by a stick."

On 12 February, Muhamadi joined more than a thousand demonstrators at the university. The balataga attacked them with daggers, clubs, axes and stun guns. Muhamadi was stunned several times.

The next day, there were larger protests in the capital where security men took pictures but schoolchildren and those in traffic cheered and waved. At least 20 demonstrators were beaten with batons and many were arrested. The journalist Samia al-Aghbari was attacked by guards who threw her to the ground. Her head hit the kerb and she lost consciousness. One security officer loaded his rifle to intimidate men trying to protect Karman. Others were stunned electrically, including Mizar Ghanem, 31, a student leader.

“We first came out on 16 January," he said. "Our first activity was to support the Tunisian revolution and call for the fall of the regime in Yemen. We are a peaceful youth and student revolution." This time, they could not reach Tahrir, so they renamed the square in front of the university Taghir, meaning "change".

By 16 February, the protests had spread even further. Hundreds of judges were protesting in front of the ministry of justice and new demonstrators had come out in response to a call by the student union. Police trucks dropped off dozens of balataga, who attacked the crowds with stones, chains and clubs and fired gunshots into the air. Policemen in plain clothes attacked the students. Amir al-Gimri, a medical student who is lame in one leg, was unable to escape. Police and balataga attacked him, calling him a traitor and spy, slapping his face and throwing him to the ground. They beat his head and legs with clubs as he lay helpless.

French leave

In the two months since the Yemeni protests began, the regime has responded as aggressively as other Arab dictators. But the people's fear seems to have gone and I feel that Saleh's days are numbered. That Friday in February, I was sitting in a taxi when a young man at an intersection threw a leaflet through the window. Youth organisations were calling for peaceful demonstrations on 17 and 18 February, it said.

It was 3pm and already the driver's mouth was full of khat. I asked him if there would be any demonstrations today. "He [the president] has to go," he said, "like in Egypt."

I fired questions at him. Did he expect a mass uprising in Yemen? "There has to be one," he said. How will Saleh go? "In a revolution." Does everyone think like this? "Yes." What about the army and security forces? "When there is a revolution, there is no fear." But what can you do when Tahrir Square is full of government supporters? "We'll remove them," he said, smiling and gesturing forcefully. "He has to go, to Saudi Arabia or France."

“God grant you victory," I said as I left. He smiled a big, green-toothed khat grin.

The demonstrations continue to grow, forcing the opposition parties to take a harder stance against the government and leading to defections of major tribal leaders. Meanwhile, the silence from the White House on the regime's abuses makes it likely that a post-Saleh government will be far less friendly to the Americans.

With the earthquake in Japan distracting the world's attention, the state forces intensified their crackdown over the weekend of 12 March, killing at least seven and injuring hundreds more. In a pre-dawn raid, the youth demonstrators camped by Sana'a University were ambushed with live automatic rifle fire, electrical stun guns and a gas that caused convulsions. The regime is now expelling the few remaining foreign correspondents covering the protests.

Still, there is hope here that Saleh's rule is near an end. Already, the optimistic chant is: "After Gaddafi, oh, Ali!"

Nir Rosen is the author of "Aftermath: Following the Bloodshed of America's Wars in the Muslim World" (Nation Books, £20.99)

This article first appeared in the 21 March 2011 issue of the New Statesman, The drowned world

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt