Like a tornado that sweeps across the globe with little prediction, acute economic instability is leaving a trail of political turmoil and violence in poor and rich countries alike.
In debt-ridden Kenya, protests against proposed tax increases last week left dozens dead, demonstrators abducted and part of parliament burned.
At the same time in Bolivia, residents lined up because of gasoline shortages, a military general led an attempted coup, and armored vehicles rammed into the presidential palace just after the president, a former economist, said, “We must stop impoverishing our country.”
And in France, after months of farmers blocking roads angry about low wages and rising prices, far-right parties saw a surge in support in the first round of parliamentary elections on Sunday, bringing long-taboo nationalist and anti-immigrant politics to the doorstep of power.
The causes, circumstances and conditions behind this unrest vary widely from country to country, but common threads are clear: rising inequality, declining purchasing power and growing fears that future generations will be worse off than current generations.
As a result, people in many countries facing bleak economic prospects have lost faith in their governments’ ability to respond and are fighting back.
This backlash has often targeted liberal democracy and democratic capitalism, and has given rise to populist movements on both the left and the right. “Economic malaise and political malaise are feeding off each other,” says Nouriel Roubini, an economist at New York University.
Economic uncertainty has sparked protests, sometimes violent, around the world in recent months, including in many high-income countries with stable economies. Poland Belgium, and other countries struggling with uncontrollable debt, Argentina,Pakistan, Tunisia, Angola and Sri Lanka.
On Friday, Sri Lankan President Ranil Wickremesinghe warned, using Kenya as an example: “If we do not establish economic stability in Sri Lanka, we could face similar turmoil.”
Even in the United States, where the economy has proven robust, economic fears underlie the possible reelection of Donald J. Trump, who frequently speaks with authoritarian rhetoric. Recent polls show that more American voters than any other party say the economy is the most important issue in the election.
National elections held in more than 60 countries this year have focused attention on the political process and caused citizens to express dissatisfaction.
Economic issues always have political implications, but economists and analysts say the chain of events triggered by the COVID-19 pandemic has triggered a severe economic crisis in many parts of the globe, laying the groundwork for the current widespread social unrest.
The pandemic halted commerce, wiped out income and disrupted supply chains, causing shortages of everything from semiconductors to sneakers. Then, as life returned to normal, factories and retailers were unable to meet pent-up demand, sending prices soaring.
Russia’s invasion of Ukraine has dealt a further shock, sending oil, gas, fertilizer and food prices soaring.
Central banks have tried to tame inflation by raising interest rates, but this has put further strain on businesses and households.
Inflation has eased, but the damage has been done: Prices remain high, and in some places bread, eggs, cooking oil and home heating cost two, three or even four times what they did a few years ago.
As always, the poorest and most vulnerable countries were hit hardest. Governments already saddled with debt they could not repay saw the cost of that debt balloon as interest rates rose. In Africa, half the population lives in countries where more money is spent on interest payments than on health and education.
As a result, many countries are desperate for solutions. Indermit Gill, chief economist at the World Bank, said countries in debt crises who can’t borrow have two basic ways to pay off their debts: print money or raise taxes. “One leads to inflation,” he said. “The other leads to insecurity.”
Kenya was looking to raise taxes after paying off a $2 billion national debt in June, and things have gone from bad to worse.
Thousands of protesters stormed Parliament House in Nairobi, where clashes with police left at least 39 people dead and 300 injured, according to rights groups. The next day, President William Ruto withdrew the bill, which included tax hikes.
In Sri Lanka, which is $37 billion in debt, “the people are totally bankrupt,” said Jayati Ghosh, an economist at the University of Massachusetts Amherst, who visited the capital, Colombo, recently. Families are skipping meals, parents can’t pay school fees or medical bills, and a million people have lost electricity in the past year because of rising electricity prices and taxes, she said. Police say They used tear gas and water cannons To disperse protests.
In Pakistan, flour and electricity prices have risen sharply. Kashmir And it spread to almost every major city this week, with traders closing their shops on Monday, blocking roads and raising electricity prices.
“We can no longer bear the burden of rising electricity prices and increased taxes,” said Ahmad Chauhan, a medicine seller in Lahore. “Our business has been hit and we have no option but to protest.”
Pakistan is heavily in debt to a range of international creditors. 40 percent To win Up to $8 billion in relief To avoid defaulting on its debt, it needs financial assistance from the International Monetary Fund (IMF), the lender of last resort.
No country has a bigger IMF loan program than Argentina, totaling $44 billion. Decades of economic mismanagement by Argentine leaders (including printing money to pay bills) have left the country battling inflation, with prices nearly four times higher this year than they will be in 2023. Argentines use U.S. dollars rather than Argentine pesos for big purchases like homes, and hide stacks of $100 bills in their jackets and bras.
Economic turmoil led voters to elect Javier Millay as president in November. Millay, a self-described “anarcho-capitalist,” promised to cut government spending. He cut thousands of jobs, slashed wages, froze infrastructure projects, and imposed austerity measures even tougher than those required by the IMF to help rebuild the country’s finances. Within six months of taking office, poverty rates had soared.
Many Argentines are fighting back. Nationwide strikes have shut down businesses, grounded flights and filled squares in Buenos Aires with protests. demonstration Outside Argentina’s Congress, some protesters threw stones and set cars on fire. Police responded with rubber bullets and tear gas. Several opposition lawmakers were injured in the clashes.
Martin Guzman, Argentina’s former economy minister, said that as national leaders ease the burden of government debt, the burden falls hardest on citizens, who will see their pensions cut and taxes increased. That’s why he pushed for legislation in 2022 that would require Argentina’s elected Congress to approve any future deal with the IMF.
“There’s an issue of representation and dissatisfaction,” Guzman said, “which combine to lead to social unrest.”
Even in the world’s richest countries, there is discontent: European farmers worried about their future are angry that the costs of new environmental regulations to prevent climate change are threatening their livelihoods.
Overall, Europeans feel their wages aren’t growing as fast as they used to. Inflation is expected to reach nearly 11% at some point in 2022, chipping away at their incomes. Surveys show that about a third of people in the European Union believe their standard of living will fall over the next five years. Recent Research.
Protests erupted Greece, PortugalSimilar incidents have occurred in Belgium and Germany this year. In March, farmers outside Berlin spread fertilizer on a highway, causing several accidents. In France, they burned hay, dumped fertilizer on Nice’s city hall and hung a wild boar carcass outside the labour inspectorate in Agen.
“It’s either the end of the world or the end of the month,” the head of France’s farm union told The New York Times.
Economic insecurity is deepening divisions between rural and urban residents, unskilled and college-educated workers, religious traditionalists and secularists. Far-right politicians in France, Italy, Germany and Sweden are exploiting this discontent to promote nationalist, anti-immigration policies.
And with growth slowing globally, finding solutions is even harder.
“Scary things are happening in countries where there are no protests,” said Ghosh, the economist at the University of Massachusetts Amherst, “but protests are a wake-up call for everyone.”
Zia-ur-Rehman He contributed reporting from Karachi, Pakistan.
