Arabs feel inflation

Press, Volume CXIV, Issue 33676, 28 October 1974, Page 4

Arabs feel inflation

(NJ. P..4.-Reuter— Copyright) <

BEIRUT. Arabs throughout the Middle East, even in the : oil States whose production reduction sent shock waves across the industrialised world, are feeling the effects of infiat ion. To the rich it is only a nuisance: to the middle classes it means frustration.’ But to hundreds of thousands of poor Arabs, inflation has brought despair.

Ironically, the wealthy oilproducing nations have not

[been spared. They are earn-: ling many more thousands of], (millions of dollars from petroleum exports than they.; [were two years ago. But theli Icost of their,heavy depend-! jence on the. inflation-stricken j I West, for food and industrial ! i [imports has also soared. : Lebanese. Syrians, Jordanians, Iraqis, and Saudi Ara-] I bians alike watch furiously I as they see how each wage: irise only drives up prices |i [even further beyond their! 1. reach. j Thousands have taken sec-; ’ond jobs, driving taxis,! [translating, serving in res-! [taurants or selling lottery: Tickets, to buy food and I [ clothes for their families, or to meet the latest rent in-] crease. In Egypt the problem for many housewives is scarcity i [rather than inflation. Prices! I of ordinary goods have leapt but many have disappeared; from the markets and the] streets in towns and villages! iare swollen by anxious! women and children queuing i in scorching sun for such necessities as rice, soap, tea.! .and salt. Many of the poor and, [middle class Arabs, cannotji ! hope to save. They feel-' their living standards are! . falling. This anxiety, coupled!] with a fatalistic conviction Ithat governments cannot or! will not cure the disease, . brings more wage demands,! 1 pushing prices up the spiral. Last month the 14-month old Lebanese Government led by Ta Keddin Al-Solh re- . signed, after criticism by : political leaders and the; press that it had failed to fight inflation and uphold 1 law and order. In Beirut a new Govern- : ment is being formed, but ; the people are pessimistic about its chances of beating! i; Economists say that the]! only answer seems to be a|! vigorously enforced price,;: wage and credit squeeze, but ! this relies on Government! determination to prosecute] shopkeepers and businesssesb increasing their prices too ■ 1 sharply, and on seemingly i( unattainable standards of I;

j individual honesty and selfi discipline. The most savage burst ot ; .inflation came after a IO per [cent wage increase ordered 'by the Government for the [public and private sectors! [last February. Now some trade unions are demanding a further 15 ; per cent wage increase, [which on past form will only make the average perjson worse off. Earlier this year, the Government stiffened credit terms, encouraged savings i by stepping up interest rates, and increased the amount of obligatory reserve holdings in But the association of ] Lebanese banks said that the, ! Government should have moved to cool off the economy 12 months ago “when

I overheating was at its worst, the flood of capital into the country was even more massive than today, and speculation of every sort was at its height . . . now there are fears that the new (tight) credit policy will depress the expansion of the Lebanese economy."