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THE TWO PHASES OF STRUCTURAL ADJUSTMENT/151

country samples in Latin America and Africa, it can be observed
that the political costs in terms of strikes, demonstrations and riots
are very different from one stabilisation measure to the next. Our
research has allowed us to define what a politically effective sta­
bilisation programme should look like. It is possible to obtain the
desired results while minimising political risks.
It is politically important to distinguish between stabilisation
and structural adjustment. Indeed, stabilisation programmes
involve a degree of urgency and therefore necessarily involve
many unpopular measures - such as sharp reductions in
household revenues and consumption through cuts in public-
sector wages, subsidies and employment in the construction
sector. On the other hand, structural adjustment measures can be
spread out over a number of years; each measure creates winners
and losers, in such a way that a government can easily obtain the
backing of a coalition of beneficiaries to defend its line of march.
In the case of an adjustment, a government can put down social
unrest to compensate for a drop in popularity stemming from
spending cuts. But this approach brings with it a number of costs


  • increased dependence on the army and negative foreign reaction.


Timing

A clear three to six month time lag can be observed between the
announcement of stabilisation measures and the outbreak of
strikes, demonstrations and other social unrest. This lag is
interesting since it proves - contrary to the hypothesis of rational
expectations - that political reactions occur when measures are
implemented rather than when they are announced.

A Worthy Role Model: Hassan II


That said, there is an example of a government successfully
avoiding this risk, such as in Morocco in 1983-1985. There were
two reasons for this political success: caution (price rises were
moderate and gradual) and good public relations (for example, the
king proclaimed that the poor should be protected from the effects
of adjustment, using the slogan 'austerity yes, pauperisation no').
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