The Middle East has the world's priciest and cheapest cities, and that's a problem

'Expensive' doesn't mean always rich, and 'cheap' doesn't always mean affordable

The costs of transport and groceries have increased in Tel Aviv, Israel. AFP
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Ten years ago, while the Middle East was in the throes of uprisings rocking several Arab cities, Tel Aviv saw one of the biggest protests in its history, with 300,000 Israelis marching through its tree-lined avenues.

The demonstrators were not protesting political oppression or calling for an overthrow of the government – though, as in nearby Arab cities, many of their placards did cite corruption among their list of grievances. They were protesting an unsustainable cost of living.

At the time, Tel Aviv had become the most expensive city in the Middle East – a title it has held throughout the decade since. This month, it was named by the Economist Intelligence Unit’s Worldwide Cost of Living Index (WCOL) as the most expensive city on Earth. The index measures the US-dollar prices of 200 goods and services – including rent, transportation, household goods and other items – in the world’s major cities.

Tel Aviv’s place at the top of the table may be (and has widely been) interpreted as a sign of strength for the Israeli economy, as it is in part the result of a strong shekel compared to the dollar. That would make the city more expensive for tourists, as well as would-be expatriates and the employers considering relocating them there. After all, the WCOL Index was designed to be used by multinational companies as a tool in formulating their relocation and remuneration packages.

But other factors come into play that make Tel Aviv expensive not only for foreigners, but for Israelis and (as too much coverage of the subject seems to forget) Palestinians, too. Some of these are predictable, though no less uncomfortable for residents: higher fuel prices have pushed up transport costs, and global supply shortages and supply-chain issues have driven up the cost of groceries. Israel’s relative success in controlling Covid-19 and the corresponding loose restrictions on daily life have also kept demand for consumer goods high when, in many European cities, for example, the reverse has often been true.

But even before the pandemic, for the past decade, when supply chains were well-oiled and the oil involved was cheap, the greatest financial hardship for anyone living in Tel Aviv was rent. Today, it eats up half of the average salary.

The rent is a particularly bad problem in a country where a shortage of housing and a high population density is already the cause of so much political and social discontent. The Israeli economy, like Israeli politics, is particularly hard on Palestinians, 100,000 of whom work in Israeli cities, use Israeli transport and often purchase food for lunch at Israeli supermarkets. While most of them do not rent in Tel Aviv, high housing prices there can often translate to greater demand for settlements elsewhere – increasingly in Palestinian territory, which breaks international law. This will do nothing to help ease the conflict between Palestinians and Israelis.

The truth is, for all but a few wealthy landowners and investors, being at the top of the WCOL Index is not a badge of honour; it’s a curse. And in a country as politically fractured as Israel, it can be a cancer.

Even as the Syrian war draws down, most Damascus residents are under severe financial strain. Reuters
Damascus and Tel Aviv have something in common in that it is their Palestinian populations who lose out the most

Three hundred kilometres up the road, albeit a road with an untraversable border crossing, is the cheapest city on Earth, Damascus. There, residents risk their lives if they protest, but many of them certainly would if they could, because being the world's cheapest city is no blessing either.

The WCOL Index is, it is worth repeating, designed for those who think in dollars, and the dollar goes tremendously far in Damascus these days. One hundred and fifty dollars a month will fetch a medium-sized apartment in the affluent neighbourhood of Rukneddine. Basic groceries are subsidised to a price far below what they are in neighbouring countries, and fuel prices are capped at $0.20 a litre.

Of course, this means nothing to Damascenes, the vast majority of whom have no access to dollars, thanks to the near-total economic collapse brought about by the past decade of civil war. As cheap as their city may be on the international market, most of them are far more financially stressed than the residents of Tel Aviv. That $150-a-month apartment in Rukneddine is more than 10 times the monthly wage of a public-sector worker with a university degree.

Even the cap on the fuel price is deceptive; fuel can only be purchased using ration cards, because there is so little of it to go around. And while groceries are kept artificially cheap, in real terms they remain unaffordable. Eggs are the cheapest source of animal protein available in Damascus, making them a good metric for people’s nutritional priorities under financial stress. A survey by the Operations and Policy Centre, a Syria-focused think tank in Turkey, found that between 2018 and 2020, nearly half of poorer households in Damascus cut down on egg consumption to save money, and more than half of wealthier households increased egg consumption, also to save money.

Interestingly, and depressingly, Damascus and Tel Aviv have something in common in that, in both instances, it is their Palestinian populations who lose out the most. In Damascus, Palestinians do not qualify for ration cards.

All of this begs one question concerning popular rankings on expensive and cheap places to live: expensive for whom, and cheap for whom? The WCOL Index is not a straight line of wealth or quality of life. It is more akin to a horseshoe, with both ends of the spectrum being in the economically problematic zone. The most expensive cities are too expensive for almost everyone, and the cheapest cities are cheap for almost no one.

The best place to be is, actually, in the middle ground. In this sense, the Middle East fares rather well. Most Arab cities are middle-of-the-pack – neither prohibitively expensive, nor economically in serious trouble. The region, of course, has a very long way to go in terms of its economic development. But, as can be said about so much else in the Middle East, the fewest problems lie away from the extremes.

Published: December 06, 2021, 4:00 AM