Showing posts with label Middle East Economics. Show all posts
Showing posts with label Middle East Economics. Show all posts

Friday, July 22, 2011

Fouad Ajami: A Genuine Arab Hero

By Barry Rubin

You want to know what's wrong with the study and analysis of the Middle East in the West in a single sentence? Ok, here it is:

Edward Said is treated like a guru and hero; Fouad Ajami isn't.

Said never took the slightest risk and lived a life of greatest privilege. He was lionized by the intellectual elite. His work was taught in universities and shaped the worldview of a generation of professors and students.

Yet what Said said was disastrous for the Arabs themselves and for Western intellectual life. He told the Arabs that they were innocent victims who didn't need to do anything differently, thus guaranteeing they stayed on the wrong road. He backed the Palestinian cause as perfect (despite some criticisms of Arafat's dictatorial tendencies and corruption) and thus didn't use his influence to turn it toward moderation--away from radicalism, terrorism, and hatred--and a genuine two-state solution.

Equally bad, he undermined Western pragmatism, Enlightenment values, and scholarship by a Stalinist-type campaign to discredit all preceding work on the region and substitute for it propaganda.

I will never forget standing at the door of a Middle East Studies Association (MESA) annual meeting session listening to Said recite with hatred in his voice a list of scholars who he said were "enemies of the Arabs" to what can only be called a howling mob of professors. I had the honor of being on that list.

At that moment, I thought to myself: "I am witnessing the death of scholarship in American universities." If we had been living in a Middle East society, the audience would probably have erupted from the hall to beat up or kill those "enemies of the people."

Many years after his influence gained virtual hegemony, I am not aware of a single book authored by any of his followers that is of lasting value in the study of the modern Middle East. Not one. On the other hand, environmentalists should protest the forest murders to manufacture paper wasted on the ideological junk that is turned out on the region by academics today.

While Said came from an incredibly rich family and was raised from childhood as a Westerner (I personally witnessed him wearing earphones to hear the Arabic translation into English at a Palestine National Council meeting), Fouad Ajami came from a poor Shia Muslim family and grew up in a Lebanese village.

Ajami's brilliance, balance, and genuine adherence to democracy along with his people's welfare has been rewarded in the West with a response ranging from intellectual persecution to mere neglect.

He's also a great guy in person. Only a few days ago, a Lebanese student told me about meeting Ajami, who he didn't know, on a train ride and how friendly and kind Ajami behaved toward him. I also had an extensive conversation with a childhood friend about how Said used to make fun of the Arabs in private in terms that would shock the socks off the Politically Correct gang.

I'm leaving out a lot of detailed anecdotes about both men that demonstrate my thesis.

Pick up book and almost any article by Ajami and you will meet with a truly creative and incisive mind. Arguably, he is the greatest living thinker on the contemporary Middle East. (Lest anyone misread this as a slight toward Bernard Lewis, I would say he is the greatest living Middle East historian.)

If the West and the Arab world listened to Ajami rather than Said they would be both far better off.

All of this is by way of introduction to Ajami's latest article, "The Road to Serfdom and the Arab Revolt," published in the Wall Street Journal. He raises the hitherto neglected economic angle on the Arab world's recent history and opens the door to a fascinating comparison with Western history. Ajami also adds an important point in understanding what went wrong in the Arab world.

Though I already knew the basic points he made, Ajami's article inspired me to see these issues in a different way. I reprint here in its entirety:

"The Road to Serfdom and the Arab Revolt"

By Fouad Ajami
Wall Street Journal, July 8, 2011

The late great Austrian economist F.A. Hayek would have seen the Arab Spring for the economic revolt it was right from the start. For generations the Arab populations had bartered away their political freedom for economic protection. They rose in rebellion when it dawned on them that the bargain had not worked, that the system of subsidies, and the promise of equality held out by the autocrats, had proven a colossal failure.

What Hayek would call the Arab world's "road to serfdom" began when the old order of merchants and landholders was upended in the 1950s and '60s by a political and military class that assumed supreme power. The officers and ideologues who came to rule Egypt, Syria, Iraq, Libya, Algeria and Yemen were men contemptuous of the marketplace and of economic freedom.

As a rule, they hailed from the underclass and had no regard for the sanctity of wealth and property. They had come to level the economic order, and they put the merchant classes, and those who were the mainstay of the free market, to flight.

It was in the 1950s that the foreign minorities who had figured prominently in the economic life of Egypt after the cotton boom of the 1860s, and who had drawn that country into the web of the world economy, would be sent packing. The Jews and the Greeks and the Italians would take with them their skills and habits. The military class, and the Fabian socialists around them, distrusted free trade and the marketplace and were determined to rule over them or without them.

The Egyptian way would help tilt the balance against the private sector in other Arab lands as well. In Iraq, the Jews of the country, on its soil for well over two millennia, were dispossessed and banished in 1950-51. They had mastered the retail trade and were the most active community in the commerce of Baghdad. Some Shiite merchants stepped into their role, but this was short-lived. Military officers and ideologues of the Baath Party from the "Sunni triangle"—men with little going for them save their lust for wealth and power—came into possession of the country and its oil wealth. They, like their counterparts in Egypt, were believers in central planning and "social equality." By the 1980s, Saddam Hussein, a Sunni thug born from crushing poverty, would come to think of the wealth of the country as his own.

In Libya, a deranged Moammar Gadhafi did Saddam one better. After his 1969 military coup, he demolished the private sector in 1973 and established what he called "Islamic Socialism." Gadhafi's so-called popular democracy basically nationalized the entire economy, rendering the Libyan people superfluous by denying them the skills and the social capital necessary for a viable life.

In his 1944 masterpiece, "The Road to Serfdom," Hayek wrote that in freedom-crushing totalitarian societies "the worst get on top." In words that described the Europe of his time but also capture the contemporary Arab condition, he wrote: "To be a useful assistant in the running of a totalitarian state, it is not enough that a man should be prepared to accept specious justification of vile deeds; he must himself be prepared actively to break every moral rule he

has ever known if this seems necessary to achieve the end set for him. Since it is the supreme leader who alone determines the ends, his instruments must have no moral convictions of their own."

This well describes the decades-long brutal dictatorship of Syria's Hafez al-Assad, and now his son Bashar's rule. It is said that Hafez began his dynasty with little more than a modest officer's salary. His dominion would beget a family of enormous wealth: The Makhloufs, the in-laws of the House of Assad, came to control crucial sectors of the Syrian economy.

The Alawites, the religious sect to which the Assad clan belongs, had been poor peasants and sharecroppers, but political and military power raised them to new heights. The merchants of Damascus and Aleppo, and the landholders in Homs and Hama, were forced to submit to the new order. They could make their peace with the economy of extortion, cut Alawite officers into long-established businesses, or be swept aside.

But a decade or so ago this ruling bargain—subsidies and economic redistribution in return for popular quiescence—began to unravel. The populations in Arab lands had swelled and it had become virtually impossible to guarantee jobs for the young and poorly educated. Economic nationalism, and the war on the marketplace, had betrayed the Arabs. They had the highest unemployment levels among developing nations, the highest jobless rate among the young, and the lowest rates of economic participation among women. The Arab political order was living on borrowed time, and on fear of official terror.

Attempts at "reform" were made. But in the arc of the Arab economies, the public sector of one regime became the private sector of the next. Sons, sons-in-law and nephews of the rulers made a seamless transition into the rigged marketplace when "privatization" was forced onto stagnant enterprises. Of course, this bore no resemblance to market-driven economics in a transparent system. This was crony capitalism of the worst kind, and it was recognized as such by Arab populations.

Indeed, this economic plunder was what finally severed the bond between Hosni Mubarak and an Egyptian population known for its timeless patience and stoicism.

The sad truth of Arab social and economic development is that the free-market reforms and economic liberalization that remade East Asia and Latin America bypassed the Arab world. This is the great challenge of the Arab Spring and of the forces that brought it about. The marketplace has had few, if any, Arab defenders. If the tremendous upheaval at play in Arab lands is driven by a desire to capture state power—and the economic prerogatives that come with political power—the revolution will reproduce the failures of the past.

In Yemen, a schoolteacher named Amani Ali, worn out by the poverty and anarchy of that poorest of Arab states, recently gave voice to a sentiment that has been the autocrats' prop: "We don't want change," he said. "We don't want freedom. We want food and safety." True wisdom, and an end to their road to serfdom, will only come when the Arab people make the connection between economic and political liberty.

Mr. Ajami, a senior fellow at Stanford University's Hoover Institution, is co-chairman of Hoover's Working Group on Islamism and the International Order.

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

Sunday, January 30, 2011

Egypt's Revolt: The Economic Dimension

By Barry Rubin

The very savvy columnist Spengler has kindly given me permission to quote in advance his column in the Asia Times. He writes:

"There's an economic dimension to the problem is quite worrying. Structural changes in the world food market will make jumps in the price of grains such as we had during the last few months and in 2007-2008 a regular occurrence. A spike in food prices were certainly a factor in the timing of the revolts.

"The trouble is that this is likely to be a regular occurrence. Any minor disturbance in grain supply now has catastrophic price effects because prosperous Asia no longer cares what it has to pay for wheat and maize. In effect Asia is threatening to price the Arab poor out of the world food market.

"Egypt is the world's largest grain importer in most years (Iran had the number-one spot in 2009 due to drought, with 6 million tons of imports). Egypt imports about half its wheat. Iran still can pay for food; with a few weeks' of instability, Egypt's currency and foreign credit (trade credits from banks in particular) will be in jeopardy and people will be hungry. Whatever regime is around will have to deal not just with the urban mob but with the very poor. We haven't really had food riots like 1977 [in Egypt] yet, but we probably will. We have a country that is structurally incapable of feeding itself and may have difficulty paying for imports soon.

"Insurance against Egyptian default was LIBOR +3.3% a week ago; now it's at LIBOR+ 4.54%. That's not quite crisis levels, but if banks start reducing exposure, things could get bad fast. In 2009 Egyptian imports were $55 billion against only $29 billion of exports; tourism and other services brought the current account into balance. Scratch the tourism, and you have a $26 billion deficit against $35 billion of central bank reserves. It would not take long for a run on the currency to materialize--and if the currency devalues, food and fuel become all the more expensive. Food and fuel subsidies are now 7% of GDP.

"With half the population living on $2 a day or less, that means real distress. I suppose there's a scenario under which al-Baradei gets in and scores some loans from his friends at the World Bank and an ad hoc aid consortium, but there's no reason to count on it. And if the country really starts to hurt badly, the Ikhwan will be out there preaching al-Qutb style Islamic socialism to hungry people."
Right, I'd add that given Egypt's situation, a free election would not produce a moderate democratic government that can meet popular demands. That means either the elected government will go to demagoguery to mobilize mass support--meaning shrieking about Israel, the United States, and the West--or be replaced by an Islamist regime.
We've seen this pattern in the past, including in Egypt itself between 1952 and 1977 or so. There were three wars with Israel during that period, an alliance with a radical anti-Western state (the USSR), and a government dedicated to destroying U.S. and Western interests in the region.
This is a critical point: What could a moderate democratic government do if it gained power given Egypt's difficult situation (few resources, some oil; Suez Canal; huge population; little capital)? It can't cut the military budget because the army would revolt. It can't cut subsidies because the people would revolt.
It is no accident that Egypt has a dictatorship. Obviously, every country is in a different situation 
Here's a detailed article about the issue.

Wednesday, June 3, 2009

Obama! Learn from Berdimuhamedow!

By Barry Rubin

Some people understand how international affairs work. They might not be in the hallowed halls of Whitehall, the Quai d’Orsay, or State Department. But what about Gurbanguly Berdimuhamedow?

He’s the president of Turkmenistan. That country struck a good deal with Russia in December 2007 because Moscow needs Turkmenistan’s natural gas the Russians were willing to pay $210 per thousand cubic meters. The Iranians paid $75.

Turkmenistan, presumably lacking world-class universities or proliferating pundits was able to do the math. It told the Iranians: We’re doubling the price.

Meir Javedanfar tells the story. Naturally, Iran refused, and naturally Turkmenistan stopped the supply. In the tough north Iran winter, massive numbers of Iranians went cold. Iranian President Mahmoud Ahmadinejad who walks over America, Britain, and France, refused to spend any money. A domestic crisis ensued; the supreme guide stepped in and gave an order.

Sure enough, in April 2008, Tehran agreed to Turkmenistan’s price. Turkmenistan won.

President Barack Obama says he is going to listen and learn from foreigners rather than arrogantly assuming America knows best. So remember the Berdimuhamedow Doctrine: Power works.

Imagine if Berdimuhamedow had given a speech explaining how he respected Iran and wanted to be its friend? Consider him apologizing for real or imagined past Turkmen misdeeds.
Berdimuhamedow didn’t say to the Iranians: I feel your pain. He inflicted pain.

Yes, that’s how it works. Of course, things might be different when Tehran gets nuclear weapons. But that won’t be because they have gained in empathy or been impressed at how nice a guy Obama is.

So yes, Mr. President listen to Berdimuhamedow. And while you're at it, take a look at how your enemies operate in the Middle East, too. Imagine a powerful politician or ruler. On one side is a big powerful person saying: "Do what I want or I'll kill you." On the other side is another person who says to the bully, "I don't believe in using violence and I want to be your friend."

Now imagine an average Arab. On one side is a big powerful person who says, "I'm your brother and together we will smite the infidel. See all the victories I've won! See how the enemy is retreating!" And on the other side is someone who says, "I'm really a very nice guy and I respect you."

During the Cold War, the Soviet Union was able to bully Finland so much that it surrendered large parts of its sovereignty. By now we should know that nice guys Finnish last.

Sunday, April 26, 2009

MERIA Journal: The Middle East Review of International Affairs
Vol. 13, No. 1 (March 2009)

We’ve now completed publication of the March issue (it’s a long story, related to our putting in an entirely new site. Come see the articles or—better yet--subscribe

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Laurent Bonnefoy
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Patrick Clawson
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Doris H. Gray
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Panel Discussion
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Nissim Gal
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Wolfgang G. Schwanitz
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Michel Makinsky
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