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Lessons From The Middle East

March 17, 2011

For years, Western (democratic) nations argued that collaboration with autocracies and dictatorships would lead to greater distribution of wealth and growing internal pressures for democratic systems.

 In reality, the results appear rather more variable. For example, the collapse of Communism has led in many cases to the growth of corruption and an unaccountable elite. The early hopes of democratic reform in countries such as Russia and the Ukraine have been stifled by the emergence of strong leaders who appear selective in their application of the law.  Now we see similar turmoil in the Middle East, causing us to question many of the political assumptions that were made regarding the path of progress in the region.

An editorial in The Jordan Times by former Jordanian Foreign Minister Marwan Muasher(now a senior fellow at Yale University) addresses some of the myths and realities exposed by the current unrest. Of particular interest for those in the commercial world is his observation regarding economic liberalization. Mr Muashar says that Western governments (and large international corporations) convinced themselves that ‘economic liberalization should precede political reforms’. This was perhaps a convenient excuse for doing business with unpleasant and repressive regimes; we could convince ourselves that this was morally justified since it would. over time, lead to greater distribution of wealth and thence to growing freedom for the people. Co-incidentally, it also served the short-term exconomic interests of those governments and corporations.

But in reality, says Mr Muashar, the benefits of privatization, economic reform and increased international trade went largely to ‘political and business elites’ because it occurred in an environment where there was no system of checks and balances. As a result, the Arab people ‘have come to view liberalization and globalization negatively’. The article suggests that to be successful and sustainable, economic reform must be accompanied by the creation of institutional mechanisms of accountability. The real sources of public anger are not high prices or unemployment, but rather they are driven by a sense of inadequate governance and fundamental unfairness.

This suggests that governments and international corporations from outside the region face a challenge of building trust with local populations. But they also face a period of sustained uncertainty, because the implosion created by popular unrest has revealed the lack of established institutions for improved governance and hence it is hard to predict what systems may emerge. In some respects, making investments at a time of such uncertainty will be risky, but failing to make them is probably even riskier. We must show the positive aspects of economic liberalism and globalization or otherwise face the prospect of a potentially hostile and alienated world region.

4 Comments
  1. Jim permalink

    Interesting article and views. I find myself agreeing in part with the view of Marwan Muasher, the West (who is the predominant customer of such regimes) has a lot to answer for in terms of the economic support it had provided to such regimes whether in the Middle East or even in South & Central America. I also believe that the lack of trust that has developed will not be improved if we simply see these countries as potential buyers and sellers of goods. We need to start looking at them as communities and real people.

    The one part of the article that I do not agree with is the final summary re: positive aspects of economic liberalism and globalization. The positive aspects are in the minds of businessmen and politicians. Most ordinary people even in the major economies see liberalisation and especially globalisation as a risk or the cause of job losses in their own countries. One reason they believe these things are bad is because they see them as exploitation of the weak by the strong (powerful companies exploiting low paid workers).

    If we want to build trust in the Middle East and elswhere in addition to making sure that the necessary governance institutions are in place, we must also allow those countries to join globalisation from a position of strength and not weakness. This may mean letting them have time to develop their own industries that are capabl of competing on a global stage whilst at the same time not forcing them to accept subsidised western goods that undermine their own industries. We do not want another Miami rice problem as in Haiti or food crisis that has happened in Africa due to subsidised European food imports making local crops expensive.

    • An excellent comment – thank you!

      Perhaps I would nuance your comments on liberalization / globalization by trying to distinbguish ‘good’ from ‘bad’. As other researchers have suggested, positive trade is driven by an understanding of the relative terms of trade and competitive advantage. In a blog last year (https://tcummins.wordpress.com/2010/08/29/leadership-values-and-the-role-of-international-contracting/), I highlighted a book by Harbvard professor Paul Lawrence that tackled the myths of outsourcing and the qualities of leadership. I think you would find that interesting – as well as this blog from September 2010 on the wider question of overseas sourcing (https://tcummins.wordpress.com/2010/09/14/overseas-sourcing-the-end-of-an-era/)

      I think the real point is that we must become more discerning in what we do. Some changes are most likely desirable. For example, The Economist ran a recent article pointing out the impacts of today’s air travel and how this has enabled Kenya to become the flower growing capital of the world. They made the point that this takes advantage of the favorable climatic conditions and provides much-needed jobs and income for Kenyans. Interestingly, it is also probabaly positive for the environment, because although it drives more air traffic, it reduces the energy and fertilizer use traditionally associated with flower-growing in less favorable environments.

      However, I guess there might also be an argument that says ‘Why do we need flowers?’!

  2. FCA permalink

    Mr. Muashar raised a very interesting but open ended issue concerning the collaboration of the western world with autocracies and dictatorships.

    Hypothetically, if the Western world will not collaborate with autocracies and dictatorships, who are possessing the major reserves of the very basic engine for growth i.e. oil (black gold), how are we going to sustain world economic growth and even survival for some, what will be our option?

    I respectfully refute his contention that it is a convenient excuse but I would rather argue that “necessity” is the overriding driver behind the collaboration, without the collaboration of the western world, how are going to fill our engines, light our houses and live in the comfort that we are enjoying now.

    I have been in the Middle for 25 years now (on & off) and I can fairly conclude that the real sources of public anger are rooted in the fact that most people in the middle east are now well educated and informed as a result of the electronic media and exposure to the western developed world, in contrast to 25 years ago, where education and information is only a privilege to the selected few. Educated population and wide ranging poverty is a perfect and insidious combination that can quickly spark unrest amongst people.

    Let us draw a dividing line between economic liberalism and globalization to the political system of other countries. The best that we can do, is as what have been suggested “show the positive aspect” and let the people of the Middle East control their own destiny because democratic reforms must not be imposed but embraced through the free will of the people.

    • Thanks for this comment; I tend to agree with you. With regard to the ‘collaboration’, I guess the question is always to some degree the extent. As events have unfolded, we have clearly seen some rather unsavory examples of the degree to which there was collusion. Accepting reality is one thing; condoning it (or pretending that it does not exist) is another.

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