A clash of globalizations: obstacles to development in the Middle East. (Development and...

Issues of international development took center stage at the 2002 (UN-sponsored Johannesburg Summit, but the Middle East was virtually ignored in favor of partnerships with Africa and Central Asia. Indeed for the Middle East and North Africa, issues of development and modernization have acquired

new urgency in the context of transnational terrorist networks rising in the region. The current war on terrorism, conducted by the United States in response to the terrorist attacks of September 11, 2001, does not address the underlying sense of alienation among the Middle East's unemployed youths, who provide support for terrorist networks. Sustainable human development in the region thus represents the ultimate solution to regional instability and to swelling support for terrorism. Policies pursued by the United States under the administrations of US Presidents Bill Clinton and George Bush adversely impacted regional conditions; even if the countries in the region achieve self-sustainable human development, continu ed US confrontations with Iraq and support for Israel at the expense of the Palestinians will surely aggravate the underlying conditions for terrorism.

The situation in the Middle East can be characterized as a new clash of globalizations that frames the processes of development and modernization in much of what used to be called the Third World. Pressured to undergo extensive political and economic reforms, states in the region are caught between the imperialistic impulses of a neo-conservative Bush administration and other, apparently more benign, multilateral proponents of globalization, such as the World Bank, International Monetary Fund, and United Nations. Meanwhile, some of the more radical Islamist opposition parties stand pitted against any such reform-oriented forces.

In the 1960s, following the model of W.W. Rostow, developing countries were viewed as nascent economies about to "take off" under the protection of a relatively benign international environment. If so, then today they are caught by these international forces in a global pressure cooker. Arab countries are doubly pressured, with the regional forces of Arab nationalism and political Islam on one side and the challenges of globalization and reform on the other. As a result, they are less insulated than most other developing countries, both from one another and from the forces of globalization, making reforms and the achievement of human development far more difficult.

Regional Constraints

Political and military instability comprise the first major impediments to development in the Middle East. The long-standing Arab-Israeli conflict shows no sign of a bating. Despite the diminished appeal of Arab nationalism after Gamal Abdel Nasser's death in 1970, the fate of Palestinians during the second intifada has been a prime daily news broadcast throughout the Arab world and beyond. The sight of the humiliations inflicted on Palestinians steadily erodes the legitimacy of Arab governments, whose citizens see them as impotent onlookers if not outright accomplices of the aggressors. The Arab-Israeli conflict is obviously not the sole obstacle to Arab development, but it was used to justify the militarization of Arab politics in the 1950s and 1960s and heavy military expenditures in Egypt, Iraq, Jordan, and Syria--the legacy of which continues today.

Similarly, the intra-Arab disputes that Malcolm Kerr so vividly describes as the "Arab Cold War" probably contributed as much to the huge military expenditures of the Arab Gulf states as fears of Iran or Israel did. Although its share of international arms markets has declined in recent years relative to East Asia's, the Middle East on average devotes a greater proportion of its gross domestic product to arms purchases than does any other region in the world. The military expenditures of the Arab states and Iran between 1980 and 1995 are estimated to have totaled US$420 billion, excluding the damage caused by the 1991 Gulf War. These expenditures not only divert funds from development but also contribute to military-industrial enclaves that defy efforts to liberalize economies in the region.

These expenditures have slightly diminished in recent years, but the major reason for their reduction introduces a second distinctively Middle Eastern blockage to development: oil rents. Of the 10 countries in the region that have a population of 10 million or more, only Morocco lacks oil reserves, and only Tunisia--the smallest of the 10 in population as well as in oil production--is sufficiently diversified to be relatively unaffected by the volatility of oil revenues. All other states in the region (particularly Algeria, Egypt, Iran, Iraq, Saudi Arabia, Syria, Yemen, and most recently Sudan) depend heavily on oil exports to sustain government revenues and balances of payments--or in the case of Jordan, Lebanon, and the poorer states, to buffet inflows of remittances

When oil revenues plummeted in the mid-1980s, this dependence on oil wealth led to unproductive investments and unsustainable expenditures. The curse of oil hit Algeria's economy the hardest and may have tempted Saddam Hussein to carry out his ill-fated 1980 invasion of Iran. In addition to their deleterious economic impacts, oil rents may also help explain what the Arab Human Development Report 2002 (AHDR) calls the region's "freedom deficit." Even after factoring in inflated military personnel and any expenditures induced by the Arab-Israeli conflict and by intra-Arab and Arab-Iranian rivalries, oil revenues still contribute to the prevalence of authoritarian regimes in the region. Most economists, however much they believe in free markets, now understand that good governance, which is closely associated with the practices of constitutional democracy, is vital to making those markets work for sustainable human development. By reinforcing authoritarian regimes, oil wealth ironically becomes a barrier to goo d governance and development even as it provides the material wealth capable of funding development projects.

In addition to wars and oil, a third major impediment to development is the region's special colonial legacy, which also discourages democracy and political pluralism. Close to Europe and strategically located on the rim of Eurasia and Africa, the Middle East and North Africa were the principal battleground where the great powers competed for influence in the 19th century, even before the discovery of oil enhanced their geopolitical significance.

Political development suffered as a result. Direct French rule smothered civil society in Algeria and united civil society against French occupation in Tunisia, destroying pluralism as well. Indirect rule in Syria and Iraq promoted vulnerable, isolated elites who fell victim to military juntas. Egypt and Morocco were among the few to acquire legacies of political pluralism in opposition to more refined patterns of indirect colonial rule. Most of the other impositions of indirect rule generated monarchies that were either toppled by the military or that remain precarious and corrupt-hardly agencies for promoting self-sustaining human development.

Moreover, the memories of European imperialism, not to mention more recent interventions against Nasser and Saddam Hussein, color the perceptions of globalization among most of the region's contemporary political actors, in regimes and opposition movements alike. Many view globalization's intrusion into internal affairs as a new form of imperialism, which to some Islamist parties hearkens back to the Crusades. Thus the region has tended to be more reluctant than the rest of the developing world to accept the structural adjustment that international financial institutions and bilateral aid programs advocate.

Challenges to Globalization

Though it is facilitated by new information technologies, globalization is far from inevitable because it depends on the political acts of states, particularly the great powers. As John Gray and others have noted, the world economy today is less globalized in some dimensions, such as capital flows, than it was in 1913. But the process of globalization connotes the removal of barriers to the international movement of capital, goods, and labor. For example, the international debt crisis of the 1980s contributed to globalization by obliging debtor states to remove some of their trade barriers and capital flow controls.

In the Middle East and North Africa, these pressures recalled similar ones in the 19th century when predatory European creditors imposed reforms leading to the colonial subjugation of Egypt, Tunisia, Morocco, and the Levantine and Turkish heartlands of the Ottoman Empire, ultimately resulting in profound changes in policy as well as regime. The Middle East in the 21st century is distinctive in that globalization is again raising specters of regime change, not only for Iraq but also for many other shaky autocracies in the Arab world. Such regimes are coming under external pressure not only to change their economic policies but also to rectify their "freedom deficit" and improve their human rights record.

Yet political liberalization--cautiously attempted in the 1980s in Egypt, Jordan, Morocco, Tunisia, and more vigorously in Algeria--reversed in all of these countries by 2001. The pressure for regime change has strengthened the hand of reform opponents, sparking the rollback of gains in political and economic liberalization. Every regime except Algeria's faced growing opposition from within, perhaps assisted in part by another feature of globalization: the rise of transnational terrorist networks. It is often argued that a need to contain the discontent caused by structural adjustment induced these regimes to "deliberalize."

The anger against US imperialism, articulated by political Islamists, that flared across the Arab world in response to the Persian Gulf War seems nearly forgotten today. Following these military operations in 1991, Egyptian and Tunisian authorities cracked down on their Islamist oppositions. Major military operations against Iraq are likely to increase repression in the region further. Meanwhile, widespread Arab perceptions of US complicity with Israel have weakened support for regimes that are perceived to be US allies.

Within each country, tighter repression complicates any reconciliation between beleaguered reformers who may support globalization and the various opponents who reject change in the name of cultural authenticity, political Islam, or Arab nationalism. Many moderate political Islamists in fact favor market-oriented reforms and a less intrusive, more accountable state of the type suggested by the World Bank. But the dialectics of globalization hardly favor any inclusive syntheses in the tense regional climate. International intervention in Iraq and possibly elsewhere may jeopardize the slow work of Arab technocrats to engineer necessary reforms.

Regional Reform Efforts

The analyses and prescriptions of leading Arab social scientists expressed in the AHDR represent the most candid positive regional response to the economic and political challenges of globalization. As the authors clearly realize, however, the governance reforms needed to implement effective economic development are likely to endanger incumbent regimes and further exacerbate their respective oppositions. Moreover, to the extent that the United States pre-empts the gentle persuasion of multilateral institutions with direct military aggression toward "regime change," these incumbents are likely to harden their opposition to globalization and thereby render gradual reform an impossibility.

The AHDR singles out three deficits that conventional economic growth indices and the UN Development Programme (UNDP) overlook. These include deficits in freedom, women's empowerment, and human knowledge capabilities (at least relative to wealth). Three of the AHDR's eight chapters focus on this third deficit and try to tackle the problem of harnessing the region's human potential for economic growth and development. Because they view civic and political freedom as intrinsic to human development, the Arab intellectuals writing this report do not shy away from addressing the "freedom deficit" either. They argue, "Efforts to avoid the political aspects of governance when discussing the question sometimes reflect fear of expected or imagined consequences of dealing directly with the subject. However, restricting discussion of governance in this way does not serve the long-term interests of developing countries." Constitutional democracy is viewed not only as an intrinsic good by the putative globalizers who dra fted the AHDR; it is also an instrumental necessity if the region is to end stagnation and begin catching up with the rest of the world.

By focusing on the knowledge deficit, the authors of the AHDR also highlight the importance of good governance. The Arab world has consistently trailed the rest of the developing world in gross primary education enrollment ratios, despite outspending other developing countries in education until 1985. Arab spending went more to secondary and university education, where Arab states outperformed most developing countries, although not those in Asia or Latin America. Thus, the gap in educational achievement obviously stems from the fact that urban middle class rulers and administrators were looking after their own interests, not those of poor rural residents or women. Literacy rates in the region improved very slightly between 1980 and 1995 but remained far lower than the average in developing countries--over half of the region's women were illiterate in 1995. The AHDR argues that the best way to correct such a major bias and alleviate poverty is to deepen democratic participation.

An urban class policy bias may also help explain the "mismatch" deplored in the AHDR between educational curricula and labor markets, which is caused in part by parents and teachers propelling vocational schools into a dysfunctional academic status. The combination of inadequate vocational training and the declining quality of primary schools helps explain why Arab unemployment, especially among youth, is more severe than in other parts of the world. Too many aspiring but poorly trained youth graduate from secondary schools and universities to be absorbed by local economies. As a result, labor productivity, like per capita income, has stagnated or, according to one World Bank study, actually declined. Arab workers tend to produce less for equivalent wages than workers in most other regions of the developing world, while Arab states have failed to attract foreign direct investment outside the petroleum sector.

Given these failures of development in the region, the Arab world above all else needs to tackle the freedom deficit and its implied issues of governance if the region is to catch up with the rest of the developing world. The AHDR lays out the dimensions of good governance as objectively as possible. The reform agenda calls for: fair and free elections with "a solid electoral system that permits the peaceful rotation of power;" an elected representative legislature that can exercise real control over executive power; a constitution that effectively defines the rules of the game separating executive, legislative, and judicial powers; rule of law and autonomy of judicial institutions; local self-government; and reforms to invigorate civil society and guarantee a free press.

Achieving Good Governance

The question is no longer whether but how to engineer significant political change in the Arab world. Evidently the AHDR is articulating new dimensions of globalization-induced change. During the debt crisis of the 1980s, the region was called upon to remove trade barriers, plug up fiscal and current account deficits, stabilize macro-economic indicators, and reform the economy structurally through privatization. In addition, Arab countries are now being asked not only to implement economic policies that few understand, but also to engage in major public efforts of political reform. Backed by citations from the Prophet Muhammed's son-in-law Ali (thus appealing to both Sunni and Shi'a Muslims), the AHDR calls, in essence, for the transformation of Arab regimes into constitutional democracies like those of Organisation for Economic Cooperation and Development countries.

The UNDP will continue its benevolent political intervention through the Program on Governance in the Arab Region (POGAR). UNDP-POGAR's guidelines include a level of country-specific detail that the AHDR could not achieve. Mirroring the AHDR, UNDP-POGAR focuses on eight substantive dimensions of governance that embody the normative principles of participation, rule of law, and transparency and accountability. Although these standards apply as yardsticks for evaluating political institutions and practices, their relevance varies with the nature of the concrete theme. Thus, extending participation is the primary concern behind the themes of civil society, decentralization, elections, and the role of women in public life. Corresponding to the rule of law are proposals for the judiciary and constitutions, while legislatures and financial institutions are the primary foci of transparency and accountability.

UNDP-POGAR documents the practices of 20 Arab countries concerning the eight themes of governance. Because POGAR's partners include the governments themselves, the descriptions are meant to be credible without being incendiary. Behind its reform agenda may lie the hope that publicity will gradually induce changes that will alter regimes by changing mentalities, concrete behaviors, and practices. The strength of this approach is that it enjoys legitimacy in the eyes of the concerned parties. POGAR is quietly expanding the scope of globalization, typically defined as the elimination of various state barriers, to include barriers of domestic government practices. It is thus more akin to Benthamite improvements of the early 19th century than to the rampant imperialism in the latter part of that century. In the spirit of the Enlightenment, good ideas and practices are expected to drive out bad ones, and significant changes, such as Bahrain's new constitution, are visible to all to be criticized or emulated by the neighboring monarchies.

However, multilateral international and regional efforts to promote good governance may give way through gradual information exchange to more rapid regime change, either by US military intervention or by increases in domestic violence against regimes viewed as US collaborators. Globalization is now associated with regime change in the region, whether gradually through multilateral efforts or by more extreme methods. Underlying the clash between these alternatives is the conflict between the unilateralist tendencies of the Bush administration and the proponents--in the United States as well as in the international community--of the gentler liberal conception of gradual political reform through globalization.

Either way, the experience of globalization in the Middle East starkly projects the new dimension of regime change. If it does not happen spontaneously as a result of internal forces and regional "snowball effects," as in Latin America and Eastern Europe, regime change may become directly associated with cruder forms of external intervention, which could have the unintended consequence of reversing globalization's push toward economic convergence and political liberalization. Ironically, the region's oil fueled the first truly global industry, yet the region's resistance to externally imposed political change may set examples that others will emulate in opposition to a globalization perceived as US imperialism. Freezing processes of internal reform by forcefully imposing them on Iraq from the outside could have a domino effect well beyond the Arab and Muslim world, eliminating decades of progress in the Middle East.

CLEMENT HENRY is Professor of Government at the University of Texas at Austin.