CHAPTER EIGHT: CONCLUSION In the preceding chapters we have sought to demonstrate that MENA economies are not performing at levels commensurate with their factor endowments, and to explain this inadequacy as a result of political factors at the global, regional and national levels. Globalization, today's equivalent for many non-western economies of yesterday’s imperialism, is the primary external thesis against which MENA countries are reacting. As their revenues from hydrocarbons and strategic rents diminish, regimes throughout the region are now being pushed into dramatic adjustments to capture new, private sector sources of revenue which are less susceptible than traditional sources to political pressures and calculations. These adjustments are having profound domestic consequences. Ruling elites and their oppositions are being further bifurcated into "globalizers" and "moralizers." Whether in government or opposition, the globalizers seek to be the local apostles for the Washington Consensus, whereas the "moralizers" either reject globalization in its entirety or seek a synthesis incorporating nativist, primarily Islamic values and practices. Threatened by both the ardent globalizers and the moralizers, most regimes cautiously control the pace and content of globalization, lest they be swept away by it. The regimes have so far survived, at the cost of mediocre economic performance and a specter of rising unemployment rates and social unrest in the new millennium. But if the analogy to imperialism holds, it suggests that at least some of the incumbent elites will be unable to contain the contradictions arising from the need to sustain political order at the cost of economic development. The powerful forces unleashed by globalization may ultimately prove too much for them and bring to power new political actors representing different social forces.
At least until the next global crash, globalization will continue in the twenty-first century to reshape the MENA's political economies much as imperialism shaped and conditioned them in the nineteenth and early twentieth centuries. The MENA, more than any other region, was defined by rivalries among the great powers and continues to struggle with its imperial and colonial legacies. Within the region a high level of intra and inter-state conflict resulted also from contradictions between various nationalisms, primordial sentiments, and conflicts over the new state borders. The main economic consequence was an extraordinary imbalance between guns and butter in the expenditures of most MENA governments. This imbalance is now being reduced, but even a resolution of the region’s major conflicts between Israel and Arabs, Iran and Iraq, and each of these with the GCC countries may not suffice to reduce MENA military expenditures to global averages. Internal security forces are heavy drains, even in placid countries like Tunisia. Reductions of military expenditures might, however, lessen the role of armed forces in MENA political systems and open up possibilities for civilian control of them, or reinforce it in those few instances where civilian rule is at least partially established.
At the national level, imperialism’s impact and legacy may have been yet more profound. More than any other factor, imperialism and its resultant anti-colonial dialectic determined the nature of regimes in the post-colonial era. Monarchies and their attendant civil societies tended to survive in the peripheries where the imperial impact was weakest, whereas praetorians ultimately seized the reins of power in countries where imperialism enervated the very social forces that it cultivated. Imperialism can claim much of the credit (or blame, depending on the perspective) for the emergence of an ethno-religious democracy in Israel, while the reaction against its "neo" form is primarily responsible for Iran’s Islamic variant of democracy. Turkish democracy is more a home grown product than any other in the region, while Lebanon’s was largely inherited from delicate institutional balances established by the imperialists.
Imperialism and its post-colonial state creations also shaped civil society and the mode of capitalism sustaining it. In the monarchies, the palace tended to accommodate and even indulge the indigenous merchants, manufacturers and eventually finance capitalists who provide their respective economies with capacity to respond to the challenges and opportunities of globalization. In the praetorian republics, on the other hand, radical nationalists wreaked their vengeance upon civil society as a whole, and especially its capitalist component, key elements of which frequently were of minority or foreign backgrounds. Taking direct control of the economy, praetorians typically then harnessed the factors of production to ill-fated attempts at state-led import substitution industrialization, thus compounding their economic problems and leaving their states with yet bigger adjustments to make and fewer capitalists to help in making them. Finally, in the "qualified" democracies, the politics of identity have preoccupied states and civil societies, thereby diverting both from the tasks of economic development, tasks for which they are nevertheless better equipped than the praetorian republics or monarchies.
In most MENA countries the very heart of the capitalist component and engine of civil society, the financial sector, was structured first by imperialism, and then modified by the post-colonial elites. The two models characterized by centralized control--a French one involving significant governmental involvement, and a German one predicated on private oligopoly--have tended to prevail, as the Anglo-American model of deconcentrated, private ownership asks both less and more than most MENA states have been able to give. It requires less governmental involvement, on the one hand, and on the other requires governments to provide more effective legal/regulatory environments, including transparency and accountability, something which both the imperialists and their successors have seen as being at least partially inconsistent with their own interests. The French model, predicated as it is on an administrative, rather than market rationale, has tended to hobble development in those countries where it persists, including Israel. The Anglo-American model, which is at the core of the Washington Consensus and which the World Bank and IMF are seeking to propagate globally, has yet to be firmly established anywhere in the region and may not be for a long time, if ever. But in the absence of something approaching an Anglo-American model, with its attendant transparency and accountability, the MENA will continue to forego its fair share of foreign private investment, while domestic capital will probably continue to flee the region.
Various other paradoxes that characterize MENA political economies further underscore the utility of the Hegelian dialectic in understanding historical processes. One is that the political movement of moralizers culturally most distant from the West, that of Islamism, is the one that is also among the most committed to implementing the Washington Consensus. The regimes with which the purveyors of that Consensus must or chose to work are, by comparison, very much less committed to it. So in the conservative Gulf states, for example, and especially in Saudi Arabia, the foundations for an Anglo-American type of financial system are more developed than in ostensibly more modern, quasi-secular countries, such as Egypt or Tunisia. This does reflect the more globalized nature of these hydrocarbon dependent financial sectors, but it also results from demand for more open markets expressed by the comparatively strong capitalists in those countries, many of whom are involved in traditional or modern Islamic economic practices and institutions. In Turkey, where Islamists have been granted political space as a result of the partially democratic political system, they have articulated in thought and action Islamist financial institutions that both require and propagate key elements of the Consensus. Islamism in Iran, on the other hand, because it gained control of the state structure within which a post-revolutionary struggle for power is occurring, is too caught up in the exercise of that power for it to generate useful new syntheses of Islam and globalization.
The Turkish and Iranian cases thus raise the question as to whether it is the relation to state power that determines Islamist attitudes toward globalization and the Washington Consensus, rather than anything inherent in Islamist thought and practice. Since implementation of that Consensus tends to further dilute state control over the economy, hence also the polity, it could be that were Islamists to take power in countries other than Iran, their desire to assert political control would take precedence over their commitment to free markets. Thus any creative and viable synthesis of Islamic economics and secular globalization may have to occur while Islamists remain excluded from power, but that synthesis could, presumably, persist if Islamists were subsequently to enter government by constitutional means.
Another paradox this investigation has revealed is that the nominally "modern" Arab states are less capable of responding to its challenges than are the so-called "traditional" ones. The Arab countries that appeared to constitute the region’s vanguard in the post-colonial era, including Egypt, Iraq, Syria, and Tunisia, built states that overpowered and ultimately seriously degraded civil societies and capitalist capacities, as the states themselves became overgrown and increasingly committed to societal control. Thus in the praetorian Arab republics neither states nor societies are well equipped to handle the information, management, regulation, and other tasks required by successful globalization, although there are clear and important differences among them. The monarchies, which were predicted some thirty years ago to be on the verge of extinction (Huntington, 1968), have persisted. The greater societal pluralism they permitted, including that for their native capitalists and the markets in which they operated, provided space in which skills and other resources could be developed and which are now being deployed in efforts to respond to globalization.
That the MENA constitutes a region of the global political economy and not just a linguistic/cultural area is suggested by yet another paradox, which is that while it is closest geographically to Europe, it has adapted less successfully to globalization than regions more distant. A possible explanation is that geography does not matter, especially as globalization itself results in part from the revolution in communication and transportation technologies. But this view undervalues the lingering importance of the colonial experience, including the displacement of perceptions of yesterday’s imperialists onto today’s globalizers. In no other region of the world have moralizers constituted such a strong oppositional force to globalization. This opposition, combined with the relative fragility of most MENA regimes, has impeded effective responses to globalization, thereby opening the door to various antitheses, some rejectionist, some accomodationist.
This study has also implied a paradox involving financial sectors that has broader relevance. It is that banking systems established in late and "late, late" industrializers for the purpose of aggregating and allocating scarce capital have, as a result of globalization, become less efficient at both tasks. Implementation of at least some components of the Anglo-American model increasingly appears to be a necessary if not sufficient condition to attract substantial foreign private investment, as those who channel it require not only the sophisticated mechanisms which that model is best at providing, but the information and regulatory contexts which those mechanisms require. Similarly, the economically rational allocation of capital in the increasingly competitive, rapidly changing global economy also would appear to require the agility and even ruthlessness of competitive financial markets, rather than the more ponderous, long-range focussed, German and French models. The MENA region, dominated by more "administrative" approaches to aggregating and allocating capital, has lagged behind other developing regions in creating both the regulatory/information contexts and the structures/processes of more market driven methods to capital aggregation and allocation. The relative concentration of capital and the role of governments in its aggregation and allocation has proven to be not an advantage, but a liability for MENA countries, a liability that is likely to intensify as ever greater proportions of global investment flow through equity markets. Many MENA financial systems, which were some of the first modern ones to be developed outside of Europe and North America, have been rendered almost obsolete by the actions of post-colonial states and by the impact of globalization.
A final paradox is that the degree of societal heterogeneity does not seem to matter to rates of development and adaptation to globalization within the MENA. The democracies, which by and large have performed better, have comparatively high levels of social heterogeneity, even fragmentation. Egypt and Tunisia, among the most socially homogeneous of the countries in the region, are comparatively poor globalizers. Syria and Lebanon have similar degrees of societal complexity, yet Lebanon has developed much more sophisticated capitalist capacities. The evidence suggests that it is political structures and processes, rather than underlying social systems, that account for variations in economic development. Comparatively heterogeneous societies in the MENA have been made to "work" economically by political systems that balance the needs of conflict resolution with those of capital accumulation and investment. But it remains the case that social heterogeneity in the MENA region complicates the task of governance, hence of economic development, thereby underscoring the advantage of social homogeneity enjoyed by many East Asian countries.
In conclusion, this study has suggested that the response to globalization in the MENA has been defensive, as political elites have sought to temper in varying degrees its potential political impacts. No MENA country has eagerly embraced all or even most of the ten commandments of the Washington Consensus, as all have been willing to pay substantial economic costs to preserve the political status quo. But the forces of globalization cannot be entirely contained or channelled by ruling elites, for they impact on political economies as a whole, stimulating widely varying responses. In virtually all MENA countries there are eager globalizers, typically business persons who want to accelerate the pace of economic reform by adopting most or all of the tenets of the Washington Consensus. These "first moment" elites have varying degrees of capacity and influence. In no country in the region, however, does it appear that they are on the verge of supplanting incumbent defensive globalizers and establishing sustainable, liberalized political economies that would terminate the dialectic with globalization. That dialectic, therefore, looks set to continue, stimulating second and third moment antithetical responses, one radical, the other synthetic. The likelihood of the former displacing incumbent elites appears to vary in direct proportion to the rigidity of political systems. The praetorian republics, having either essentially destroyed their civil societies and the capitalist components thereof, or subdued them such that the only real capitalists extant are of the crony variety, are challenged primarily by Islamist radicals who ride a wave of nativist reaction against the perceived secular forces of globalization. In the more flexible political systems that are monarchies or qualified democracies, on the other hand, civil societies are generating synthetic responses that incorporate both the tenets of globalization and nativist, primarily Islamic principles. The contest for power between incumbent elites and these first, second and third moment counter elites will be the central feature of most if not all of the region’s political economies in the Twenty-first Century. Its outcome will determine their economic futures, hence that of the MENA region in general. [top]
Last updated 2 January 2000 | Globalization seminar | Table of Contents
Department of Government, College of Liberal Arts, University of Texas at Austin.
Questions, Comments, and Suggestions to chenry@gov.utexas.edu