Economic Liberalisation In The Middle East Social And Political Implications

The most important social forces behind the drive for economic liberalisation are the need for providing employment and occupation opportunities in the growing youth population of the Middle East countries, which have led to the diversification of the economy and the liberalisation of the economy. The important political forces behind the drive for economic liberalisation are both endogenous and internal. This essay discusses how these factors have led to economic liberalisation with a focus on Middle East, and in particular, two countries, Iraq and Israel. The essay finds that the experience of economic liberalisation and the factors that led to economic liberalisation are not the same for these two countries. With Iraq, the factors were endogenous in nature, whereas with Israel the factors were internal in nature.

Economic liberalisation in the Middle East is a concept with possible deep impact on the existing social and political order and, as economic liberalisation is linked to social and political change, and liberalisation in general relates to the challenge to the existing order and denial to the state its dominating role in the economy (Cali, et al., 2008). In the Middle East, states have in general been governed by authoritarian regimes, such as, Iraq under Saddam Hussein. The exception to authoritarianism is found in Israel, which is a democracy. Barring Israel, most of the Middle East states have been authoritarian, with the economy of these states being dominated by the governments. Economic liberalisation then poses a challenge to the existing political conditions in these states because by its very definition, economic liberalisation seeks to free the economy from the dominance and control of the state (Cali, et al., 2008).

There are many complex social and political factors that are responsible for the drive for economic liberalisation in the Middle East; moreover, these factors are endogenous and external in nature (Zambelis, 2005). Endogenous factors of the social kind include the growing youth population of the Middle East states, which is changing the patterns of demographic pressures for social, economic, and political change. The demands of this growing youth population for jobs and a better standard of life have led to political movements, generally called as the ‘Arab Spring’. Therefore, one social factor that is responsible for drive for economic liberalisation is the demand of employment opportunities by the growing youth population of the Middle East nations.

Another social factor that is responsible for the drive for economic liberalisation is the need for diversification of the economy, which in the Middle East has been oriented towards oil. With the discovery of oil fields in the West, there is no longer a monopoly on oil sourcing in the Middle East. Governments in the Middle East have been satisfied for a significant period of time with focussing on oil as a source of foreign investment and economic growth; however, there is now a greater need to diversify as oil cannot be said to be the only source of economic growth.

One of the political reasons for the drive for economic liberalisation in the Middle East, is the post 9/11 push towards greater liberalisation of the region in order to provide a counter to the threat of radical and fundamentalist forces in the region, which are considered to be a threat to the West. America in particular shifted its Middle East strategy after the terror attacks on 9/11 in order to provide a counter narrative to its perceived role as a supporter of autocratic regimes in the Middle East because after 9/11 there was an increased perception that the spread of Islamic radicalism in the Middle East, which threatens America and its allies, is due to the continuance of authoritarianism in the Middle East, and the “failure of incumbent autocratic regimes to address social and economic problems and meet the basic demands of their citizens” (Zambelis, 2005, p. 88). This has led to a push towards reform and democracy in America’s engagement with the Middle East, whereas earlier, America maintained a status quo with the autocratic regimes in the region.

American role and the social and political factors that drive economic liberalisation in the Middle East cannot be overstated as American foreign policy in the Middle East is an important part of the discussion on Middle East and its engagement with the West. American interest in the Middle East, in part is related to the presence of vast sources of energy in the region, which has led to America seeking hegemony in the region since the 1940s (Stokes & Raphael, 2010). Indeed, oil has been a major source of influence for American policy in the Middle East. Although, America has managed to thwart non-US military presence in the region, there have always been internal challenges to American interests in the Middle East due to the expressions of nationalism, Islamism and pan-Arabism in the region (Stokes & Raphael, 2010).

America has taken substantial interest in the Middle East at least since the 1940s, as it has sought to control the oil supplies that emanate from the Middle East. The Persian Gulf region has been a region of significance for the American foreign policy due to the oil reserves in the region (Stokes & Raphael, 2010). As 61 percent of the proven world oil resources are in this region, it has been important to American foreign policy and American political push towards hegemony in the region (Stokes & Raphael, 2010). The national oil companies in Iraq, Saudi Arabia, Iran and Kuwait have been the ones in control of the oil reserves in these countries, and the West, particularly the Americans have found it necessary to engage with and accommodate these oil companies, which in turn has meant that America has had to engage with the nationalist powers in these countries. The nationalist powers in countries like Iraq were able to take advantage of the oil reserves at there disposal as they did not need loans from the International Monetary Fund (IMF), therefore these countries were impervious to the free market economy fostered by the IMF. In other words, the West had to deal with and accommodate the nationalist powers in Iraq and other Middle East countries that were not accepting of neoliberalism. The neoliberalism approach finally found its way into Iraq only when it was occupied by the American forces (Stokes & Raphael, 2010, p. 85).

One of the crucial political reasons that is responsible for the economic liberalisation of Iraq is that of occupation under the ‘war on terror’ approach, which gave the Bush administration some legitimacy in gaining control over Iraq, which then paved the way for the entry of international oil companies in Iraq under the neoliberalisation agenda (Stokes & Raphael, 2010). It may be stated that the American strategic policy has always been vary of social and political changes in the Gulf states, which might threaten or disrupt the flow of oil from this region into the West (Stokes & Raphael, 2010). The political forces emanating from outside the Gulf region, and predominantly in the West have been focussed on guarding against overly populist or reformist changes in the region that could challenge the American interests in oil, air bases and markets in the region (Stokes & Raphael, 2010). In this light, the liberalisation of Iraq can be seen from the perspective of securing American interests in the region. Saddam Hussein, the Iraqi president, who had once been a pro-American ally in the Middle East, became a threat once Iraq occupied Kuwait in 1990; and it became necessary to control that threat and also a possible occupation of Saudi Arabia by Iraq. Throughout the 1990s, Iraq presented this threat, and the post 9/11 scenario saw the creation of political conditions with a ‘war on terror’ approach, which would make it possible for West to gain control of Iraq, depose Saddam Hussein and create conditions in which economic liberalisation of Iraq could be carried out and international oil companies could gain access to the oil reserves in Iraq (Stokes & Raphael, 2010).

Therefore, the political factors that pushed Iraq’s liberalisation were in part endogenous in nature. These factors emanated from the Western need to gain continued access to Middle East oil reserves. The Iraqi occupation by the US-UK coalition army was justified on the basis of the existence of weapons of mass destruction that were alleged to have been amassed by Iraq, and the leadership in both America as well as Britain denied any oil link to the occupation project; however, later events proved that the alleged threat of weapons of mass destruction was a pretext to justifying the occupation of Iraq by the US-UK coalition army and that the war was in fact a way to get access to the Iraqi oil reserves (Stokes & Raphael, 2010, p. 95). The economic liberalisation of Iraq in the post occupation period saw the transnationalisation of Iraq, with the country being opened to investment by global corporations, something which was not done when the economy was controlled by the Saddam government (Stokes & Raphael, 2010). Therefore, once the authoritarian government was no longer in control of Iraq, the country could be brought into the global capitalist system. The privatisation of Iraq’s political economy was done in the period when the Coalition Provisional Authority was in control in Iraq and a series of orders were passed by it to open up the Iraqi economy to investments (Stokes & Raphael, 2010).

Iraq’s economic liberalisation was driven by the hegemonic and neoliberalisation goals of the West led by the America. This is in contrast to the economic liberalisation of Israel which happened due to internal reasons, predominantly set in the creation of the Israeli state. Israel has sought to identify itself as a democracy and a liberal state modelled somewhat on the European democracies; however, its origin as a frontier state has meant that there was a greater state control because the state was involved in a “massive, publicly financed and organised colonial settlement project” (Shafir & Peled, 2002, p. 22). There is thus an element of colonisation that is an integral part of the Israeli statehood experience (Shafir & Peled, 2002). Another element is that of ethno-nationalism, which also have played an important role in the development of Israeli state. Israel passed the Emergency Economic Stabilisation Plan in 1985 at the time when certain sections of the Israeli society, including non-citizens Palestinians supported more freedom from the state, as well as there was establishment of liberal institutions, like the Supreme Court, the Bank of Israel, and the Finance Ministry that have resisted the ethno-nationalism of other groups (Shafir & Peled, 2002). Liberalisation in Israel was also influenced by the peace process in the wake of the Israel and Egypt peace treaty in 1979 and the Oslo Accords in 1993, which led to more calls for the integration of Israel in the global capitalist system (Shafir & Peled, 2002). The international environment presented opportunities to the emerging liberal society in Israel, which saw the decline of institutions that has resisted liberalisation in Israel (Shafir & Peled, 2002).

To conclude, the economic liberalisation in Iraq and Israel indicate that there are different forces that drive economic liberalisation in the Middle East. There are both endogenous and internal factors that are responsible for economic liberalisation. In Iraq, the presence of oil and the Western control of the oil sources has played an important role in economic liberalisation in the post Saddam Hussein era. In the case of Israel, the internal factors are more responsible for such economic liberalisation with the country moving from a model of public sponsored settlement to more liberalisation in order to integrate with the global economic order. Therefore, the Middle East shows interesting contrasts in how states have moved towards economic liberalisation with some countries like Israel being more in control of their liberalisation, whereas Iraq was driven towards liberalisation due to Western interests.

Bibliography

• Cali, M., Ellis, K. & Velde, D. W. t., 2008. The contribution of services to development: The role of regulation and trade liberalisation. London: Overseas Development Institute.
• Shafir, G. & Peled, Y., 2002. Being Israeli: the Dynamics of Multiple Citizenship. Cambridge: Cambridge University Press.
• Stokes, D. & Raphael, S., 2010. Global energy security and American Title: hegemony. Baltimore : Johns Hopkins University Press.
• Zambelis, C., 2005. The strategic implications of political liberalization and democratization in the Middle East. Parameters , 35(3), p. 87.