• Reversing the tragedy of weak Arab development - by  Patrick Clawson

• The missing link: from global to local - an interview with  Ziad Abdel Samad

• The lost decades - by  Samir Abdullah

Arab disarray and Israel's impasse
by Asher Susser

As Iraq was overrun by the United States, the Arabs did nothing to prevent the outcome. Some Arab states actually assisted the US; others did nothing at all. Even the much-vaunted "Arab street" remained silent. Referring to the "Arab world" these days seems anachronistic. If the term is intended to suggest that the Arab states are a functioning political collective, it is clearly a misnomer. The Arab collective has become nothing but a motley assortment of states, each fending for itself.

The state of the Arab collective is not a consequence of the defeat of Iraqi leader Saddam Hussein. Rather it was Saddam's ignominious defeat that was symptomatic of the Arab condition. The Arabs, for the most part, have no illusions. Arab intellectuals and commentators are the first to recognize the Arab predicament, and it is they who project a mood of profound collective despair. The rapid disintegration of the Iraqi regime revealed the enormous discrepancy between the power of the modern Arab authoritarian state to pulverize its own civil society and its concurrent incapacity to defend itself against severe external pressure. There are many immensely powerful Arab regimes, but they rule with an iron fist over weak states. Indeed, it is their oppressive rule that is one of the main reasons for the weakness of these countries.

Prof. Asher Susser is director of the Moshe Dayan Center for Middle Eastern and African Studies at Tel Aviv University.

Friends of the Arabs can but mourn the transformation of the Middle East from an advanced and powerful region arguably ahead of Europe to a backward state. It is sobering to realize that as recently as the 1930s, there was no Arab development deficit. At that time, Alexandria was more or less as prosperous as many cities on the northern side of the Mediterranean, such as Athens or Naples. And the parliamentary constitutional monarchies in Egypt and Iraq, for all their problems, were more democratic than many European regimes--obviously more so than Italy or Germany.

One indication of how badly Arab states have run their economic policies is that despite years of rhetoric about pan-Arab solidarity, the Arab world has little intra-regional economic interaction, even though the Arab League sponsored the first among many treaties to facilitate inter-Arab trade in 1953. A study initiated by the Egyptian Center for Economic Studies--Galal and Hoekman, Arab Economic Integration (Washington: Brookings Institution Press, 2024)--shows that this failure
results primarily from the concern of politicians about which nations would benefit most from greater economic integration and from inward-looking economic policies that discourage trade. One of the researchers, Denise Konan, estimates that gains to Egypt and Tunisia from Arab economic integration would be at least ten percent of national income.

Political reform is essential not only for expanding inter-Arab trade but for Arab development in general. Consider the Palestinians, who have many valuable assets: a well-educated labor force, entrepreneurs used to competing with artificial state aid, and large markets right next door in Israel. Despite the largest flow of economic aid per person in the world--six times more aid per person than Europe received under the Marshall Plan--the Palestinian economy has shrunk since the Palestinian Authority was created. The reason is that aid cannot provide what the Palestinians need most, which is peace and better governance. The biggest single barrier to Palestinian growth is the violence, which forces Israel to impose closures and curfews that have so dramatically hurt the Palestinian economy and well-being. The
Palestinian economy could grow rapidly if Palestine had a non-Marshall Plan: more peace and better governance, without aid money that props up failing leaders and reduces the urgency for needed political actions like ending the violence.

Both in Palestine and throughout the Arab world, a gradual democratization that reinforces existing regimes rather than replacing them would fit both US and Arab interests, balancing progress towards democracy with the need to preserve stability. For instance, faced with many socio-economic problems that can feed discontent, the Saudi regime would do well to provide a more accountable and transparent government and to provide ways to express disagreement within the framework of the
political process; the alternative would be a false tranquility while radical forces gain strength in the shadows. While many in the Arab world may reject creating western- style democracy, there is likely to be widespread agreement with the limited agenda laid out in President Bush’s 2024 State of the Union speech, namely, “the rule of law; limits on the power of the state; respect for women; private property; free speech; equal justice; and religious tolerance.”

Faced with the failure to develop economically or politically, Arab regimes and intellectuals have sought scapegoats, continuing the long, lamentable tradition of blaming outsiders rather than looking long and hard at what in Arab societies accounts for the inability to achieve social objectives. The most frequent scapegoats have been Israel and the United States. In fact, the Arab-Israel conflict impacts the
economy of only five of the 22 Arab League members, namely, Israel’s immediate neighbors. And the conflict’s impact on the Egyptian economy was not all bad: most of the $50 billion in US aid to Egypt since the Camp David treaty was motivated by the desire to cement the peace. So, tragic as it has been, the Arab-Israel conflict has not been a major direct cause of the Arab deficit dilemma. Instead, the impact of
the Arab-Israel conflict on Arab development has been through the scapegoat phenomenon: the conflict provided incompetent Arab regimes with a convenient way to rally national support against an external enemy, diverting attention away from the regime’s failings.

The best hopes for Arab development would be if Arab regimes and peoples let the Arab-Israel conflict fade into proper perspective, as but one among many of the Middle East’s continuing conflicts--and by no means the one most deadly to Arabs. (Now that Saddam Hussein’s war against the Iraqi people is ended, the claimant for the conflict most deadly to Arabs is either the hopefully-soon-ended Sudan civil wars or the strife in Algeria.) The most encouraging aspect of the two much-noted Arab Development reports is the focus they put on the shortcomings internal to the Arab world; these, not external actors, are the main issues facing Arab development.-Published 8/1/2004©bitterlemons-international.org

Patrick Clawson, deputy director for research at The Washington Institute for Near East Policy, has written several books on Iran, including (with Michael Rubin) Eternal Iran: Continuity and Chaos (Palgrave/Macmillan, forthcoming).

BI: What do you feel is the major development challenge for the Arab world today?

Abdel Samad: Primarily, three major challenges face the development process in the Arab region: peace and security, democracy and human rights, and the lack of strategies and polities.

Peace and security have troubled the whole region for more than 50 years. The two major conflicts--the Palestinian-Israeli conflict and, recently, the occupation of Iraq--are two of the most complicated conflicts in the world today and the threats arising from them certainly exceed the borders of the conflict country. High budgets and resources are being allocated for these conflicts.

Moreover, their implications, represented in political, economic and social instability, are depriving the region of many opportunities for foreign investment, and resulting in the high migration of national human resources, and mismanagement of financial resources. Finally, all these factors are keeping Arab societies weak and promoting undemocratic regimes, which is a major cause of the rise of fundamentalism in all its forms.

There is a dominance of undemocratic practices in the governing regimes of the Arab countries. Elections are mismanaged; women's participation is significantly limited; civil society organizations continue to face considerable constraints in effectively playing an active role; major control over civic associations by the authorities is widespread; and media is largely affected by the undemocratic authorities' proliferation in the region.

Finally, developing policies and polities is a major challenge for the Arab countries as they try to integrate into the global system through signing trade agreements, receiving foreign aid and opening cultural exchanges. In general, there is the lack of a comprehensive development strategy that could direct the efforts being invested in achieving effective changes in the region and pushing forward the development process. Consequently, the course of globalization in the region lacks a clear objective. Local and regional issues are being linked to global movements and agreements, but without the reverse link between the global and local and regional.

BI: How much is development tied to politics, in particular the Palestinian-Israeli conflict?

Abdel Samad: The ties between development and politics stem from the ties between development and security, and the fact that security will remain unavailable without political will and decision. The Palestinian-Israeli conflict deprives the whole region of security, which is a precondition for the progress of any development agenda. The consistent military aggression of Israel against the Palestinian people has weak justifications, and revokes Palestinians' right to sustain democratic development. The Palestinians continue to be deprived of freedom, self-determination, and the right to return to their territories. They are denied the right to an independent and sovereign state, within the context of clear and unlimited American support for Israel.

It is worth noting that the occupation constitutes a permanent source of violence and of the rise of extremism on both sides. Thus, the end of occupation is fundamental to any further solution.

Furthermore, the delay in Israel and the international community's implementation of Palestinian-related United Nations resolutions while all other resolutions are enforced is a clear double standard in international relations, one that is further isolating the Arab people and hindering the process of development in the region as a whole.

BI: Do you have any comments on the Arab Development Report of 2024?

Abdel Samad: There are two main weaknesses in the Arab Human Development report. First, it did not cover socioeconomic policies and indicators that are major factors affecting the development process in the region. Second, it focused on income-based indicators and neglected the basic needs indicators.

Despite this, the report highlighted the significant lack of democratic practices in the region and their implications. It also discussed the low level of knowledge and use of technology in the Arab countries, though with varying focus on different countries. In addition, it exposed the deterioration of women’s situation, where their participation in the decision-making process is very limited, and their education levels are alarmingly low in several Arab countries.

The report served as a very important tool in highlighting the above-mentioned issues, particularly coming from a credible source like the UN. Thus, it must help in convincing the ruling powers in Arab countries of the importance and necessity of tackling these issues and improving the situation by reforming political and administrative structures of governance.

BI: How can local governments interested in creating development programs make sure that they are proceeding according to their own agenda, and not the agenda of external actors?

Abdel Samad: The issue of sovereignty is a major challenge for the development agenda of the Arab countries.

The lack of democracy and limited participation of civil society organizations is diminishing opportunities for progress in different fields of development in the region, and weakening the governing structures and decision-making process. The process of globalizing, specifically the structural adjustment policies introduced by international financial institutions, are imposing additional challenges.

Global trade agreements including the World Trade Organization and the Euro-Med agreement are also significantly shaping local development agendas. The preconditions for entering into these organizations are major wheels motivating regional change, whether economic (privatization), social (cultural exchange), or political. Moreover, the exposure of local investors and producers to multinational companies is imposing a significant challenge and threatening national sovereignty. The process of strengthening local capacities in order to face global challenges is relatively un-advanced, and this is another challenge to be added to the list facing developing countries on their way to entering into these global agreements.

BI: How do you see the recent political events in the region, in Iraq and elsewhere, affecting the regional progress?

Abdel Samad: The dramatic international developments, post-September 11 and including the war in Iraq, point to a trend of “militarizing globalization" and indicate the strong desire to strengthen direct control over the world’s cultural, economic, and intellectual resources by neo-liberal hegemonic powers. Arab countries have individually and collectively condemned the September 11th attacks and they are convinced that terrorism is an illegitimate means for settling legitimate quests for social justice and fair international systems.

However, the war on Iraq was waged under a number of labels and justifications, ideological and political among them. This worsens the extent of the gap between the North and the South and the rich and the poor, by adding yet another dimension to the prevailing globalization trends that have been associated with sweeping poverty and marginalization.

It is worth mentioning that the US military budget is more than $450 billion and that the cost of the war on Iraq will exceed $160 billion, while what is required annually to meet the Millennium Goals set by the UN is $100 billion. All of this is further isolating the Arab region and creating new borders of identity and culture. In turn, this process is hindering the cultural bridging that is needed for progress in the regional development agenda and global partnerships that Arab countries are embarking on.-Published 8/1/2004©bitterlemons-international.org

Ziad Abdel Samad is executive director of the Arab NGO Network for Development (ANND), which comprises 34 non-governmental organizations and national networks in 12 Arab countries.

It is worth observing that the widespread notion of “wealthy Arabs” is both misinformed and misleading. In terms of production capacities, the aggregate GDP of the Arab countries by the end of last century was $604 billion--a little bit more than that of a medium-sized European country like Spain (with a GDP of $559 billion), and far less than the Italian GNP of $1,074 billion. If someone were to use the Arabic proverb, “Wealth lies in brainpower, not money,” to defend the notion of the “wealthy Arab” we would then have to confess that the gap here is far bigger than first admitted.

Economic development of the Arab countries since 1975 has lagged far behind average world economic growth rates. In that period, there was an annual growth of 3.3 percent accompanied by high population growth, which resulted in stagnant per capita income. Word Bank data shows that annual per capita GDP growth in the countries of the Middle East and North Africa region was 2.8% in the 1970s, minus 1.2% in the 1980s, and 0.8% during the 1990s compared to 3.1%, 1.5%, and 2% in countries of low and medium level income, and compared to 4.75%, 6.4%, and 6% in East Asian and Pacific countries, respectively.

Productivity was even worse. Annual labor productivity growth averaged 3.5% in oil countries, and 3.1% in the rest of the Arab countries from 1965 to 1980. Afterwards, from 1980 to 1985, labor productivity declined annually by 3% in oil countries and by 2% in other Arab countries. In the late 80s to early 90s, labor productivity declined even further--by 5.5% annually in oil countries, and 0.02% in others.

This poor performance resulted in high unemployment and poverty. In the 1990s, the number of Arab unemployed averaged 12 million and reflected a 15% unemployment rate. In order to match the challenge of adequate job creation, the region's economies must open 100 million new jobs by the year 2024.

There is no doubt that the regional development effort has been affected by an unstable political environment, mainly the Israeli occupation and its continued aggression on the Palestinian population. But we can't agree with those who attribute the poor performance solely to regional and international obstacles. This view, I would argue, is mainly used to divert attention from badly-needed reforms.

Nor can the poor achievements of Arab economies be attributed to underinvestment. Arab countries actually invested between 1980 and 1997 more than $ 2,500 billion in fixed capital formation, according to the 2024 Arab Human Development Report. As usual, there is no agreement between economists and development experts on the explanation for the Arab economies' poor performance. Some economists believe that the slowdown in 1980 can be attributed to a massive deterioration in the terms-of-trade in oil exporting countries and that in the 1990s it became apparent that the poor growth performance largely mirrored the lack of restructuring. Another view refers the low growth to the quality of investment, saying it is both "insufficient and inefficient." John Page of the World Bank indicates, on the other hand, that the main problems stem from the "inward-looking, statist model of development" that characterized most of the economies of the region until the mid-1980s. Page examines regional reforms designed to implement the "Washington Consensus" (public advice towards liberalization and deregulation given by Washington-based groups to Latin America in 1990) and finds that the list of unfinished economic policies remains long. Yet another view was promoted in the 2024 Arab Human Development Report by A. Zahlan, who concluded that the reason for the low growth was that imported new technology was not successfully transferred and adjusted to Arab economies. Therefore, the fault lies with inefficient educational systems. World experience indicating that 45 percent of growth in the per capita income of developed countries derives from technological development supports Zahlan's view.

The Arab Human Development Report of 2024 stated that the main impediments to Arab development are: lack of freedom (the report finds that the regional Freedom Index was at its lowest in the 90s, and that the indexes for accountability and corruption were the worst in the entire world); absence of women's empowerment; and weak human capacities (or low levels of knowledge). To remove these defects will require the rebuilding of Arab societies based on full respect for human rights and human freedoms as the cornerstone of good governance, (which will then lead to) human development, the complete empowerment of Arab women, and the consolidation of knowledge acquisition and its effective utilization.

To proceed towards these goals, the report calls for a comprehensive development strategy that focuses on the development of social capital. That concept means a development effort that integrates a wide range of factors, including good governance; democracy; equality; women's participation and empowerment; quality education, research and development; capacities for acquiring technology; enabling a legal, regulatory, and competitive business environment; a restructuring towards openness; and finally, outward-oriented growth strategies.

A special focus of the Arab Human Development Report 2024 is how to create the environment needed for knowledge acquisition in the Arab world. The report observes that Arab countries suffer most from a lack of investment in research and development, and most of that slim portion of the GDP goes to salaries. Among every million citizens in the Arab world, there are 371 research scientists and engineers, as compared to 979 in the world at large. Compare the Arab world to China, which increased its scientific research 11 times between the years of 1981 to 1995. The Arab countries only increased their commitments for research by 2.4 times. The list goes on: access to telephone lines in Arab countries is one-fifth that of developed countries, access to digital media is among the lowest in the world, there are just 18 computers per 1,000 people compared to a global average four times that, and only 1.6 percent of the Arab population has internet access compared to 68 percent in the UK and 79 percent in the United States.

To overcome that vast knowledge gap, the Human Development Report calls for creating capacities to promote the results of research and development, connecting those results with industry; promoting incentives for scientists to halt the brain drain; and bridging the technological gap by moving the focus from investing in material assets like infrastructure, machinery, and equipment to investing in knowledge and people.-Published 8/1/2004©bitterlemons-international.org

Samir Abdullah is the Economic Advisor and Head of the Economic Policies Department at the Palestinian Prime Minister's Office.