chapter  6
18 Pages

Economic Internationalization and the Changing Balance of Economic Power in the Middle East

The undeclared big fear of globalization in the Middle East is of international economic marginalization on the one hand, and economic domination and subjugation on the other.1 These are sentiments shared by countless others across the continents: globalization ‘evokes much anger and anxiety in the South and tends to be experienced as yet another round of northern domination and concentration of power and wealth. In the slipstream of hundreds of years of weary experience, the common metaphor for globalization in the South is imperialism or neo-colonialism revisited’.2 It is in the sense of powerlessness accompanying globalization that the real fear of many millions of communities in the developing world rests. Where some countries and regions seem able to overcome the fear, and forge ahead and accept the risks of riding the tide of globalization, others either fall by the wayside or, worse still, are crushed by the weight and volume of the tide. Despite concerted attempts at accommodation with globalization by some countries in the region (Bahrain, Israel, Tunisia, Jordan, Morocco, Turkey, UAE), the bulk of the MENA region remains firmly in the timid camp of countries, fearing change that could lead to loss of control.3 The reason for this is simple – globalization is perceived as a negative economic force. Globalization in the MENA context implies ‘reduced public assistance, reduced oil revenues, and even reduced arms subsidies. It means opening most domestic markets to foreign competition that is usually better equipped in skills, capital, and marketing power than local producers. Just as the European imports of the nineteenth and early twentieth centuries had destroyed much of the MENA’s handicraft industries, so a new wave of competition could annihilate years of independent state-led capitalist development in much of the region, including Israel’.4 But much MENA economic data suggest that without fundamental and rapid change, the region is probably heading for a far less palatable outcome than even submission to globalization might suggest.5 If one

were to consider political, market and economic factors as the defining features of the region’s global standing, then in global rankings the region’s top six economies stack up as follows: Turkey is number 41, Saudi Arabia is 42, Egypt is 43, Algeria is number 55, and Iran and Iraq are 59 and 60, respectively.6 Furthermore, according to the Heritage Foundation’s 2005 Index of Economic Freedom, the MENA region was the only part of the world to experience a decline in economic freedom. The region’s least economically free were Iran, Libya and Syria, with scores of 4.40, 4.16 and 3.90, respectively; and Bahrain, Israel and the UAE were seen as the region’s most economically free. The region’s freest economy was ranked only 20th in the world, however, and the UAE 48th.7 In terms of ‘good governance’ indicators, the region does equally badly: the highestranked in the 2005 world governance competence table was the UAE at 29, followed by Israel at 40. Saudi Arabia stood at 92. Three other large economies: Algeria, Iran and Syria, were ranked as 129, 145 and 149, respectively, in the world rankings.8 These data hardly paint a promising picture, despite the rapid oil price rises of the post-2002 period.