5.2.1 Iraq from the Overthrow of the Hashemites to Saddam Hussein - Part 1

Moving from the revolutionary process in Egypt to the revolutionary process that took place in Iraq, which led to the transition from the Hashemite monarchy and eventually to the rise of the infamous Saddam Hussein. Iraq was the first of the British mandated countries to achieve independence. Iraq was independent already in 1930 and in 1932 Iraq was the first Arab State to join the League of Nations. That is the predecessor to today's UN, but the Iraqi monarchy was not able to consolidate a cohesive Iraqi State. Fortunately, for the regime the opposition wasn't coherent either and the Kurds and the Shiites were relatively weak located in the periphery and could hardly cooperate against the Sunni-dominated regime. From the outset, the regime was dominated by the Sunni Arab minority led by the Hashemite monarchy. Like in Egypt, the parliamentary system was corrupted by the main powers of Iraqi politics. The British, the monarchy, the urban notables and the tribal chiefs. And elections were always stage managed in one way or another by the government. The building up of a national army based on conscription began in 1934. The army was successful in suppressing the Shiite tribes in the South, but much less successful in reference to the Kurdish minority in the area of Mosul in the North. The Kurds were the majority in the form of Vilayet of Mosul, but were never really completely subdued by the state. But we see in Iraq, an early interference of the army in politics and pressure from the army in reference to government formation was prevalent already in the mid 1930s. After the fall of France in June 1940, a pro-German government of Rashid Ali al-Kaylani supported by military officers. Came to power in the spring of 1941 and the Hashimites were forced to leave the country. Thanks to the intervention of the British army, the Hashimites were restored to power. But from mid-1941 onwards, the Hashimites were living on borrowed time. In the Post- War period, there were very significant social changes in Iraq. Rising levels of education led to the increased politicization of Iraqi society. High school graduates increasing in number. Had insufficient opportunities of suitable employment and it was they who were attracted to radical parties. The rapid process of urbanization increased the possibilities for street protests that became a very common feature of Iraqi politics of the late 1940s. The poor urban masses were open to the influence of the radical parties and these were particularly the Ba'th Party on the one hand and the communists on the other. The defeat in Palestine in 1948, naturally had its damaging influence on the stature of the government in the eyes of the people and the Free Officers movement began to form in the Iraqi army, very much under the impact of the military coup in 1952 in Egypt, which served as a model for Iraqi officers too. But the early 1950s were actually the good years for the regime, these were the years where Iraq was beginning to really enjoy its oil wealth, but all of that rested on very shaky foundations. And in July 1958, a military coup overthrew the regime with incredible ease. The general public was absolutely delighted with the coup, which was received with great public excitement. The Hashemite monarchy in Iraq was after all, a small elite group without any really large social basis and as a pro-Western monarchy, it was not at all popular. The leader of the coup was Brigadier Abd al-Karim Qasim, who brought about the abolition of the monarchy by the execution of its leading figures. Like in Egypt, this was followed by the demise of the land-owning elite. Land reform therefore, was designed to destroy the big landlords. And the old elite was replaced by the rule of a civil and military bureaucracy. At the top, were Sunni officers. Mainly from middle and lower classes and a very small minority of Shiites. The coup did not build strong institutions and everything revolved around the personality of Qasim him, himself. He and his number two, Abd al-Salam Arif, soon split in disagreement on the pace of unity with the United Arab Republic that had been formed in this union between Egypt and Syria in early 1958. Other enemies were eliminated through the regular use of the revolutionary court, which dispensed with most of Qasim's challengers. Popular support was built up by extensive social welfare programs that were managed in the towns in particular. This was an urban revolution and Qasim invested in the well-being of the urban population at the expense of the villagers in order to create a loyal constituency for his regime. Agrarian reform did not change a great deal in the rural areas and the pattern of massive migration to the cities continued unabated. Population growth continued to bring pressure to bear on the standard of living of the people. In the 20 years between 1957 and 1977, the population of Iraq doubled form about six million to 12 million. And in the 20 years after that, it almost doubled again to 22 million in 1997. And presently, over 30 million. Fortunately, for Iraq, oil wealth was available to improve the Iraqi economy. But the regime was deeply divided within itself. Qasim never had the charisma of Abdel Nasser. It never captured the imagination of the masses, like Abdel Nasser did. Competing factions of officers within the military joined with civilians in the Ba'th Party to set the stage for yet another coup. What was the Ba'th Party? The Ba'th Party was established in Syria in the early 1940s as a secular, Arab-nationalist party that believed in Arab unity and socialism as the avenue to Arab revival, Ba'th. Ba'th means revival in Arabic. And Qasim was overthrown and executed in February 1963 by new rulers, many of whom came from the Ba'th. The new rulers, however, were not united amongst themselves either and internal power struggles led to another coup in November 1963, led by Abdul Salam Arif and the Ba'th supporters were ejected from the new ruling group. The Arif regime, like its predecessor was made up of a few personalities. Loose army factions and cronies, but no serious building of supportive institutions.

Lecture transcript

The regime lasted for five more years, until the rise to power of the Ba'ath in July 1968. Now the Ba'ath was much better organized than before, and the party dominated the new regime entirely. For the first time since the monarchy, a regime of institutions was actually created. The Ba'ath party branches and cells were established all over Iraq, which led to an effective and centralized government which imposed its authority over all organizations. Such as professional and trade unions. The party ruled over the army, and not vice versa. The two key figures in the regime were Ahmad Hasan al-Bakr and Saddam Hussein. Both Sunnis of provincial background, from the town of Tikrit, north of Baghdad and both men with modest lower middle class backgrounds. Saddam Hussein was the real strong man of the regime. And he became president in 1979. And what is very characteristic of the Saddam Hussein regime, aas this predominance of men from the town of Tikrit, not just Sunnis, not just members of the Ba'ath party, but Sunnis from one particular town in, in Iraq in the northern provincial town of Tikrit. In 1987, for example, one-third of the senior Ba'th party leadership was composed of people from Tikrit. The regime was socialist and secular. That meant that the economy was state-controlled, oil was nationalized in the early 1970s, and the state bureaucracy was a major employer, giving many a vested interest in the political status quo. There was a common sectarian interest between being a Sunni and a member of the Ba'ath. Secular politics, trying to push religion to the margins of politics, served the interests of the Sunni minority. After all, if politics in a country like Iraq were to be religious, surely the Shiite majority would dominate. The Sunni Arab minority in power therefore had no particular interest in pushing the issue of religion, but rather marginalizing religion as much as possible. Secularism served the particular sectarian interest of the minority. But the Ba'ath encountered increasing religious opposition, especially from the Shiites, to the secularizing tendencies of the Ba'ath regime from the late 1960s onwards. And the regime assumed a more religious character of its own, to defend itself against this kind of criticism. It enforced religious observance on Ramadan, for example. Even Saddam himself exhibited a more religious observance. The Islamic revolution in Iran, in 1979, added to the regime's anxiety about the possible effects of Khomeini's Shiite revolution on the Shiite population of Iraq. It was this fear of the revolutionary fervor of Shiite Iran that drove Saddam Hussein to launch a war against Iran which lasted for eight destructive years, from 1980 to 1988. So now Hussein launched his war against Iran in the expectation of rapid victory. But the war dragged on for eight years at huge cost. And with hundreds of thousands of casualties on both sides. An issue that Iraq never really found a solution to aside from its Shiite majority, was the question of the Kurdish minority in Iraq. And the Kurdish opposition to the central government in Iraq. Between 1961 and 1975 the Kurds fought the regime for greater autonomy, only to be constantly repressed by all the various governments in power. In 1975, following an agreement between Iran and Iraq. The Iranians ceased all their support for the Iraqi Kurds and their struggle collapsed. But the Kurdish struggle here resumed during the Iran-Iraq war, with renewed Iranian support. And in the closing phases of Iraq's war with Iran, mainly during the year of 1988, the Kurds were ruthlessly crushed by the Iraqi regime. The Anfal Campaigns, as they were called, included the killing of tens of thousands and mass deportations of Kurds from thousands of villages that were destroyed. And other atrocities like the gassing of the people of Halabja in March 1988 in which some 5,000 people perished. Iraq's basic problem of collective identity was never really resolved. Shi'is, Sunnis, and Kurds never fully shared the Arab identity of the Iraqi state. Shi'is after all, saw Arabism as just another means of Sunni domination. The Kurds weren't Arabs at all, and therefore Arab nationalism hardly appealed to them. The attempt to promote a particular Iraqi identity resting on the glorious past of ancient Babylon, was very artificial. And neither Sunni Arabs nor Shiites or Kurds were particularly attracted. And therefore, whether it was Arabism, or Iraqiness, or Islam, which could not possibly unite both Sunnis and Shi'is all were problematic in one way or another. And Saddam therefore ruled by the ruthless suppression of the secret police in the creation of a state described by an Iraqi author, Kanan Makiya as the Republic of Fear. With a state ruled with an iron fist of gruesome repression. And this only came to an end by the external intervention of the United States in 2003.

2.1.2.2 The Tanzimat (part 2)

About this course

This course will discuss the emergence of the modern Middle East from the fall of the Ottoman Empire, at the end of the First World War to the present. It will discuss the Ottoman legacy in the region and the Western imperial impact on the creation of the Arab state system. The course will discuss the rise and retreat of Arab nationalism, the problems of internal cohesion of the Arab states, issues of religion and state, and the evolution of Islamist politics. It will also focus on the evolution of the Arab-Israeli conflict and its impact on the region and will conclude with an in depth analysis of the “Arab Spring” by placing these contemporary revolutionary events in their historical context.

Lecture transcript

In 1839, the sultan, Abdul Majid succeeded Mahmud II. This is the beginning of a period known in Ottoman history as the Tanzimat. The reorganization, or the reforms of the empire, was from now on that reforms were engaged in officially guided by official policy statements, and this went on for decades. The goals of the Tanzimat, the reforms. Were set out in two reforming edicts. The one, the first, was called the Hatt-i Sherif of Gulhane, issued in 1839. That is the Noble Edict of the Rose Garden of the Sultan's Palace, as the edict is known. And the second edict proclaiming more or less the same reforms but in greater detail, was issued in 1856 and is known as the Hatt-i Humayun, the Imperial Edict. One should add to these, the Ottoman constitution of 1876. If the reforms were meant to create a more liberal form of government, they failed. The Ottoman Empire as a result of the reforms did not become a more liberal or democratic entity. But if they were designed to strengthen the central government. And prolong the life of the Empire, they succeeded. And the Empire lasted for another 80 more years. And no small achievement. The first priority with these reforms, as in the previous reforms, was the army. Between one-half and two-thirds of all expenditure on the reforms went to the building of various military forces. And money to pay for the army required a change in the method of taxation. The method of taxation was therefore modernized and change form the old form of tax farming. Tax farming known as Iltizam, in Turkish, was a way in which notables were given the right to collect taxes from the citizenry. And in most cases, they pocketed much or most of the taxes for themselves, and this became a very corrupt and ineffective system. There was a need for wide-scale administrative reform, in order to carry out the reforms of the empire. This led to the development of a modern system of education to supply a much needed skilled manpower for the army and the administration. This was a classic example of modernization led by the needs of military reform. Administrative reform was the necessary partner for any reform of the army. One had to remodel the system of provincial government. And this was done by the passing of a new administrative provincial law, the Vilayet Law of 1864, which established a much more centralized government, run from Istanbul. Which allowed for a more effective collection of taxation, and a more effective administration of the government from the center to the provinces. There was a need to tie the provinces more directly to the center. And this was indeed achieved to at least a certain degree as a result of the Tanzimat. The Vilayets, the provinces, were placed under a governor and a structured system of subdistricts under the governor. And all of these run by appointees from Istanbul. Local councils were also created in the various parts of the provinces. And in these local councils, there were some appointed officials, some elected members, and these operated alongside the governors in a form of representation of local opinion, along with a greater measure of government centralization. In 1847, the Ministry of Education was established. This, of course, removed education from the control of the religious establishment where it had been until then. Therefore weakening evermore, the status and the stature of the Ullman in the Ottoman Empire. The established of the Ministry of Education and the creation of these new schools was in recognition of the need for the acquisition of skills for this world. For the advancement of the empire in this world, and the recognition of religion was valuable much more for the next world than it was for this one. And there was, of course, a need to keep up with the advances that were taking place not only in Europe. But in the Christian schools inside the Ottoman empire itself. Now during the Tanzimat, one must confess that education was not entirely revolutionized. It was much more difficult to change schools and education, in the villages, then it was in the towns and the cities. But what was true, was that the Tanzimat did succeed in creating a number of excellent high schools that were created in the main cities of Turkey. And were indeed established to reduce the bureaucrats who would carry on with the reform until the very end of the empire. Reforms in administration in the military eventually, of course, led to reform in the legal system. And indeed the reforms in the legal system were the most revolutionary of all. Why were the reforms in the legal system the most revolutionary? Because in the legal system meant undermining religious law. It meant undermining the weight and the status of the Sharia, it meant changing collective identity. There was nothing that weakened the hold of Islam on society more than the reform of law. And perhaps the most important legal reform of all. Was the decision to grant all subjects of the empire equality before the law. This was not the case until the Tanzimat. Religious minorities, like Jews and Christians, enjoyed religious autonomy in the empire. But they were not equal before the law. Islam was a superior civilization and a superior legal system in the eyes of the believers. Equality before the law essentially meant that Muslims, Jews, and Christians were now all equal before the law, which could no longer be the Sharia. Just by granting equality before the law, one had to erode one of the very basic principles of the Sharia, which preferred Muslims to the Jews and the Christians and other minorities. Equality before the law was a revolutionary change in the sense that now, as opposed to the past when law applied to different communities, the Muslims had their law and the Christians and the Jews were governed by their own legal authorities. Equality before the law meant that the same law applied to all subjects of the Ottoman Empire. That is what we can call the territorialization of the legal system. For the first time ever, there is one legal system. That applies to all subjects of the empire. No longer communities enjoying their particular legal orders, but individuals equal before the law. For all the subjects of the Ottoman Empire. This was a great step towards territorial nationalism. Because if the law applies territorially, to all subjects of the empire and not communities as communities. This is a great step towards the territorialization of identity. Territorial nationalism. This required new laws, obviously, that would grant equality to all. It required the training of lawyers and judges to apply the law. The Edict of 1839, in which this equality before the law was proclaimed, was explained and justified as a need to correct the deviation from the Sharia of the last 150 years. And the argument that countries who do not follow the Sharia cannot survive. So, in fact, this erosion of the Sharia, was explained and justified as if it were an upholding of the Sharia. Which in fact, of course it was not. This deviation from the Sharia of the last 150 years that had to be corrected according to the edict of the Sultan had to be fixed by new legislation. But what is new legislation? New legislation is an indication that the Sharia is no longer sufficient. That it is new legislation that must be taken from other bodies, external bodies of law. The 1839 edict introduced principles such as the security of life and property. The abolition of tax farming, the organized and proper enlistment to the army, and of course, justice and equality for all subjects, regardless of their religion. This is a radical deviation from the Sharia. And why new legislation? New legislation obviously because the Sharia is no longer sufficient. God's law was not good enough. This is the secularization of law taken from European sources. And again, a most serious blow to the religious establishment and their authority.

Lecture transcript

The guaranteeing to equality to the minorities was meant to preserve their loyalty to the empire. But in fact, the opposite was achieved. Equality for the minorities was intended to offer the Christians of the empire who were gradually breaking away as we have seen with the uprising of the Greeks in the 1820s. It was to offer the Christians equal participation within the empire as Ottoman subjects, but the Christians drew a totally different conclusion. If equality, then equality as states of their own outside the empire. And it only accelerated the Christian desire to break away, which most of them indeed did. For the Muslims, this idea of equality of all before the law was a cause for considerable opposition and frustration. This was an incorporation of the practices of the infidels, an undermining of the sharia of the religious law. And not all Muslim subjects of the empire could accept that without complaint. The major outburst came in Damascus in 1860, where there was massacre of 1000 of Christians. In a protest against the Tanzimat. Yeah, against the new reforms. Interesting in this Eventi Damascus was that the Jews of Damascus were not affected by the outbreak of violence, it was not against the Jews who the Muslims had a complaint. Their complaint was against increasing Christian influence. The increase of the influence of Christian powers. The increase of the influence of Christians and their schools. The Jews of the empire did not represent foreign powers. There were no external Jewish powers that threatened the empire. And as a result, the Jews were not seen as partner's to external influence and power. On the contrary, the Jews were seen for what they really were loyal Ottoman subjects. The Christians in the empire had the desire to break away wherever this was territorially feasible and as we will see it wasn't territorially feasible everywhere. But in places where it was like in the Balkans, this was the preferred direction that Christian minorities took. And what was difficult for the empire in this circumstance was that it was no longer possible to suppress the Christians who sought to break away, because of European pressure. And as the British historian, points out, it was a contradiction here. The state was becoming more powerful and more centralized as a result of the reforms, but it's ability to use these new advantages was limited by increasing external influence. One can see this increasing external influence by the timing of the edicts of reform as they were issued. And they were issued at various times when the need to leave an impression of liberalism on Europe was important for the empire. One should not make the mistake, however, by concluding that the reforms were just window dressing for the, for the Europeans. They were not. These were genuine desires for reform from within the Ottoman Empire, out of recognition that the empire had to be reformed and strengthened. But there was at the same time, a need for European assistance. In 1839 the reforms were introduced at a time when the Ottoman Empire desperately needed help against Muhammad Ali, who was threatening Istanbul. In 1856 the reforms were issued at the end of the Crimean War where again, the Ottomans were in need of European support against Russian designs against them. In 1876, the constitution was passed in an effort to avoid European intervention as the empire was going bankrupt. It was at that time also in the mid-1870s that the financial problems of the empire were compounded by the possible intervention of Europeans in their struggles with the Christians in the Balkans. But the constitution was passed in 1876, also for real domestic reasons. There was a movement at that time known as the Young Ottomans. The most well-known spokesperson of which was Namik Kemal. And Namik Kemal had made an argument, noting that the Tanzimat reforms had removed the elements, which had traditionally restrained the strength of the Sultan of the government. The religious establishment, the Ulama and the Janissaries. And the Namil Kemal was right. Those forces that had previously restrained the Sultan were no longer there. So in order to exercise to some form of influence over the Sultan and in order to keep the momentum of reform going when the Sultans in power were elected to do so. There was a need for greater influence on the Sultan through the vehicle of Shura, the Islamic injunction for consultation. This was a justification for the creation of a parliament and for the passing of a constitution. These ideas of constitutionalism and parliament were part of a broader movement to which we will refer to later in greater detail of Islamic reform. That movement which spoke of the need for a synthesis between the West and Western ideas and Islamic values in order to avoid the loss of Islamic identity in the process of westernizing reforms. Reform in the empire was obviously essential, but so was the preservation of the empire's Islamic character. If the empire was reformed, but wouldn't be Islamic. Who needed it? So there had to be this synthesis between the reform and the maintenance of the Islamic character of the empire and this was emphasized further by the troubles of the 1870s. The empire was bankrupted by the expense of the reforms and the loss of Christian territories in the Balkans. And as a result, the migration of Muslims from there into the empire. The empire was becoming more Muslim and less Christian. After the 1876-78 war with the Serbs and the Bulgarians that led to further Christian gains and to another war with Russia and Ottoman defeat, there were more vocal critics of reform and resentment for the concessions that would be made. So, it seemed to Christians and to Christian powers. The new sultan, Abdulhamid II, dissolved the newly formed parliament in 1878. The Constitution remained in place, but wasn't acted upon. And Pan-Islamism became a feature that the Sultan emphasized as a common front of Muslim peoples against the European-Christian empires. Muslim solidarity at this phase was still much easier to mobilize amongst the masses than more secular notions of nationalism. If the Tanzimat was considered a process of liberalization than this suspension of the Constitution in 1878, marks the failure of that movement. But it wasn't really a process of liberalization, it was a bureaucratic and not a liberal movement. The reforms were not just lip service to Europe. They were genuine reforms of government and the military, which serve the purposes of the empire and its long term survival. And with all its shortcomings and all its limitations, the Tanzimat, nevertheless, laid the foundations of modern Turkey. As Bernard Lewis puts it, the biggest achievement of the Tanzimat was in the field of education. A new group of educated elite emerged out of the new schools, but at the same time, there was also widespread hostility towards the reforms as some kind of foreign intrusion or foreign invention. But in reality, there was only one option and that was to move forwards towards more reform and more change. And for Turkey, there was no turning back.

9.2.1.1 The Islamic Revival in Egypt, Syria and Iraq - Part 1/2

About this course

This course will discuss the developments in the Middle East from the early 20th century to the present. It will discuss the rise and retreat of Arab nationalism, the problems of internal cohesion of the Arab states, issues of religion and state, and the evolution of Islamist politics. It will also focus on the evolution of the Arab-Israeli conflict and its impact on the region and will conclude with an in depth analysis of the “Arab Spring” by placing these contemporary revolutionary events in their historical context. Please note that this course builds upon a previous course - The Emergence of the Modern Middle East - Part I Learn about the history of the Middle East for a deeper understanding of current regional developments!

Lecture transcript

The disappointment with Arab Nationalism that lent its impetus to the emergence of territorial identities and their promotion in some of the Arab states, was also the background for a very different development and that is the revival of Islamic qualities. The disappointment with secular nationalism and of Nasser's defeat was also the background for the emergence of the Islamic political revival. The panacea that Nasser's improved not to be the huge political setback as a result of the war in 1967. If added to the economic Malays, that developing the Arab country as a result of the process of development and modernization, population grows and massive urbanization were all at the background to these rise of the political Islam. As James Piscatori has mentioned, most rural migrants to the Arab cities, quickly became the urban poor, victims of their own hope, swallowed by the very process which they believed would liberate them. This sense of not belonging, was clearly connected to the turn to religion. Migration from the countryside generally help to spread rule attitudes in the cities and this meant particularly the greater emphasis on religious tradition amongst other classes too religious instinct ran deep. And this was especially so after the second ideologies like Nasserism and Baathism had failed to deliver. The ideological Underpinnings of the Islamist Trend were related, first and foremost, to the opposition to secularist modernization and secular nationalism and territorialism. What it was that they were after it was not against modernity and nationalism, but modernity and nationalism without their secularist thrust. The Islamist sought modernity, raft in the preservation of traditional identities, norms, and values, the need to base society on Islamic law. Since the late 19th century, there were three main theories that came to explain the relative weakness of Muslim societies in comparison to the west. The one was that the decline was the result of the deviation from true Islam. And that true Islam correctly interpreted did not conflict with Western ideas, and rationalism, and science. These were the Islamic reformers of the late 19th century. Like , and Mohammed Abdu. Those to whom we referred at great length earlier on in our course. A second explanation was that the relative weakness of the Muslim world was the fault of Islam, itself, and that Islam, itself, was used as an obstacle to change and revival. This is the attitude we could directly relate to secularists like Kemal Ataturk, the founding father of secular Republic of Turkey. And then there was the third school, those who argued that the retreat of the Muslim world was because of the intoxication with the West. That is not because they were not western enough but that the Muslims have gone too far in the process of westernization as Hasan al-Banna the founding father of the Muslim Brethren or the revolutionaries in Iran would argue. In their view, the Islamic modernists had failed because they themselves were too Western-oriented, seeking to establish Islamic justifications for Western-inspired reform. These new critics of Westernization thought in terms of a return to the idea of Islamic self-sufficiency, that which the modernists like of Ani and Abdu have begun to doubt. Islam is the solution claimed Hasan al-Banna, the founder of the Muslim Brethren 1928. But it was perhaps the key ideological Muslim Brethren in Egypt Sayyid Qutb who lived from 1906 to 1966. The year in which he was hanged by the Nazarite regime in Europe. Qutb wrote considerably more than Hassan al-Banna, and it was he who became the main ideologue of the Muslim Brethren in the second part of the 20th century. Qutb expanded on the theme of the new Jahiliyya. The new Jahiliyya was a term that was coined by the Pakistani Muslim thinker, Abu al-Ala Mawdudi, who lived from 1903 to 1979. And it is he who developed the concept of what was called a Jahiliyya society. And what did all this mean? The Jahiliyya is that period of barbarism and ignorance in the Muslim belief that preceded the advent of Islam. Therefore, societies that were described in the present as Jahiliyya societies were societies that were un-Islamic, societies that were not governed by the Sharia, by Islamic religious law. The new Jahiliyya therefore, was about the present not the past that preceded the advent of Islam. Jahiliyya therefore according to Mawdudi and followed by Kudu was not a period of history but a condition, a state of affairs which could apply to the present as well. They could be no coalescence and compromise with western thought. But the west should be rejected because of it's secular permissive and materialistic ways. Cotum went through a process of radicalization during his imprisonment before his execution by the Nasserite regime. And according to Cotum's more radical thinking, he justified the use of jihad, holy war and revolution, to overthrow these infidel regimes, that is, regimes that did not implement the Sharia. They were jihadi regimes or infidel regimes, those that because of their unbelief should be overthrown even by revolution. And Cotum therefore, for these beliefs, was imprisoned under the Nasserite regime, and as we have mentioned, hanged in 1966. According to James Gelvin, these new radical Islamists were able to counterpose their own brand of cultural authenticity as represented by Islam to the imported secular nationals: creeds, which, they argued, brought nothing but oppression, economic stagnation, and defeat to the region. So what were the specific complaints of these new radical Islamists? They argued against the marginalization of religion, politics, law, and society. They dismissed and disagreed with what they called the cult of the nation-state and its leadership. Nothing less than a form of heresy that is the cult and the belief in the leadership of the state rather than belief in religion and God. The state monopoly over education was unacceptable because it was devoid of Islamic values. The mass media that were controlled by the state spread permissiveness and generally on Islamic valued the countries like Egypt and others were open to the Western Economy and globalization. Leading to corruption and to a consumer society that began to look like the dismissive societies of the west, that they referred to as Coca-Cola societies. The real enemy, they argued, was from within. That is, the regime itself. This infidel regime that had to be removed even before the struggle against Israel. And these new radical Islamists had an ever increasing influence on the Islamization of Arab societies in the latter part of the 20th century.

Lecture transcript

First, again let's look at the process in Egypt. While Sadat encouraged Egypt's raison d'etat and territorial identity. In the process of de-Nasserization, that is, weakening the Nasserites Institutions that challenged Sadat's leadership in his early years. Sadat also allowed for a greater measure of freedom for the Islamists. And Islamists became particularly active at the universities. Where they became in their own mind, the vanguard of the that is, the vanguard of the Islamic community. Which they sought to Islamize from the universities and thereafter. When their influence seemed to gain too much ground, the Islamists were suppressed by the same Sadat. And it is this suppression of the Islamists that eventually lead to the assassination of Sadat in October 1981. And those who killed Sadat, who came from an Islamic Jihadi organization. Proclaimed the killing of Sadat to be the killing of Pharoah, that is Egypt's pre-Islamic leader. Sadat's great fault was that he was governing Egypt as a pre-Islamic, that is, generally an Islamic state. Sadat was succeeded by President Husni Mubarak. And Mubarak allowed a somewhat greater measure of political pluralism. And in practice this meant that the government acquiesced in the erosion of the secularizing foundations of the Egyptian Republic. Under Nasser, sharia courts were abolished and were accorded no role at all, even with respect to matters of personal status. Which was much further than many other Muslim countries had gone in such respects. Under Mubarak however, the regime allowed the Islamists to apply the sharia to cases in the secular courts. The courts were regularly used by Islamic lawyers to bring secular intellectuals, writers, professors, artists, and generalists to trial. And to convict them for the purely religious crimes of blasphemy and apostacy. Egyptian society from the late 1980s onwards showed ever more external signs of increasing religiosity. The construction of new mosques was rampant. People of all classes flocked in great numbers to Friday prayers. The Hijab, the veil, the scarf that covered the head and shoulders was worn by over 80% of women. And the consumption of religious literature was constantly on the rise. While movie going, alcohol consumption and the patronage of bars and nightclubs all declined. Islamists control the teacher's training college where they train future teachers who would disseminate Islamization into the classroom. In the last 1980s, the Ministry of Education in Egypt promoted greater religiosity in the schools. Through a revised curriculum and religious sentiments and ideas was said to dominate the schools. The mainstream print and electronic media were likewise deeply influenced by Islamization. The mostly state owned press shifted towards conservative religiosity. And self centers it abandoning much of the secular liberal content of the 1950s and the 1960s. Official religious publications were decidedly anti-secular. And national radio and television promoted a religious sensibility by increasing the number of Islamic oriented programs. As Asef Bayat has noted, Islamic sentiment thus eroded nationalism's secular expression. In state schools Islamic religious education was part of the Arabic language and history curriculum. Which were compulsory subjects for non-Muslims too. School text books tended to represent Egypt as a Muslim society. And sometimes he included specifically anti-Christian texts. And the curriculum required students to recognize the supremacy of Islam and the special relationship between Islam and the state of Egypt. The Islamization of society was therefore having a negative impact on Egyptian social cohesion. And on relations between Muslims and non-Muslims. The situation of the Coptic Christian minority became steadily more precarious. As they were exposed to increasing levels of intolerance and violence. The regime had consciously acquiesced in the transformation of Egypt. It would actually become what Yasser Byart has described as a secular religious state. In Syria, the religious factor in politics was interminably related to the sectarian structure of Syrian society. Just like in Iraq, Syria and the Baath party had always been deeply influenced by sectarian politics. Ever since the rise to power of the Ba'ath in 1963, sectarian solidarity played an important role in regime stability. In fact, never openly admitted by the men in power, but a fact just the same. Ba'thi secularism was a vehicle for the sectarian domination of the Alawi minority. The systemic marginalization of religion was a blessing for the Alawis whose heterodoxical faith was a political and social liability. Therefore from it's inception in 1963, the Ba'athist regime was avowedly secular. And even radically so, during the rule of the so called Neo-Ba'ath from 1966 to 1970. But under Hafez al-Assad who came to power in 1970, the Ba'ath changed course. After rising to the presidency, Assad sought to enhance the religious legitimacy of the Alawis. In 1973, he reinstated the clause in the Constitution, requiring the head of state to be a Muslim. A clause that the neo-Ba'ath had previously removed. Assad also managed to get the leading Lebanese Shite cleric . To recognize the Alawis as orthodox Shi'is. And thus as ostensible Muslims. Constitutionally eligible for the presidency in Syria. And from then onwards the link with the Shi'is in Lebanon has been particularly strong. But many in the Sunni majority community of Syria continue to regard the Alawis as socially inferior heretics. Who's political dominance was an anathema. But, after having crushed the Sunni opposition, as expressed by the Muslim brethren in 1982. President Assad adopted a more conciliatory attitude towards the Muslim Brethren. That was matched in the 1990s by a greater measure of tolerance toward religion in general. The process begun Hafez of having the Alawis accepted as Shi'is was accelerated under Bashar, his son. Bashar a president of Syria developed a more sustained program of Shi'ization, generally, with the help of the Iranians. As a means of legitimizing the Alawi community in the eyes of the Sunni majority. Hundreds of Alawis were sent to Iran for religious training. While Iranian men of religion toured Syria to preach on Shite religion to the Alawis areas. As the regime sought to rid itself of it's former ultra secularists anti religious image. The Syria mass media diligently presented to the Syrian public and the world at large as a bona-fide Muslim. Bashar like Hafez before him made a deliberate effort to portray himself not only as a Muslim, but as a devout one. Furthermore since the 1990s religious schools have opened all over the country. Religious literature was readily available and was sold to the general public in far greater quantities than books on other subjects. The number of students studying Sharia in the university was constantly on the rise. And popular religious programs, just like in other Arab countries, were broadcast on national television. Syrian society, especially its Sunni components, was becoming more observant. At least if judged, for example, by participation in prayer or the adoption of the Islamic dress code. But all of the above failed to overcome the sectarian fault lines. Many in the Sunni Majority community continued to regard the Alawis as socially inferior heretics, which political dominance was unbearable. And when the Arab Spring erupted in Syria, it did not take long for it to develop into an all out sectarian civil war. Even in Iraq under Saddam Hussein the regime went through an Islaming phase. Shite opposition to the essentially Sunni regime was always ruthlessly suppressed. After Saddam Huseins final rise to power in 1979. Along with his effort to forge an Iraqi sense of national consciousness, drawing on Iraq's supposed pre-Islamic, Babylonian past. Saddam was not aversed to exploiting political Islam when he felt that such a shift would better serve his purpose. Thus while cracking down on Shi'ite political movements. Outlawing the Shi'ite opposition party a Dawa. And arresting and executing Shi'ite leaders. The regime changed gears in its political language. Saddam even began to claim direct descent from Alī ibn Abī Ṭālib, revered by the Shi'ite as the rightful successor to the Prophet. The employment of Islamic themes for regime legitimization. Increased consistently from a towing of the Islamic line for most of the war with Iran in 1980s to deliberate Islamic flag waving in the 1990s. During the war with Shi'ite Iran hundreds of thousands of Iraq Shi'ites fought shoulder to shoulder with their Sunni compatriots. Partly out of loyalty to the state of Iraq and to their own Iraqiness. Partly out of intimidation by the state's ruthless organs of suppression. The war, however, also made it increasingly clear to the regime just how effectively the Iranians had made religion into a mobilizing force. As opposed to the weakness of Ba'ath ideology in emotionally motivating Iraqis. This further encouraged the process of Islamization, which peaked on the eve of the Gulf War in early 1991. When the words of Allahu Akbar were embroidered on the Iraqi flag. But these efforts were obviously artificial and got nowhere in bridging the sectarian divide between the Sunni's and Shia's in Iraq. After Saddam's overthrow by the U.S. in 2003, as we have already seen, the country rapidly degenerated into Sectarian strife between Sunni's and Shia's which has yet to come to an end over a decade later.

Lecture transcript

In Syria, the religious factor in politics was intimately related to the sectarian structure of Syrian society. Just like in Iraq, Syria, under the Ba'ath Party, had always been deeply influenced by sectarian politics. And ever since the rise to power of the Ba'ath in 1963, Alawi sectarian solidarity played an important role in regime stability. A fact never openly admitted by the men in power, but a fact just the same. Ba'thi secularism was a vehicle for the sectarian domination of the Alawi minority. The systematic marginalization of religion was a blessing for the Alawis, whose heterodoxical faith was a political and social liability. Therefore, from its inception in 1963, the Ba'thist regime was avowedly secular and even radically so during the reign of the so-called Neo-Ba'th from 1966 to 1970. But under Hafiz al-Asad who came to power in 1970, the Ba'th changed course. After rising to the Presidency, Asad sought to enhance the religious legitimacy of the Alawis. In 1973, he reinstated the clause in the constitution requiring the head of state to be a Muslim, a clause that the Neobathis had previously removed. Asad also managed to get the leading Lebanese Shi'ite cleric, Moussa Sadr to recognize the Alawis as orthodox Shi'is, and thus as ostensible Muslims, constitutionally eligible for the presidency in Syria. And from then onwards, the link with the Shi'is in Lebanon has been particularly strong. But many in the Sunni majority community of Syria here continue to regard the Alawis as socially inferior heretics, whose political dominance was an anathema. But after having crushed the Sunni opposition, as expressed by the Muslim Brethren in 1982, President Asad adopted a more conciliatory attitude towards the Muslim Brotherhood that was matched in the 1990s by a greater measure of tolerance toward religion in general. The process begun by of having the Alawis accepted the Shii's was accelerated under Bashar, his son. Bashar as President of Syria developed a more sustained program of Shi'ization generally, with the help of the Iranians, as a means of legitimizing both the Alawi community, and the regime in the eyes of the Sunni majority. Hundreds of Alawis were sent to Iran for religious training. While Iranian men of religion toured Syria to preach on Shi'ite religion to the Alawite areas, as the regime sought to rid itself of its former ultra secularist, anti-religious image. The Syrian mass media diligently presented Asad to the Syrian public and the world at large as a bona-fide Muslim. Bashar like Kafirs before him, made a deliberate effort to portray himself not only as a Muslim but as a devout one. Furthermore, since the 1990's religious schools have opened all over the country. Religious literature was readily available, and was sold to the general public in far greater quantities than books on other subjects. The number of students studying Sharia in the university was constantly on the rise, and popular religious programs just like in other Arab countries were broadcast on national television. Syrian society, especially its Sunni components, was becoming more observant. At least if judged for example, by participation in prayer or the adoption of the Islamic dress code. But all of the above failed to overcome the sectarian fault lines. Many in the Sunni majority community continued to regard the Alawis as socially inferior heretics whose political dominance was unbearable. And when the Arab Spring erupted in Syria, it did not take long for it to develop into an all out sectarian civil war. Even in Iraq, under Saddam Hussein, the regime went through an Islamizing phase. Shiite opposition to the essentially Sunni regime was always ruthlessly suppressed. After Saddam Hussein's final rise to power in 1979, along with his effort to forge an Iraqi sense of national consciousness drawing on Iraq's supposed pre-Islamic Babylonian past, Saddam was not averse to exploiting political Islam when he felt that such a shift might better serve his purpose. Thus, while cracking down on Shiite political movements, outlawing the Shiite opposition party Aldawa, and arresting and executing Shi'ite leaders, the regime changed gears in its political language. Saddam even began to claim direct descent from Ali bin Abi Talib, revered by the Shi'ites as the rightful successor to the prophet. The employment of Islamic themes for regime legitimization increased consistently, from a toeing of the Islamic line, for most of the war with Iran in 1980s, to deliberate Islamic flag waving in the 1990s. During the war with Shiite Iran, hundreds of thousands of Iraqi Shiites fought shoulder to shoulder with their Sunni compatriots, partly out of loyalty to the state of Iraq and to their own Iraqiness, partly out of intimidation by the state's ruthless organs of suppression. The war, however, also made it increasingly clear to the regime just how effectively the Iranians had made religion into a mobilizing force, as opposed to the weakness of Marthy ideology in emotionally mate, motivating Iraqis. This further encouraged the process of Islamization, which peaked on the eve of the Gulf War in early 1991, when the words Allahu Akbar were embroidered on the Iraqi flag. But these efforts were obviously artificial and got nowhere in bridging the sectarian divide between the Sunnis and Shiites, in Iraq. After Saddam's overthrow by the US in 2003, as we have already seen, the country rapidly degenerated into sectarian strife, between Sunnis and Shiites, which has yet to come to an end, over a decade later

In this lesson WWI & British interests The Non-Promised land

About this course

How did the State of Israel come to be? How is it that an idea, introduced in 19th century Europe, became a reality? And how does that reality prevail in the harsh complexities of the Middle East? Presented by Professor Eyal Naveh, with additional units from Professor Asher Sussers' "The Emergence of the Modern Middle East" course, This course will take you on a journey through the history of Modern Israel. In this 1st part of the course we will explore: How did the 19th century idea of a Jewish state become a reality? So the next time you hear about Israel in the news, you will be informed enough about the history of this area to comprehend the many sides and narratives that interact to shape the complex reality of Israel today. Please also join us in the 2nd part of this course: Challenges of Israel as a sovereign state * This course is a joint effort of Tel Aviv University & Israel Institute (www.israelinstitute.org) * This course uses media material from various archives, courtesy to Yad Vashem Archive for their help. * This course is self-paced. Once you register, you can participate in the course anytime, as often as you wish and over any stretch of time

Lecture transcript

World War I brought about the end of the Ottoman Empire and the end of 400 years of Ottoman Turkish rule over the Arab parts of much of the Middle East. From the ruins of the empire, the modern Middle Eastern state system was created. Before the war, the European powers sought to preserve the integrity of the Ottoman empire for the sake of European peace. The belief or the fear in Europe was that if the Ottoman Empire were to fall apart the European powers would find themselves very quickly in a disastrous war in the fight for the spoils of the Empire. After the outbreak of World War I, that logic was no longer relevant. Once there already was a war in place, there was no longer a fear of having to fight for the spoils of the Empire. The Ottoman decision to side with Germany and Austria sealed the fate of the Empire. The Western powers, Britain and France, and initially the Russians too, had every reason and interest to seek the Empire's defeat and dismemberment. And secret talks began between the powers on the carving up of the Ottoman Empire after the war. The Russians wanted the straits, the Bosporus and the Dardanelles, to enable them to get into the warm waters of the Mediterranean. The French wanted Syria, especially the coastal area and Palestine too. The British wanted Iraq because of the Persian Gulf in India and the connection from there to the Mediterranean which created a challenge to the French demands in that area. So there was a negotiation, a secret negotiation between the British and the French which led to the signing of what became the notorious Sykes-Picot Agreement. Signed between the British representative Mark Sykes and the French François Georges-Picot. The French were given a free hand in Cilicia, which is in southern Anatolia, and in coastal Syria and Lebanon, as well as a sphere of influence stretching eastwards all the way to Mosul. Britain got a free hand in Iraq, including Basra and Baghdad, and a sphere of influence going westwards towards the Mediterranean. Britain got the ports of Haifa and Acre in Palestine and much of the rest of Palestine too, under an international administration, to be shared with France and with Russian agreement. Russia was soon overtaken by the revolution and opted out of the colonial spoils. In the meantime, the British also conducted negotiations with the Arabs. Britain, because of her Indian interests, was deeply concerned by the sultan's appeal to the Muslims to join the jihad against the enemies of the empire. And as a result, the British were in a desperate search for an Arab-Muslim ally to join the war against the Ottomans. The connection with the Arabs was made through the Hashemites. Who were the Hashemites? The Hashemites were an Arab family, an Arab-Muslim family of very prestigious lineage, as descendants of the Prophet, who was himself of the House of Hashim. In the summer of 1915, in their negotiations with the British, the Hashemites under Hussein Ibn Ali who was the administrator of the holy cities Mecca and Medina on behalf of the Ottomans. Hussein Ibn Ali demanded a caliphate under Hashemite-Arab rule. The demand was for the Arab provinces of the empire from the southern border of Turkey to the Indian Ocean, and from the Mediterranean to the border with Iran. North Africa, including Egypt, were not seen as part of the Arab nation. There was an element of realism in this due to the fact that North Africa then was in the hands of a variety of colonial powers, France, Italy, and Britain. But also, the belief that the North Africans were actually not really part of the Arab nation. The correspondence was conducted by Sir Henry McMahon, who was the British high commissioner in Egypt. McMahon agreed to the Arab demands with a number of important reservations. But the question is, why did the British agree in the first place, albeit with various reservations? The British believed that cooperation with the Arabs would lead to an effective contribution to the war effort that would be made by an Arab uprising against the Turks. The British also believed that siding with Arab nationalism would serve Britain's post war interest in the Middle East in their competition with the French. And furthermore, the Middle East was critically important for British imperial communications. After all, the passage to India and oil for the great British fleet, the backbone of their imperial power, were all connected to the Middle East. So what were the reservations? These were mainly two. One was that certain areas were excluded on the grounds that they were not purely Arab. The second was that British promises related only to those portions of the territories wherein Great Britain was free to act, without detriment to her ally, France. These reservations were cause for great controversy after the war, especially over the question of Palestine.

Lecture transcript

But it was not that the British had promised the same territories to different players. As some people say, Palestine, the twice promised land. In fact, there was no substantial discrepancy between the documents and the British had generally been quite consistent. The British could not have promised Palestine to the Arab state without consulting France, their ally. And therefore Palestine was not promised to the Arabs, but Palestine was not promised to the Jews either. In reference to Zionist demands, what the British did do in the Balfour Declaration was to express their sympathy for a national home for the Jews in Palestine. So let's look at the Balfour Declaration. The war itself had its impact on the impending dissolution of the Ottoman Empire. This offered the Zionists the opportunity they were looking for to possibly obtain Palestine for themselves. The British themselves had their own interest in Palestine, particularly in connection to the protection of the Suez Canal and the passage to India. Prime Minister Lloyd George certainly recognized this British imperial interest. Lloyd George however also had a religious upbringing and because of his knowledge of the bible the appeal of a British protected Jewish colony in Palestine made sense to the British Prime Minister. In 1917 the Allies were in a sorry state in the prosecution of the war. And the British believed issuing a declaration on behalf of Zionist aspirations in Palestine would improve the position of the Allies in the war. They believed that the United States could become more involved in the war. And that Russia would stay in the war thanks to Jewish influence that would be exerted on these great powers to participate more actively in the war because of Zionist aspirations that would be promised by the British. That the support for Zionist aspirations would help propaganda in the U.S. and Russia and thus the war effort thanks to the great effect of Jewish influence. However exaggerated this British opinion of Jewish influence may have been, and exaggerated it definitely was. This was a factor in their decision to issue the Balfour Declaration. So what did the Declaration say exactly? In this letter by the British Foreign Minister, Lord Balfour, to the leader of the Jewish community in Great Britain, Lord Rothschild, the British government declared its sympathy for Zionist aspirations in Palestine. The British government in this expression of sympathy viewed with favor the establishment in Palestine of a national home for the Jewish people. It is interesting to note, view with favor, sympathy, somewhat less than outright express support and endorsement. Secondly, it was not entirely clear what a national home really meant. And thirdly, what ever this national home was to be it was to be in Palestine. Not the conversion of Palestine into a Jewish national home. These are two very different things. Furthermore, the Declaration noted that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine. That is, whatever the Jews did establish in Palestine could not be damaging to the rights of the Arab people who already lived there. This was all in a letter as we have seen by Balfour to Lord Rothschild, a rather low-key expression of British policy. It was not, for example, a declaration of policy given in Parliament. But nevertheless, for the Zionists this was understood to mean support for a Jewish state. But as the British historian Malcolm Yapp has summarized, the Declaration was virtually meaningless and committed Britain to nothing. When the war came to an end in the Middle East, Britain was by far the superior power in that part of the world. This, as the British historian and journalist Elizabeth Monroe has written, this was Britain's moment in the Middle East. The Ottoman Empire had come to an end. The French were completely preoccupied at the front in France and they could only spare token forces for the Middle East. Russia was preoccupied by revolution and her opting out of the war. So British occupation forces took over most of the Arab areas of the empire in Syria, Iraq, and Palestine, and there was only a small French force in Lebanon. So the great powers and especially Britain could shape the region more or less as they wished. And the drawing of the borders of the future Arab states in the Middle East were very much part of British-French trade-offs. And it was the French, the weaker party, who made concessions to the British in both Palestine and Mosul. As you may recall from the Sykes-Picot Agreement, Palestine was shared by the French and the British. It was now given over by the French solely to Britain. Mosul became part of British-ruled Iraq rather than French-ruled Syria. These areas of the the Sykes-Picot Agreement were now divided up by the victorious powers into mandates that were handed over to the French and to the British. At the Conference of the European Victorious Powers that was held in San Remo in April 1920, the mandates were delivered to Britain and France. Lebanon and Syria became French mandates. Britain controlled Palestine, Transjordan and Iraq. In this creation of the mandate system there was a very significant upgrading of the British commitment to the Zionists. The British mandate for Palestine as published officially in July 1922 transformed the commitment made in the Balfour Declaration to a British commitment to the international community, to the League of Nations, much more than a letter to Lord Rothschild. Moreover, the formal document of the mandate also recognized the historical ties of the Jewish people to Palestine. So while the mandate upgraded the British commitment to the Zionists, the mandate also determined finally that the area lying to the east of the Jordan would become an Arab state, that is Transjordan. And that area would be from the very outset excluded from the British commitments to the Zionists. Therefore, Transjordan as an Arab state would not be a zone of Jewish settlement or creation of the Jewish national home, which was now restricted to western Palestine only. And eastern Palestine now became Transjordan and destined to become an independent Arab state.

West Asian Economy news IVth week

The political economy of the Arab Spring: searching for the virtuous circle

PAUL AARTS and SAMIR MAKDISI 28 July 2016

No matter how tragic the short and medium-term consequences of some of the uprisings, their outbreak might eventually lead the Arab world to enter steadily the trajectory to democracy and good governance.

Amr Nabil/AP/Press Association Images. All rights reserved.

Amr Nabil/AP/Press Association Images. All rights reserved.

In a recent piece in The Washington Post, Marc Lynch argued it’s wrong to say that the Arab uprisings have failed. “Success or failure”, he contends, is not a helpful way to understand these ongoing societal and political processes. “Let’s not talk in these binary terms”, he concludes, noting  that after five years new political systems have taken shape that must be understood on their own terms – which by the way is a correct  though not a novel finding.

We have seen this before as is shown by ample research on regime transitions since WWII, and more in particular after the end of the Cold War. Here, we may refer in particular to the work of Barbara Geddes and her team and to Steven Lewitsky’s and Lucan Way’s work. It was found that more than half of regime breakdowns were transitions from one autocracy to another. Fewer than one-quarter of leadership changes resulted in “democratization” or a move towards democratic governance (but in a majority of cases remaining short of achieving  a consolidated “democracy” as commonly understood).

So nothing new here. There is no linear “transition” towards democracy, which is very much against the school of thought of those scholars, both inside and outside the Arab World (and – perhaps more understandably – among many activists), who may suffer from what the Germans call Zwangsoptimismus (translated as “forced optimism”). Of course other scholars have been more cautious, emphasizing the implementation of inclusive  political and socio-economic policies as pre-requisites for a successful transition to democracy. 

Dignity and bread

A basic motive behind the initial uprisings was the wish to break out of the autocratic hold and achieve some of form of political freedom. But what greatly reinforced this wish were growing levels of unemployment, especially youth unemployment that came to reach relatively high levels. Subsequently three of the uprisings turned into brutal civil wars, intertwined with active foreign interventions, with all their horrific socio-economic and political consequences.

So far, in one case (Egypt) it has effectively led nowhere. Only Tunisia is a more promising case, though the successful implementation of more inclusive economic policies, including the tackling of the issue of unemployment, is yet to be seen.

Generally speaking, the pro-democracy protests have been less focused on the question of economics than politics. Thus, while the Arab Spring was to a large extent rooted in protest at the neo-liberal “solution”, these protests remained basically political, issues of economic injustice or dysfunction attracting lesser attention. And what indeed evolved following the uprisings was a further worsening of the economic and job situation.

Hence whereas the removal of sitting dictators could be interpreted as a sign of success for the Arab uprisings, the consequent worsening situation, including job prospects, is a countersign of their non success, at least so far. Different sources give different numbers when it comes to jobs needed in the near future. But no matter which source is consulted, the numbers are staggering – in particular when looking at youth unemployment. In general, young females are three times less likely to find employment than young males.

Consent vs coercion

Not only have economic conditions worsened since 2011, and unemployment has been on the rise, new regimes (like in Tunisia) face the great dilemma of how to recover economically while maintaining a stable transition process. Seeking international assistance traditionally forces them to introduce market-oriented reforms (imposed by international financial institutions like the IMF and the World Bank) – such as slashing subsidies and laying off government employees. By doing so they risk losing support of the people that brought them to power, i.e. they run the risk of losing recently acquired legitimacy.

The alternative of not giving in to demands from these institutions, and “listening to the people”, may lead to an even deeper economic malaise with uncertain political consequences. Hence the bottom line and paramount question: How to reconcile market-oriented reforms with social justice?

This is the great challenge facing the post-uprising MENA region: creating a balance between the need to restore economic stability while generating growth prospects and implementing more equitable socio-economic policies. This challenge has been successfully met elsewhere as in the case of Chile. In the existing conflictual Middle Eastern region this task will be much more difficult than otherwise would have been the case.

Searching for the ‘virtuous circle’

A lot of research has been done on the link between regime type and economic development. As Przeworski has summarized: there is no reason to believe that on average non-democracies have a higher rate of growth than democracies. Or, quoting another economist, Dani Rodrik: “For each authoritarian country that has managed to grow rapidly, there are several that have struggled. For each Lee Kuan Yew of Singapore, there are many like Mobutu of the Congo.”

Whether democracies perform better economically, however, is open to divergent views. There is just one finding that is robust: It is certain that established democracies are more likely to survive in countries with higher per capita income (India is a notable exception while growing authoritarianism in Erdogan’s Turkey – clearly apparent well before the recent post-coup developments – might throw a spanner in the works of democratic theory).

It looks like “democracy seldom appears in economically underdeveloped countries, and when it does, it does not last long.” Does this mean that, as Tarek Massoud claims, a healthy economy then is a kind of prerequisite for an inclusive policy? Does this imply that democratization must be put on hold? No, of course not, is Massoud’s reply.

It is without doubt that democracy is important in its own right, but what might be relevant to point out is the need for an “enlightened political leadership that prioritizes building competent state institutions, fighting corruption, and expanding economic opportunity.” The ideal then is to achieve a virtuous circle where governance reforms support growth which in turn leads to better governance and even faster growth.

In this context, the growth of the middle class and the rise of education levels can have a modernizing influence that helps in creating more favourable conditions for a move towards a democratic environment. (Though this is not to claim that the middle class always and everywhere is the “vanguard of democratization”).

Specifically in the case of the Arab region, this has  generally not been the case (in contrast with other regions of the world), mainly on account of the negative political influences of abundant oil wealth in already existing non-democracies (in the oil-rich Gulf region) as well as raging conflicts, including the Arab-Israeli conflict that is yet to be justly resolved. The interaction of these factors has drawn in corrosive foreign interventions that further destabilized the region, thereby hindering economic development.

A post-work, deindustrialized future

It’s a truism to notice that in this grim context finding enough jobs will be an uphill battle – if not a mission impossible. Add to the above-mentioned specifics of the MENA region – where oil wealth has tended to retard potential economic diversification – the global trend towards a “post-work” future (with more time for leisure made possible by automation), and it will be hard to be optimistic. Rather than repel the advance of the machine, the West ánd the MENA region need to work on a revolution in social thinking.

For newcomers to the world market it would be difficult to emulate the industrialization experience of the Four Asian Tigers, or the European and North American economies before them. Many (if not most) developing countries are becoming mostly service economies without having developed a large manufacturing sector – a process which Dani Rodrik has called “premature deindustrialization.” This also applies to countries in the MENA region, though it may vary per country.

In general, however, as Rodrik argues, what the region most likely is going to miss is crucial building blocks to be able to come to some kind of a less autocratic system. Let’s remember that indeed some of these “building blocks of durable democracy have been by products of sustained industrialization: an organized labor movement, disciplined political parties, and political competition organized along a right-left axis. The habits of compromise and moderation have grown out of a history of workplace struggles between labor and capital.” 

Threat to stability

This has serious implications, also for the relative “success story” of Tunisia: The new government may have gained “input legitimacy” thanks to its election by the people, but that does not automatically entail “output legitimacy” in terms of policy delivery – more concretely: in particular more jobs for the massive numbers of unemployed and underemployed youth.

No jobs lead to disappointment. What comes after is difficult to say. Unless this problem is successfully addressed isn’t a likely outcome a massive permanent class of jobless people whom the state will see as a persistent threat to stability? This in its turn might necessitate repressive-exclusionary modes of governance.

Against this backdrop, the MENA region will most likely travel a rocky road to an unknown future. It’s against this pessimism of the intellect that we have to put the optimism of the will, leading to our belief that, no matter how tragic the short and medium-term consequences of some of the uprisings, their outbreak might eventually lead the Arab world to enter steadily the trajectory to democracy and good governance. 

Qatar buys chunk of Empire State Building

Empire State went public in 2013 as real estate investment trust

UPDATED 10:51 AM CDT Aug 24, 2016

7. Empire State Buildin

NEW YORK —Some of the Middle East's vast oil riches are being plowed into Manhattan's most iconic skyscraper.

The sovereign wealth fund of Qatar made a $622 million investment on Tuesday in the Empire State Realty Trust, which owns and operates the Empire State Building. The purchase gives the Qatar Investment Authority a nearly 10% stake in the building.

The Qatar Investment Authority was founded in 2005 to grow the money made off the tiny OPEC Gulf nation's natural resource. Qatar also has stakes in Tiffany, Volkswagen and Credit Suisse, among others.

Qatar is also hosting the 2022 World Cup. The nation has weathered the cheap oil storm better than Saudi Arabia and other Middle East nations. That's because Qatar has built up a big war chest of oil money to protect it during leaner times. It also has a relatively tiny population of barely 2 million people to support.

John Kessler, president of the Empire State Realty Trust, welcomed the Qatari investment in a statement, calling it an "endorsement" of the company's "irreplaceable assets."

It's the latest bet on the world famous Empire State Building by a foreign investor and a further sign of how hot Manhattan's real estate market is.

Other major shareholders of the Empire State Realty Trust include Norway's massive sovereign wealth fund.

Japanese investment firm Shinko Asset Management as well as Australian real estate investor Resolution Capital also own major stakes in Empire State, according to FactSet.

Empire State went public in 2013 as a real estate investment trust (REIT). The IPO raised nearly $1 billion.

Dubai e-services gather speed

The Roads and Transport Authority's EC3 module is a case in point, where it integrates various modes of commutation.

Dubai is busy integrating public services electronically to make them hassle-free and user-friendly. E-governance remains a focus area, and this includes e-recreation facilities using a card. Entry to public parks - from the first quarter of next year - shall be through a multipurpose NoL card. The plan is to reduce long queues in public places and make it easy for people to avail of these facilities. The system is currently in place at Mushrif Park, Al Mamzar and Zabeel Park. Electronic data will also help authorities manage civic services like parking and other issues better.

The vision of the leadership is to make the city smarter, sustainable and happier. Different departments are connecting with each other and working together - electronically.  The Roads and Transport Authority's EC3 module is a case in point, where it integrates various modes of commutation. Linking parks with transport is a first of its kind in the region. Residents can simply hop on a bus using the Nol card, and hop off for a stroll in the park. The masterplan, known as Smart Dubai Government Shared Services, aims to link more than 50 government entities by the year 2021. It will bring together millions of consumers under one umbrella. The scope of the NoL card has been expanded. No cash for government services, just swipe and go, even for fun. This mode of electronic payment is set to gain currency when private partners come on board. Emirates ID cards are already being used at e-immigration gates. NoL is another step in the e-direction. Digital oneness is closer than you think.

Two ways to ensure every child gets an education

This goal is still a distant prospect for far too many children.

When I visited the Zaatari refugee camp in Jordan earlier this year, I met with children who told me what education means to them. For Syrian youths who have been forced from their homes and have lost everything, education is about more than qualifications or test scores; it embodies their hope for the future.

Children like those in Zaatari, and millions of others around the world, are central to the work of the International Commission on Financing Global Education Opportunity, which I joined last September. This commission is committed to the fourth United Nations Sustainable Development Goals, which aims, by 2030, to "ensure inclusive and equitable quality education and promote lifelong learning opportunities for all."

This goal is still a distant prospect for far too many children. With so many development issues demanding our attention, policymakers should bear in mind that education is not just a good in itself; it is also a catalyst for many other development gains.

As the old African proverb goes, if you educate a girl, you educate an entire nation. Ensuring access to quality education for children, especially girls, will lead to fewer child marriages and less child labor and exploitation. And education has long-term societal benefits: aside from increased political engagement, educated children contribute intellectual capital and pursue entrepreneurial opportunities when they grow up, boosting economic growth.

Tackling the education challenge needs to start from two principles embedded in the goal.

First, "for all" means that we must focus on the children who have been left behind. Millions of children are out of school or are receiving a substandard education because of who they are or where they live. According to the UN High Commissioner for Refugees, refugee children are five times more likely to be out of school than other children in the countries to which they've been displaced. And in all but two African countries, girls remain less likely than boys to complete a primary education. Getting these children into school will require new approaches that directly address their exclusion and make schooling genuinely accessible and relevant.

Second, "quality": Education must be effective, so that children actually learn. For the 61 million children who are out of primary school, formal education is beyond reach. But, just as urgently, more than one-third of children of primary-school age - 250 million - are not learning the basics, according to the UNESCO Education for All Global Monitoring Report. Half of these children have been in school for at least four years. We must address the barriers to learning, both in the classroom and at home, by improving the quality of teaching and classroom conditions and teaching parents how they can support their children's education. Upholding these two principles will require increased investment. Last year, UNESCO calculated that governments must double education spending as a share of national income to achieve the 2030 goals. This will require increased revenue from taxation and stronger efforts to collect what's owed. Donors also need to live up to their aid commitments and target aid more effectively. For example, less than one-third of education aid goes to Africa, even though the region accounts for almost two-thirds of out-of-school children. Moreover, at the moment, education budgets are often regressive, with almost half of spending in the poorest countries allocated to the most educated 10% of the population.

Fixing education investment requires action in two key areas.

First, we need equitable financing, with more investment in early childhood care and development, where there is the biggest potential for returns. Budgets must be focused on the most excluded children, and primary education must be free at the point of use, so that every child can learn. We also urgently need more transparency and accountability, so that budgets are visible and communities have a say in school governance.

Second, we need to strengthen domestic education systems so that governments see themselves as the guarantor of accessible, quality schools for their citizens, rather than abdicating that role to outside development agencies. In particular, we should push for partnerships between government and business to boost domestic resources for education, and eliminate illicit capital flows that deprive governments of the means to fund it, such as tax evasion and money laundering across national borders.

With these priorities in mind, the education commission will deliver its recommendations at the UN General Assembly on September 18, when the Secretary-General will receive and act on them. The education commission will have succeeded if we are able to leverage the funding and political will to ensure that every child learns, regardless of their income, location, or social status. Our work will not be complete until that happens.

How Dubai is furthering the region's green agenda

Finding solutions to these problems is not always clear, particularly when improving energy security and addressing climate change may seem to be two conflicting goals.

In April, the World Meteorological Organisation (WMO), a United Nations body, released its latest 'Status of the Global Climate' report, which detailed the string of climate and weather records that were broken in 2015 worldwide. Given the upward trend we've seen in recent years, it's unsurprising that 2015 shattered all previous records, including global temperature records, with exceptional rainfall, devastating droughts, unusual cyclone activity and intense heatwaves around the world.

"The year 2015 will stand out in the historical record of the global climate in many ways," said WMO experts. These shocking statistics serve as a timely and critical reminder of the sheer scale of destruction climate change is having on our planet and the stark outlook for its future. It is imperative that action is taken now.

Finding solutions to these problems is not always clear, particularly when improving energy security and addressing climate change may seem to be two conflicting goals. Countries are challenged with achieving reliable and affordable energy supplies, while at the same time reducing emissions into the atmosphere. In December 2015, a historic agreement to combat climate change was reached at COP21, also known as the 2015 Paris Climate Conference. For the first time in over 20 years of UN negotiations, all 195 country members reached a universal agreement on climate change, with the aim of keeping global warming below 2°C. As a member of the UNFCCC, the GCC has pledged to implement a number of green initiatives to drive the global green agenda which include; renewable energy initiatives, R&D in technology, water conservation and energy efficiency improvements.

More recently, in April this year, representatives of States from all around the world, visited New York to sign the original text of the Paris agreement on Climate Change which was first adopted at December's Conference of the Parties (COP) 2015.

Following the landmark Paris COP21 meetings, a further meeting of the Conference of Parties (COP22) with the UNFCCC will be held in Marrakech, Morocco, in November this year, at which many of the top decisions struck in the French capital will be fleshed out into action plans. This includes continued work on the determined commitments for reducing country carbon emissions and an even stronger emphasis on the action plans for regions, cities, businesses and the civil society, where the World Green Economy Summit 2016 will be a key contributing platform.

For two years now, Dubai has hosted the World Green Economy Summit (WGES) to continue its steady and forward march aiming to achieve its ambition to become "The Global Capital of the Green Economy", facilitate a platform for green leaders to come together to discuss partnerships and develop cleaner and green initiatives to create a sustainable future. This year WGES 2016, under the new theme of 'Driving the Global Green Economy', will help the region follow up on commitments made through the Dubai Declaration and create strong links to the UN Climate Agreement 2015 and the Sustainable Development Goals 2030 following the directions set at COP22 in Marrakech. Dubai is taking major strides to drive the green economy, with a series of initiatives announced over the past 12 months. In November 2015, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai, announced the launch of Dubai's Clean

Energy Strategy 2050, which sets a target for the provision of 7 per cent of Dubai's energy from clean energy sources by 2020, increasing to 25 per cent by 2030 and 75 per cent by 2050.  To further the region's green economy, DEWA announced in January 2016 that it has opened consultancy tenders for a Dh100 billion green fund - the Dubai Green Fund. As part of the region's wider green energy investment programme, the "Dubai Green Fund" will provide financing for investors in Dubai's clean energy, and affirms the Emirate's commitment towards pioneering green initiatives and sustainability.

In addition to the Green Fund, Dubai's Clean Energy Strategy 2050 will also see the planned capacity of Dubai's Mohammed bin Rashid Al Maktoum Solar Park upgraded to 5,000 megawatts from 3,000MW previously. The Solar Park, which is the largest single-site strategic renewable energy project of its kind in the world, is a testament to the region's commitment to building and developing a greener economy, to achieve the UAE Vision 2021 of a truly sustainable environment with the lowest carbon footprint in the world.

We are very proud of the UAE's achievements. We have accomplished significant success in photovoltaic energy.  Energy, sustainability and new sources of power are all themes that are on the global agenda, as the world faces growing challenges with fluctuating oil prices. We have identified sustainability as a key theme in our upcoming Dubai Expo 2020 in recognising the undisputable fact that all economies have to focus on green strategies.

2016 is a pivotal year for Dubai and its continuation of green industry development. With the announcement of Dubai's Clean Energy Strategy 2050, the initiatives related to water and energy management programmes will get additional momentum and really showcase the regions ability to have a green voice on a global level. This year, Dubai's World Green Economy Summit (WGES), will be the perfect platform for the region to showcase how far it's come in just two years and shine a spotlight on exciting plans for the future.

Oil prices rally; tough task ahead

Oil's comeback has finally brought to an end the bearish trend prevalent all these months.

As oil prices crossed the psychological barrier of $51 a barrel, it was indeed a sign of recovery. The fact that the crude was holding at $50.80 a barrel - at the close of markets over the weekend - signifies a bullish trend, which will have a positive impact on a sluggish global economy. Oil's comeback has finally brought to an end the bearish trend prevalent all these months. If the black-gold continues to sustain itself in the bullish territory, and rise further, it will be a good sign for production, employment and investments. Stock markets in Dubai led an advance across most Gulf Arab equities after oil posted the best since April. Dubai's DFM General Index advanced 0.9 per cent, the biggest gain in a week. It is a boost for market sentiment. Rumours of a production deal between Saudi Arabia-led Opec and Russia, the world's largest producers, and bullish supply data has enabled oil to rise. It is hoped that they might agree on a deal to freeze production level, enabling oil to get the best market price. But there could be a slip as well, if Iran decides to play foul. Tehran's adamant attitude to pump as much oil as possible in April, as it returned from sanctions, had torpedoed an earlier understanding among the Opec and other oil producing nations. It remains to be seen what course of action it takes this time around.

What is inevitable is a deal from Opec with a long-term plan of action to buoy oil prices. This cannot be delayed any further. The producers have to keep an eye on demand and supply equation, and a tab on Shale's manoeuvring. A decline in US crude and gasoline inventories pose real challenges. Analysts believe Friday's rally is unlikely to sustain for a long time, as a number of factors will impact it in due course of time. The foremost among them is a weak dollar and sluggish trend in bourses. The reason is that greenback's slide will make oil cheaper for buyers using foreign currencies. Whatever may be the case, the traders expect the crude glut to shrink and this could be a game-changer.

Oil price hike gives GCC near-term relief

Kuwait relies on hydrocarbon revenues for around 90 per cent of revenues

Rise in prices unlikely to have major impact on sovereigns' creditworthiness, says Moody's

The GCC countries will face some near-term relief from the current higher oil prices, but the hike is unlikely to have a major impact on GCC sovereigns' creditworthiness, Moody's Investors Service said.

The ratings agency said the near-term would led to narrower fiscal and current account deficits than it previously expected. "In particular, Kuwait, Qatar and Oman are set to be the main beneficiaries of higher oil prices in the short term, given the larger reliance on oil for government revenues," it said.

Moody's now forecasts a deficit of three per cent of GDP (gross domestic product) for Kuwait, 5.5 per cent for Qatar and 15.1 per cent for Oman in 2016.

On the external side, higher oil prices will benefit Kuwait, the UAE and Oman the most by reducing the current account deficits by an average of four to seven per cent of GDP (with Kuwait facing the largest gains), followed by Qatar, Saudi Arabia and Bahrain, it said.

The UAE, Kuwait and Qatar are the most strongly-positioned GCC sovereigns in terms of both the size of their financial assets compared to government spending and low fiscal break-even oil prices, while Saudi Arabia, Oman and Bahrain have a higher fiscal break-even oil price along with much lower financial assets on which to draw, which contributes to the ratings gap, the ratings agency said.

Over 2016-17, Moody's projects fiscal gains of around four to five per cent of GDP for Qatar and 3.5 to 4.5 per cent of GDP for Oman, and smaller but sizeable gains of 1.5 to three per cent of GDP for Saudi Arabia, the UAE and Bahrain. 

It said Kuwait, which relies on hydrocarbon revenues for around 90 per cent of revenues, will be able to generate an additional six to seven per cent of GDP in revenues annually over 2016-17 given higher oil prices, bringing its fiscal deficit down to three per cent of GDP in 2016 and almost zero per cent in 2017, from its previous forecasts of 9.9 per cent and 6.4 per cent, respectively.

The ratings company argued that the GCC sovereigns' credit profiles would remain under stress despite prospects of somewhat higher oil prices in the near term than expected earlier this year.

"While we have revised upwards our near-term estimated prices for oil, our medium-term expectation of 'lower for longer' oil prices remains unchanged. We, therefore, expect GCC countries to continue to face economic, fiscal and external challenges," said Steffen Dyck, a senior credit officer at Moody's.

"Given the significant challenges ahead, government actions to address structural problems exposed by significantly lower oil prices will remain key to sovereign creditworthiness," said Dyck.

Moody's expects oil prices to remain low, moving within a $40 to $60 per barrel range over the medium term. In June, Moody's raised its nearer term oil price estimates for Brent crude to $40 per barrel in 2016 and $45 in 2017.

It pointed out that the oil market's recent rise has been supported by transitory factors, including temporary supply disruptions in Canada and violence in Nigeria which has curtailed production, as well as technical factors such as a weaker US dollar and financial market activity.

"However, global oversupply will continue to depress oil prices for an extended period. Capital spending, which determines future production capacity, has dropped substantially and the US rig count has declined by about 70 per cent. But non-Opec supply remains at historically high levels and the global competition for market share is not over," it said.

Saudi Arabia and Russia have both increased production to their highest levels since the early 1990s, and Iran continues to increase its production.

"The low oil price environment continues to have material, and in some cases profound, implications for economic growth and the balance sheets of GCC sovereigns, which largely rely on oil and gas to drive growth, finance government expenditures and generate hard currency for servicing  foreign-currency-denominated debt," it said.

Deloitte: Middle East a growth potential for global luxury goods sector

The global luxury goods sector is expected to grow more slowly in 2016, at a rate many retailers may find disappointing, according to Deloitte’s annual report entitled Global Powers of Luxury Goods 2016 Disciplined innovation

The growth rate is slowing in important markets such as China and Russia, although some markets continue to perform well and there are pockets of opportunity across the globe. India and Mexico for example are growing quickly, and the Middle East offers further growth potential.

The report examines and lists the 100 largest luxury goods companies globally, based on the consolidated sales of luxury goods in financial year 2014 (which we define as financial years ending within the 12 months to 30 June 2015). It also provides an outlook on the global economy; an analysis of merger and acquisition activity in the industry and discusses the key forces shaping the luxury market.

“The Middle East represents a big opportunity for luxury brands. Luxury malls in Abu Dhabi and Dubai have helped put these cities on the map for the industry, and the United Arab Emirates as a whole continue to enjoy strong growth,” said Herve Ballantyne, partner and consumer and industrial products leader at Deloitte in the Middle East. “Well-established big-name brands perform well in the region, and tourism is a major driver of sales in Dubai. Although the region is likely to feel the impact of political unrest as well as global economic uncertainty, but further growth is expected overall.”

"As the Kingdom of Saudi Arabia seeks to diversify its oil-based economy, retail is a sector that is likely to benefit given the expected growth in religious tourists over the next decade and ongoing private sector planned investments such as the recent announcement that the Majid Al Futtaim group will be adding approximately 112,000 sqm of retail space in Riyadh,” he added.

The world’s 100 largest luxury goods companies generated sales of $222 billion in financial year 2014, 3.6 percent higher year-on-year. The average luxury goods annual sales for a Top 100 company is now $2.2 billion.

“There is a shift in the luxury path-to-purchase,” said Ira Kalish, Chief Economist for Deloitte Global. “Empowered by social networks and digital devices, luxury goods consumers are dictating increasingly when, where and how they engage with luxury brands. They have become both critics and creators, demanding a more personalized luxury experience, and expect to be given the opportunity to shape the products and services they consume.”

Key findings from the report include:

Discipline by design: luxury’s new normal – The luxury goods sector has now passed the mid-point of the ‘decade of change.’ The first half was characterized by the Chinese consumer and the explosion in the use of digital technology. The second half of the decade is expected to be characterized by discipline. The external environment is likely to change in a number of crucial areas: an evolution in consumer buying behaviors; the merging of channels and business model complexity; an increase in international travel; the growing importance of the millennial consumer; and the continued impact of the global economy. All of these factors create opportunities for the luxury goods sector.

Demand for luxury goods still growing profitably – Sales for the world's 100 largest luxury goods companies continued to grow despite economic challenges, although the rate of growth was less than in previous years. Profit margins were higher than the previous year and the polarization of company performance was greater, with more high performers achieving double-digit luxury goods sales growth and profit margins, and also more companies experiencing double-digit sales decline.

Italy is once again the leading luxury goods country in terms of number of companies – With 29 companies in the Top 100 it has more than double the number based in the US, which has the second-largest number. However, Italian companies account for only 17 percent of luxury goods sales in the Top 100 – these predominantly family-owned Italian companies are much smaller, with average luxury goods size of $1.3 billion, compared to $3.1 billion for US companies.

Egypt's economic and fiscal crisis

Rescuing the sinking ship

Just last week, the Egyptian government and a delegation of the International Monetary Fund (IMF) reached a staff-level agreement about a 12 billion US-dollar loan package. Egypt hopes to restore confidence in its crippled economy and attract more investors. But is this deal the right answer for Egypt's economic problems? Sofian Philip Naceur talked to Amr Adly, a non-resident scholar of the Carnegie Middle East Center

Egypt is in the midst of an economic and fiscal crisis. Why is the country seeking this loan from the IMF?

Amr Adly: Egypt′s situation is serious. The country is currently facing a deficit in both its balance of trade and its balance of payments. There is a severe lack of hard currency in Egypt, which is the main reason for the exchange rate crisis. The shortage of US dollars has put a lot of pressure on the Egyptian pound, feeding inflation – the latter fell just short of 15 percent in June 2016. This has necessarily had a negative impact on the economy. Low growth combined with high inflation is causing the economy to spiral. Although not technically in recession, the outcome so far has been a slow-down, which is why the government has tried to interrupt the process with a massive influx of foreign capital. The Scharm El-Sheikh Economic Conference, held in March 2015, was just one of Egypt′s attempts to attract investment from abroad. In sufficient quantities, this would have aided economic recovery and checked the imbalance. Now the government′s only chance of escaping this downward spiral is to borrow capital. Egypt hopes that by striking a deal with the IMF, it will be able to stabilise the economy at a macroeconomic level.

Egyptian governments reached deals with the IMF in 2011 and 2012, but the Supreme Council of the Armed Forces (SCAF) and the government of former President Mohammed Morsi never implemented these agreements. Why did the current government agree to the IMF loans?

Adly: This loan was not the only option. For political reasons, Egypt was on the receiving end of a huge amount of cash aid from the GCC countries (Gulf Cooperation Council) post-2013 – this money had no economic strings attached. But the plunge in oil prices has made it difficult for the GCC countries to continue their support for Egypt. The regional and global economies have both suffered.

Container ship passing through the New Suez Canal near Ismailia, east of Cairo (photo: picture-alliance/dpa/A. Shaker)

The Suez Canal extension as a demonstration of power: estimated to have cost almost €8 billion, the project was intended not only to breathe new life into Egypt's sluggish economy, but also to buff up President Sisi′s international image. Yet, as Amr Adly explains, "this project will not have a reforming effect on the Egyptian economy and enhance its performance, thereby creating a huge number of new jobs and raising the living standard of the Egyptian people. The state and the military may be capable of getting a major infrastructure project up and running, but there's no plan for development; no package of measures with a particular goal″

That said, this aid still proved insufficient to re-structure the state budget, which is hugely in deficit. Egypt's economy today has the same problems it had in 2013. The Gulf is neither willing nor able to supply Egypt with the same level of aid anymore. This is why the United Arab Emirates extended Egypt's quota in the IMF and paid around 1 billion US dollars in 2015 to allow Egypt to seek this massive loan. The deal between Egypt and the International Monetary Fund is one of the biggest loans in the organisation′s history.

Is this deal with the IMF an appropriate measure to tackle the fiscal and economic crisis?

Adly: The austerity measures and the devaluation of the pound, agreed on by the IMF and the Egyptian government, would have happened anyway. By implementing them in co-operation with the IMF, however, the government can make it look as if the IMF is responsible for these unpopular measures. I don′t have a problem with the IMF deal per se. What I am concerned about is the massive borrowing of money. This will raise Egypt's external debts by 40 percent, which is hugely risky. My main concern is that the government will not invest these loans, but use them to cover expenses instead. There will be no return. Indeed I fear that the Egyptian economy will not be able to pay off these debts.

The government says it will stabilise foreign exchange mechanisms and attract foreign investment. But in an ailing global economy, that′s easier said than done. If they fail to trigger an increase in economic growth, these austerity measures will lead to lower standards of living for the majority of the population. It′s a risk the government is willing to take simply because there is a lack of options.

And yet, on the other hand, the government is trying hard to pretend that all these austerity measures are not related to the IMF deal at all. Why?

Adly: It′s the usual kind of government propaganda. The political leadership is committed to reform and to implementing these austerity measures. They have been preparing to go in this direction for a while and are willing and able to implement them. In 2014, for instance, the government reduced the subsidies for fuel significantly, but got nothing in return. So the subsidy cuts were frozen. They are not going to proceed without getting something back. As the aid from the Gulf continued to shrink, however, they had to act. The conditionality on IMF programmes is a restraint.

Egypt four years after the January uprising

After the overthrow of President Hosni Mubarak and the coup against his successor, Mohammed Morsi of the Muslim Brotherhood, many Egyptians were relieved and delighted that Abdul Fattah al-Sisi was at the helm. Civil society, however, has paid a high price. By Diana Hodali

Pause 12345678910 PrevNext A woman holds up a poster of Abdul Fattah al-Sisi (photo: picture-alliance/dpa)

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The hopes raised by the revolution in 2011 were immense. The overthrow of Mubarak led to Egypt's first free elections and a new constitution. Mohammed Morsi of the Muslim Brotherhood was elected president. Often heavy handed and sometimes autocratic, he provoked mass protests. In 2013, he was ousted by army chief Abdul Fattah al-Sisi, who was then elected president.

The government and Egypt's President Abdul Fattah al-Sisi announced that they will implement a new system that provides subsidies only for those in need. What will this new system look like?

Adly: This is not yet clear. What might happen is a slash in fuel subsidies and an introduction of cash transfers for the poorer segments of society. They might end up mixing both measures and extend the smart card system that was introduced in 2014. The idea is to distribute smart cards for car owners with a certain quota for subsidised fuel. If customers purchase fuel beyond their quota, they have to pay a higher price.

Egyptian syndicates fear a mass sacking of state employees. Some are saying up to 2 million people might lose their jobs as a result of the controversial Civil Service Act. Is this realistic?

Adly: These figures are nonsense. The Civil Service Act was watered down considerably in the latest draft. What they want to do is encourage people to leave. The government wants to bring down the wage bill that has increased vastly since 2011 and limit the percentage of the state budget that is spent on wages. The wage bill increase has been even higher than inflation.

Six syndicates have rejected the VAT tax the government wants to implement in Egypt. In a statement, the syndicates stated that this tax ″will serve to further impoverish the poor″. They expect that the tax ″will result in increased incidents of tax evasion."

Adly: I doubt this. There is little room for tax evasion. There are a lot of VAT exemptions. It is not a flat rate. It will not impact the poor, but rather the middle classes. The middle classes, especially the lower middle class, provide the government′s bedrock of support. People who work for the state – politically it would be a risky move.

Boy stands in front of a stall near one of Cairo's markets (photo: Getty Images/J. Mitchell)

How best to tax: "VAT will not impact the poor, but rather the middle classes. The middle classes, especially the lower middle class, provide the government′s bedrock of support. People who work for the state – politically it would be a risky move," says Adly

The syndicates also suggest the state should tax high income earners via a higher bracket of income tax or corporate taxes, rather than imposing VAT upon the population. Is this a reasonable way to deal with the budget deficit?

Adly: I agree. There is room for more taxation in the country, especially when it comes to property. VAT is much cheaper politically, but no more so than say capital gains tax, higher taxation on incomes exceeding 1 million Egyptian pounds or a property tax. The government says it cannot tax capital. But what the cabinet could do is to tax property via income tax. This would not affect economic growth.

If tourists don′t come back to Egypt, how will the country deal with the lack of US dollars?

Adly: Structural problems exist and they are not being solved. The economy cannot work properly without this massive money influx from abroad. We are returning to the pre-revolution era of President Hosni Mubarak – the structural problems are exactly the same.

Arab spending boosts economy in Bosnia, but not all locals are happy

Reuters |  Published on August 22, 2016 12:24 MYT

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Arab spending boosts economy in Bosnia, but not all locals are happy

Tourists from the Middle East enjoy along the Prokosko Lake near Fojnica, Bosnia and Herzegovina, August 20, 2016. REUTERS/Dado Ruvic

SARAJEVO: Abdulah Al Sanousi enjoys the breeze in the lush resort outside Sarajevo where his family bought a flat to escape the summer heat at home in Kuwait, one of thousands of new Gulf buyers whose investment has polarized local opinion.

They discovered mountainous Bosnia, where half the population is Muslim, after the Arab Spring which destabilised many traditional holiday destinations such as Libya, Tunisia and Egypt. The trend has picked up with more direct flights, new resorts and the end of visa restrictions.

Estate agents and local businesses have welcomed the economic boost. But in a secular country where many Muslims drink alcohol and wear European-style clothing, the arrival of a Saudi-built mall where no alcohol is sold and the sight of burqas and traditional Arab robes is worrying for some.

Tourists from the Middle East walk through Ilidza near Sarajevo, Bosnia and Herzegovina, August 19, 2016. REUTERS/Dado Ruvic

Tourists from the Middle East walk through Ilidza near Sarajevo, Bosnia and Herzegovina, August 19, 2016. REUTERS/Dado Ruvic

"People from the Middle East come here because of the nature and good weather, and very cheap prices for property and other goods," said 28-year old Sanousi, who works in the media industry in Kuwait.

"Many Muslims feel it's a good place for them, they feel they are with their people, they feel comfortable here," he said in the gated resort that is inhabited mostly by Gulf visitors. It was built by a Kuwaiti investor and opened last year.

The number of visitors from the United Arab Emirates surged to 13,000 in the first seven months of this year from 7,265 last year, according to hotel data from the Sarajevo tourist board. In 2010, there were only 65 visitors from the UAE.

Bosnia does not have a national tourism authority and data on land purchases is patchy in the Balkan country which has a fragmented government system.

Unofficial estimates put the total number of Arab tourists at between 50,000-60,000 a year, with about a quarter buying property.

The visitors bring much needed cast to the economy which has not recovered from the 1990s war.

But many local Muslims, who pray only at mosques or at home, were shocked when a group of Arab men dressed in traditional robes prayed outdoors at a popular weekend resort near Sarajevo last year. Others have been upset by a Saudi-funded mall that serves no alcohol or pork.

"I'm not glad that they are coming," said Amina, a Muslim pharmacist from Sarajevo in her 50s. "I'm worried about what influence they can have on our children if they stayed here."

DELICATE BALANCE

Many Bosnians remember the Arab fighters who came during the 1992-1995 war to fight with Bosnian Muslims against Serbs and Croats, bringing with them a stricter form of Islam which drew followers, some of whom fought in Syria and Iraq for Islamic State.

At the end of the war, some restaurants and cafes in the Ottoman-era old town of the capital stopped serving alcohol and pork and residents say they have now disappeared from the menu in other cafes which have started to do the same.

Esad Durakovic, a professor of Arabic studies at the University of Sarajevo, wrote in an editorial for the Depo news portal last week property purchases by Gulf visitors could hurt a delicate religious balance in Bosnia.

"This is not about tourists who come and go but about those who permanently stay on their property," he said, saying that it could fuel a desire for secession among some Bosnian Serbs.

"They will not want to live in "Muslimstan."

Travel and real estate agents dismiss those concerns, saying the country should welcome the money to help get the economy back on track and that the visitors only come in the summer to escape the heat at home.

"I'm really wondering why so many people are questioning (Arab investments) rather than getting profit out of it... I find it really sad," said Abdelal Mustafa, general manager of Saudi-based HR Holidays travel agency.

They want the state to improve legislation to encourage more visitors and investors in Bosnia.

"The legalisation blocks a lot of money," said Tariq Burjaq, executive director of the Kuwaiti Rawasi Real estate company, which is building a 25 million euro worth residential complex at the foot of Igman mountain, near Sarajevo, with 246 housing units.

Mirsada Gostevcic who was selling honey and blackberry and raspberry juice near the Sarajevo Resort where Sanousi's family has a property, does not see what all the fuss is about.

"I don't mind that Arabs are coming, I don't know why people are bothered with that. This is a country where life is difficult, and we are looking forward to earning more money," Gostevicic said as visitors from the Gulf strolled along improvised shop-stands where local farmers sold their produce.

Middle East-North Africa Metals and Minerals Have 30% of Global Reserves but Low Development

metals_minerals

Industry Segment: Metals & Minerals | Word Count: 1278 Words

SUGAR LAND--August 23, 2016--Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Johannesburg, South Africa)--Diversification of Middle East economies, aside from dependence on income from hydrocarbons, has been a stated good intention of governments since 2000. This aim is driven not only by the brittle nature of one-commodity dependence, but also by increasingly youthful populations seeking education and the type of jobs which would be available in a modern, mixed economy. In addition, there is the looming problem of the presence of millions of expatriate laborers and professional and technical staff, who in some countries outnumber the local-born nationals.

UAE to deposit $1bn in Egypt's central bank

#EgyptTurmoil

Egypt has been in financial turmoil and has seen foreign currency reserves plummet as leaders try to secure a financing deal with the IMF

Sheikh Mohamed bin Zayed receiving Egyptian President Abdel Fattah al-Sisi in the Emirati capital (AFP)

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The UAE has agreed to provide Egypt’s central bank with a $1bn deposit for a duration of six years in a new show of support for President Abdel Fattah al-Sisi, state news agency WAM said on Monday.

The announcement comes as Egypt grapples with a dollar shortage and dwindling foreign reserves, and as Sisi has been preparing public opinion for economic reform measures, including further subsidy cuts.

The $1bn deposit, which is for a six-year period, comes as part of the UAE's "unwavering position in supporting Egypt and its people" and in recognition of Egypt's "pivotal role in the region," WAM said.

In April, the UAE allocated $4bn to support Egypt - $2bn in investment and another $2bn to be deposited at the central bank to support foreign exchange reserves, but none of the promised transfers have yet materialised Reuters reported.

Egypt has already received more than $20bn in aid from Gulf countries that supported the overthrow of Sisi's Muslim Brotherhood predecessor Mohamed Morsi, but that has not stemmed the decline of its economy. Egypt’s net foreign reserves fell sharply to $15.536bn at the end of July, down from around $36bn before the 2011 revolution to oust long-time president Hosni Mubarak. In March, the bank devalued the Egyptian pound by 14.3 percent to 8.95 to the US dollar amid a shortage which has worsened in the past few months, with black markets offering the dollar at much higher rates.

IMF loan and Saudi electricity deal

Egypt this month signed a preliminary deal for a $12bn IMF lending programme contingent upon the government securing $5-6bn in bilateral financing for the first year and carrying out a reform programme aimed at plugging a budget gap and rebalancing the currency market.

The Gulf has also offered non-cash support and pledged to help bolster Egypt’s infrastructure.

The Egyptian parliament on Monday also approved an agreement with Saudi Arabia to connect the two countries' electricity grids.

Originally signed in Cairo on 22 November last year, the agreement will be financed by a loan from the Kuwaiti Fund for Arab Economic Development.

"The fund will provide 30 million Kuwaiti dinars ($100m) in a loan to be used for implementing this landmark project, which will become a key hub in the Arab electricity grid," said the parliamentary report on the deal, according to Ahram Online.

The two grids of Egypt and Saudi Arabia will be interconnected at a station in Egypt in the city of Badr and two other stations in Saudi in the cities of Medina and Tabuk.

"These three stations will be linked via aerial lines and naval cables in the Gulf of Aqaba and will help interconnect the two electricity grids of the two countries and boost their total power-generation capacity to more than 90,000 megawatts," said the report, adding that "they will represent the two biggest electricity grids in the Arab world."

Riyadh and the UAE have been key political and financial backers of Egyptian President Abdel-Fattah al-Sisi since 2013, when the then army chief helped lead a popularly-backed military coup against Morsi, Egypt’s first democratically elected president. However, the relationship has not always been a smooth one, with the death of King Abdullah in Saudi said to have impacted ties and Sisi also allegedly dismissing and criticising the Gulf last year in a string of leaked audio tapes that could not be independently verified. 

Morsi is now in prison, as are tens of thousands of other political opponents.