Political Economy of the Contemporary Middle East Working Group II

On September 29, 2019, the Center for International and Regional Studies held the second working group under its research initiative on “Political Economy of the Contemporary Middle East.” During the meeting, the convened scholars presented and received feedback on their papers that tackled a wide array of issues, including: economic integration in the Levant and GCC, the Iranian economy under sanctions, fiscal decentralization in the Islamic Republic of Iran and anti-extractivist social movements and re-envisioning the political economy in North Africa.

Ashraf Mishrif commenced the working group discussion with his paper on, “The GCC’s Unsettled Policy for Economic Integration.” The paper presents a broad picture of the political-economic (dis)integration of the Gulf Cooperation Council (GCC) since its inception in 1981. The study suggests that the GCC’s ineffective institutional structure and the lack of political will among its member states to implement and reinforce coordinated policies are the main factors that have led to a lack of meaningful integration. Mishrif suggests that currently, at a global level, there is a retreat from regionalism, as can be seen in some of the leading organizations such as the EU and NAFTA. While to retain relevance for its regional integration mission, the GCC must strengthen its institutional structure. Currently, the domestic political environment of its member states makes it unlikely that this can occur. GCC member states lack fundamental institutional components, such as elected parliaments and legislative bodies, which are needed to institute supranational policy-making. Mishrif also states that ideological differences, the rise of ambitious young leaders in Gulf ruling families, and differing foreign policy interests demonstrated by GCC member states have shown that politics and national interest trump economic logic when it comes to the GCC. The paper concludes that there is a low interregional trade between the member states (sixten percent in total) and that there is a need to reexamine and reevaluate the process of integration.  

Angela Joya shifted the discussion to North Africa, with her paper, “Alter-globalization in the Middle East and North Africa: The Case of Anti-Extractivism in Algeria, Tunisia, and Morocco.” Joya argues that the rise of new grass root rural movements in North Africa indicates that marginalized communities in the Middle East are beginning to press against processes of globalization and neoliberal economic logic. Joya’s paper presents a series of case-studies of different rurally-based social movements in Morocco, Tunisia, and Algeria, as examples of how people are rejecting neoliberal authoritarianism. The case studies suggest that local communities are mobilizing around environmental concerns and resource-extraction projects, and are demanding an alternative development model that better serves public needs. Mobilization against phosphate mining in the Gafsa basin in Tunisia, silver mining in Imider, Morocco and the fracking of shale gas in Ain Salah in Algeria, demonstrates that anti-extractivism lies at the core of these social movements. People are protesting against government policies that have not brought enough economic development at the local level, not significantly enhanced the quality of life for the people living in these regions where natural resources are being extracted. Conversely, some of these resource-extraction projects have led to deepening inequality among the local population, have had adverse environmental consequences, depleted local natural resources such as water, and negatively affected health conditions as a result of pollution. Joya argues that these people’s movements in North Africa show that the public is questioning the effectiveness of the growth-based economy model, which, while meant to counter unemployment and bring in investment to the country, has been capital intensive and has had negative consequences for rural communities. Joya states that these movements are broadening the demands for economic, social, and political justice and inclusion of local preferences and knowledge with environmental protection to bring about a change in the current development model.

Kian Tajbakhsh discussed his paper on “The Political Economy of Fiscal Decentralization under the Islamic Republic of Iran.” The article looks at the fiscal decentralization of local government in over 90 cities and municipalities in Iran. Using descriptive data and empirical analysis, the paper provides a detailed study of Iranian municipal finances and examines the extent to which fiscal decentralization has led to strengthening local government. In particular, Tajbakhsh questions whether the decentralization policy has created structures of local governance that are more responsive and accountable to voters’ preferences. In 1999, a new reform of establishing elected local government was implemented and backed by four political actors; the ruling Islamists, the Islamic reformists, the developmental Islamists, and the apolitical technocrats. Each had their motivation for supporting decentralization, which led to three distinct projects. The study conducted reveals that the elected municipalities have a narrow set of responsibilities and limited legal autonomy from the central government. Many of the municipalities collect revenues from local sources; however, this revenue decentralization is not accompanied by expenditure decentralization, which has led to a system of “perverse economy.” The author argues that the evolution of the local government in Iran, over the past two decades, can be explained by the theory of local electoral authoritarianism, in which the central government aims to install local electoral institutions to enhance its influence rather than allow dispersal of autonomy. 

Esfandyar Batmanghelidj’s paper, “The Ins and Outs of Iranian Industrial Resiliency under Sanctions,” looks at the Iranian economy and industrial resiliency under sanctions and examines the relationship between the availability of industrial inputs and total industrial output and growth of the non-oil exports in Iran. Batmanghelidj argues that the sanctions imposed on Iran have been effective in cutting back Iran’s energy exports. However, for the past fifteen years, Iran has steadily increased its non-oil exports, through which the country is earning its foreign exchange. The increase in non-oil exports also has paved the way for Iran to trade with regional countries, such as Iraq and Afghanistan. The paper looks at how Iran’s imports are being sustained to maintain industrial output. The author identifies a process of “import reflection” through which Iran is able to maintain the availability of industrial input (intermediary and capital inputs) and steadily increase its industrial output. The study examines the trade data of Iran’s main partners, EU, China, UAE, and Turkey and Total Productivity Index of Central Bank of Iran, and demonstrations that the sanctions on Iran temporarily affected the relationship between European industrial exports to Iran and Iranian industrial productivity. However, Iran was able to substitute European industrial inputs with Chinese inputs and re-export required European goods via UAE and Turkey further, which enabled it to stabilize industrial productivity and bypass sanction pressures. 

Misba Bhatti presented Imad El-Anis’s article on “Transport Infrastructure and Regional Integration in the Levant.” This chapter contributes to the study of regionalism by investigating the relationship between hard infrastructure and economic integration in the Levant. The author argues that regionalism and economic integration relies on the development of domestic and cross border transport infrastructure. The author assumes that a higher level of trade leads to economic integration, which leads to interdependency and political cooperation and stability. Despite the presence of commercial institutes, tariffs, and international institutions, such as Greater Arab Free Trade Agreement (GAFTA), any previous initiatives to deliver regional public goods and enhance domestic economic progress have been unsuccessful in the Levant. The chapter investigates the physical transportation infrastructure in the Levant and its impact on regionalism by addressing two main questions: 1) What is the condition of domestic and cross-border transport infrastructure in the Levant?; and, 2) What is the relationship between domestic and cross-border transport infrastructure? As a result of the study conducted, the chapter concludes that domestic and cross-border transport infrastructure performance is weak in several of the countries studied and that this weakness hinders regional economic integration. 

• To view the working group agenda, click here
• To read the participants’ biographies, click here
• Read more about this research initiative

Participants and Discussants: 

• Adel Abdel Ghafar, Brookings Doha Center, Qatar
• Zahra Babar, CIRS – Georgetown University in Qatar
• Esfandyar Batmanghelidj, Bourse & Bazaar, Iran
• Misba Bhatti, CIRS – Georgetown University in Qatar
• Angela Joya, University of Oregon, US
• Mehran Kamrava, CIRS – Georgetown University in Qatar
• Suzi Mirgani, CIRS – Georgetown University in Qatar
• Ashraf Mishrif, Sultan Qaboos University, Oman
• Abdul Rehmaan Qayyum, Georgetown University in Qatar
• Khushboo Shah, Georgetown University in Qatar
• Jackie Starbird, CIRS – Georgetown University in Qatar
• Kian Tajbakhsh, Columbia University, US
• Elizabeth Wanucha, CIRS – Georgetown University in Qatar

Article by Misba Bhatti, Research Analyst at CIRS