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The Political Isolation of Lebanese Sunnis

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The delicate fabric that is the Lebanon polity, only recently rewoven after decades of civil war, is once again on the verge of unraveling.

Recent events—between the ascendance of Shiite groups through the February 2005 assassination of former prime minister Rafiq Hariri to the current Syrian civil war—have caught one of the most prominent sectarian groups, the Sunnis, unprepared. How this has come about is a convoluted tale of jockeying for power between rival politicians and ethnicities.

Sunni Enfeeblement

It is ironic that Lebanon’s Sunni population, long ascendant in that region and identified with the governing powers since the days of the Umayyads (c. 661 C.E.) and through the Ottoman period (ending in 1918), has virtually been bereft of communal autonomy. Sunnis became junior partners in ruling Lebanon with the Christian Maronite population after independence in 1943. But the rise to power of Hafiz al-Assad and his Alawite relations in neighboring Syria in 1970 brought marginalization of the Sunni majority there, which quickly spilled over to affect Lebanese Sunnis as well. The eviction of the Palestine Liberation Organization (secular though largely Sunni in religious background) from Lebanon in 1982 then left them vulnerable to the emerging Shiite power block as well as to resurging Maronites.

Shiites made their forceful entry into the Lebanese political system in the name of resisting Israeli occupation. They built up their forces in southern Lebanon and the Bekaa Valley and have managed to keep the national army outside their areas of influence. But the Jewish state has not been the only target of their violence and machinations. Shiite and Druze militiamen eliminated the rival Sunni al-Murabitun militia in 1985. Then in 1989, the outspoken Sunni grand mufti Hassan Khalid was assassinated. However, this was neither the first—nor would it be the last—political murder to roil the Sunni community.

Beginning with the assassination in 1951 of Riad as-Sulh, a prominent Sunni politician and cofounder of independent Lebanon, Sunnis searched for leadership outside the territorial boundaries of the fledging state. The appointment of Rafiq Hariri as prime minister in 1992 got their hopes up for making it back to the center stage of Lebanese politics. Hariri came into office with strong Saudi backing and French blessing and was determined to resurrect the 1943 Maronite-Sunni “gentlemen’s agreement” for governing Lebanon. His rise to power coincided with the political mobilization of Shiites into two major groups with the Amal movement implementing the schemes of the Syrian regime while Hezbollah submitted itself to the dictates of Iran’s supreme leader.

Hariri presumed he could integrate the Shiite community in his accommodationist project for Lebanon. While he managed to win the trust of many Maronites, his success in collaborating with Amal depended on maintaining a working relationship with a hard-to-please regime in Damascus. Moreover, his ability to enlist the cooperation of Hezbollah proved futile because the latter had an opposing vision for Lebanon. In 2005, Hariri paid with his life for promoting a project that, if successful, would have undermined Syrian hegemony in Lebanon and blunted Iranian determination to become a greater regional player. Hariri’s assassination amounted to a political coup, removing Lebanon from the camp of Arab moderate states and advancing the interests of the Syrian-Iranian axis.

The March 14 Coalition’s Unfulfilled Promise

Hariri’s assassination ignited the Cedar Revolution which, in turn, inspired the formation of the March 14 Coalition that drew from the mostly Sunni Muslim Future Trend party, Druze leader Walid Jumblatt’s Progressive Socialist Party, Maronite Christian Samir Geagea’s Lebanese Forces (LF), and the largely Maronite Phalangists associated with the Gemayel family. Shortly afterward, the Syrian army exited Lebanon. In June of that year, the coalition won a majority of seats in the parliament and Fuad Seniora formed a new cabinet that promised to prosecute Hariri’s assassins. Its efforts seemed to bear fruit when in March 2006 the United Nations Security Council issued resolution 1664 to form a Special Tribunal for Lebanon (STL) to investigate the assassination.

The July 2006 war between Israel and Hezbollah altered the balance of power between the March 14 Coalition on the one hand and Hezbollah and its allies on the other. Despite heavy losses and a U.N.-brokered cease-fire, Hezbollah portrayed the outcome of the war as a divine victory and accused Seniora’s government of colluding with the United States and Israel to destroy a patriotic Lebanese party. By November, Hezbollah and Amal had withdrawn their ministers from the central government to protest its stand on the special tribunal, triggering a wave of protests against it. A state of paralysis persisted until May 2008 when Hezbollah stormed predominantly Sunni west Beirut and disbanded the ragtag and poorly-led Future Trend militia. This incident convinced Jumblatt that the power of arms had become more important than the ballot box in ruling Lebanon. This also got Christians within the March 14 Coalition thinking about the significance of their role in the alliance. Their doubts increased when President Michel Suleiman designated Hariri’s son and political heir, Saad as prime minister in 2009. The new prime minister immediately decided that he needed to be on the good side of the neighboring Syrian regime to have a smooth stay in office and appealed to Saudi King Abdullah to arrange for him to visit Damascus and meet with Syrian president Bashar al-Assad. The joint visit to Beirut of King Abdullah and President Assad in July 2010 “to defuse tensions about [STL’s] impending indictment of Hezbollah members,”[1] highlighted both Syria’s resurgent role in Lebanon and an overall regional preference for stability over justice. The final act of the 2005 coup that began with the Hariri assassination took place in January 2011 when Syria’s Lebanese allies pulled their ministers out of Hariri’s cabinet and forced its dissolution. The March 14 Coalition has failed to govern Lebanon and the Future Trend had demonstrated its inability to lead.

The Limitations of the Future Trend

The Future Trend party suffered from two fatal shortcomings. First, its total dependence on Riyadh for political direction limited its options because the Saudi royals chose not to pursue an aggressive Lebanon policy. Since Hariri’s assassination, which created a vacuum in Sunni leadership, the Saudis have come to believe in the need for a plurality of leadership within the Sunni community.[2] This may be the reason why they quietly welcomed the appointment of Najib Miqati, a Sunni politician with somewhat pro-Syrian credentials, to the office of prime minister after the collapse of Saad Hariri’s cabinet.[3] The second fatal flaw was Hariri’s political inexperience, exacerbated by his apparent lack of self-assurance and poor speech delivery; his inability to properly read his inaugural parliamentary speech when he became prime minister invited the ridicule and laughter of other members of parliament and elicited public dismay.

The leaders of the Future Trend are not oblivious to its limitations and realize that the party must behave in a conciliatory manner toward other sects because its Saudi patron keeps it on a short leash. When a Saudi newspaper mocked Maronite patriarch Bishara al-Rahi for visiting Damascus, Lebanese Maronites responded by hanging a banner portraying King Abdullah on a playing card holding a blood-dripping sword.[4] Had the banner been hung in a different country, the Saudi response would probably have been extreme, but an exception was made in the case of Lebanon. Second Saudi deputy prime minister Prince Muqrin assured Lebanese officials that Riyadh “will not take any measures against Lebanese citizens working in the Kingdom … [and] we have no intentions to withdraw deposits from Lebanese banks, whether by the cabinet or investors.”[5]

Conflict in Syria and Impact on Lebanon

The Syrian war has given impetus to renewed Lebanese Sunni militancy, attracted direct Hezbollah involvement, caused Christians to reposition themselves politically, and has left the Future Trend bereft of allies and in a state of powerlessness. Many former supporters have shifted their allegiance to Sidon’s Salafist sheikh Ahmad Asir who has transitioned himself from being merely a fiery preacher into a fiercely anti-Hezbollah partisan. The frequent sit-ins he has organized to demand disarming Hezbollah appeal to most Lebanese Sunnis. Asir has called for the release of militant Sunni detainees suspected of affiliation with Islamic terrorist organizations, on whose behalf mainstream Sunni politicians had been hitherto reluctant to publicly advocate. Much to the chagrin of Lebanese Christians who extol the army as a virtuous and upright institution, Asir slammed its legal apparatus: “I say to the military law that we do not have faith in your investigations and the justice of your military tribunal.”[6] He made his remark to demand the release of some 480 Sunnis who had been in jail without trial since 2007 on suspicion of membership in the Fatah al-Islam militant group. He said government officials had told him they could not try them because of the unavailability of a courtroom big enough to hold all of them.[7] The founder of Lebanon’s Salafist movement, Dai al-Islam Shahhal, urged the Lebanese military establishment to rectify its path and “cease to act as an Iranian-Syrian tool of subjugating Sunnis, otherwise I would issue a jihadist fatwa against trespassers of our rights.”[8] When Asir and a group of his followers sought to spend a picnic day at Faraya ski resort in the Maronite heartland in Keserwan, locals cut off the road leading to the resort; a local dignitary told correspondents that “this visit is unwelcome, and blocking the road demonstrates our opposition to it.”[9]

As the Syrian civil war takes on a greater sectarian complexion with many Christian Syrians fearing for their safety, their Lebanese brethren’s sudden warming to Hezbollah and the Syrian regime has startled the Sunnis. They disapproved of Maronite patriarch Bishara Rahi’s urging of the international community “to refrain from making decisions aimed at changing the region’s regimes.”[10] Rahi even asserted that “Syria was closest to democracy in the Arab world.”[11] As if his statements were not enough, he broke a 70-year-long Maronite patriarchs’ boycott of travelling to Syria though the sect’s holiest religious places are located there. The patriarch’s landmark visit to Damascus underscored the extent of Lebanese Christian change of heart vis-à-vis the Assad regime.[12] Sunnis have found it difficult to come to terms with this shift, especially in view of Maronite vaunting of their heritage of fidelity to authenticity, fondness for democracy, and respect for the conscience of the human individual.[13]

The influx across the border of Syrian refugees has further complicated Lebanese politics. Whereas Sunnis have called for accommodating them, Maronite responses range from concern about their numbers and the duration of their stay to outright hostility. The Phalangist Party complained that the arrival of a large number of Syrian refugees to Lebanon had taxed the country’s meager resources and called for tightening border controls.[14] Another Maronite politician, Minister of Energy Jubran Bassil (son-in-law of the Free Patriotic Movement’s leader Michel Aoun) went to the extent of proposing shutting the border to prevent further refugee arrivals.[15] Even though the Lebanese government has—thanks to U.S. pressure—halted the deportation of the mostly Sunni Syrian refugees, it continues to pursue “a systematic policy of harassment to coerce as many of them as possible to return to their country.”[16] Christian- and Shiite-controlled security forces regularly stop Syrians at checkpoints and “physically abuse them in detention centers.”[17] Despite an official policy of dissociation from the Syrian crisis, the Lebanese government has done nothing to curb Hezbollah’s direct involvement in it and has been openly violating the sanctions regime against Damascus. The frequent burials of Hezbollah militants killed in obscure missions eventually compelled Hezbollah chief Hassan Nasrallah to allege that “party members had fought Syrian rebels … but they were acting as individuals and not under the party’s direction.”[18] Nasrallah’s deputy, Na’im Qassem, subsequently admitted that Hezbollah had armed and trained Shiite villagers in Syria in the Orontes River basin. He argued that these villagers were actually Lebanese nationals who had found themselves annexed to Syria as a result of the 1916 Sykes-Picot agreement.[19] In this way, the ripple effects of Syria’s crisis have spilled across the border, drawing Lebanon’s Sunnis into an increasingly fraught situation.

Sunnis versus the Rest

Sunnis sense that there is a tacit agreement among other Lebanese sects against them. While the continuation and escalation of the Syrian insurgency has given hope of redemption to many Lebanese Sunnis, it has caused heightened anxiety among Christians and Shiites. It is not difficult to see an emerging grand alliance of historical minorities in Lebanon but one that differs markedly from past associations. The Sunni “awakening” in both Syria and Iraq has caused Christians in the March 14 Coalition to see eye to eye with the Shiites on the need to alter the rules of the country’s political game in stages, beginning with parliamentary elections.

The formation of inter-sectarian electoral tickets with Sunnis no longer appeals to Christians. The media outlets of Hezbollah and its allies have consistently complained that the multi-confessional electoral districts at governorate level had previously led to the election of Christian parliamentary deputies by Sunni voters. During the talks leading to the May 2008 Doha agreement, Michel Aoun insisted that the next parliamentary elections be held at the sub-governorate level as per the 1960 electoral law.[20] When the 2009 parliamentary elections did not give the March 8 Coalition a legislative majority, Aoun’s son-in-law, Jubran Bassil, demonized the 1960 electoral law as “an act of large scale robbery of Christian rights.”[21]

Phalange parliamentarian Sami Gemayel joined rival Aoun in speaking out against reintroducing an electoral law on the basis of multi-confessional lists: “We will no longer tolerate the marginalization and misrepresentation of Christians who prefer not to vote in districts with Muslim majority because they know their votes will not make a difference.”[22] In responding to criticism over his unexpected position on the parliamentary electoral law, Lebanese Forces’ Samir Geagea stated that his party was “playing a complicated political game over the parliamentary electoral law … The LF was misunderstood, and it was wronged at different instances over its position.”[23] The Lebanese Forces, too, could not distance itself from the changing mood of Lebanese Christians, dismayed by the proliferation of Middle Eastern jihadism in general and Lebanese Salafism in particular.[24]

Hezbollah and Michel Aoun Reform and Change Parliamentary Bloc rejected the Future Trend’s compromise hybrid electoral draft law and insisted on the adoption of the Orthodox Gathering Electoral Proposal.[25] Settling for a hybrid electoral draft law, which combined the winner-takes-all system and the proportional electoral system, would have denied the Future Trend and its allies in the March 14 Coalition a majority in the parliament. It fit well into Lebanon’s politics of accommodation and sectarian balance. This led Nabih Berri, the speaker of the House and leader of Amal Movement, to withdraw the hybrid proposal saying it had become a point of contention among rival groups.[26]

Conclusion

On March 22, 2013, Prime Minister Najib Miqati tendered the resignation of his government since he could no longer tolerate Sunni ridicule as being a Hezbollah stooge. Matters came to a head when Aoun barred him from extending the term for six months of the Sunni chief of the internal security forces, who had reached retirement age. It was at that point that Miqati decided that enough was enough. The arduous task of naming a new prime minister came up again less than two years after Miqati’s cabinet won the vote of confidence in parliament. Syria’s burgeoning conflict and Hezbollah’s desire to mitigate mounting Sunni-Shiite tensions drove them to make a tactical retreat and to name Tammam Salam as a politically innocuous Sunni prime minister. Salam, who hails from a previously prominent Sunni political Beiruti family, became a de facto member in the March 14 Coalition after Saad Hariri secured him a parliamentary seat in 2009.

Portrayed by the March 14 Coalition as heralding a comeback reversing Hezbollah’s political coup d’état that toppled Hariri’s cabinet in 2011, Salam’s designation to lead the republic’s seventy-third cabinet actually confirms Hezbollah’s grip on Lebanon. In a country where politicians disagree on everything, the fact that Salam received the nomination of 124 of the parliament’s 128 deputies suggests a preference for maintaining the status quo. Contrary to Geagea’s boasting that Salam’s designation was 100 percent made in Lebanon, media reports indicate that Saudi Arabia played a decisive role in making it happen.[27] For their part, Lebanese Christians endorsed Salam’s candidacy with the understanding that he would work with them to adopt an electoral law that emancipates them from the hegemony of Sunni numbers at the election poll. Securing his approval, the Maronite patriarchate took the lead in demanding that the Ministry of Interior take measures to annul the 1960 electoral law. Sunni involvement in Lebanese politics had undergone a full cycle from a key role to a minor one.

While the Sunnis have clearly failed to anticipate the specter of a grand Christian-Shiite alliance, the essence of Lebanon’s politics is unlikely to change. Still, Beirut’s current sectarian lineup on political issues may eventually give way to another lineup with different actors on vital economic resources. A new flashpoint is already looming on the horizon over the discovery of vast natural gas resources off the Lebanese coast.

Hilal Khashan is a professor of political science at the American University of Beirut.

[1] The Daily Star (Beirut), Aug. 2, 2010.
[2] Al-Akhbar (Beirut), Oct. 18, 2012.
[3] Ibid.
[4] Al-Anwar (Beirut), Feb. 19, 2013.
[5] Naharnet (Beirut), Mar. 10, 2013.
[6] An-Nahar (Beirut), Feb. 24, 2013.
[7] Sawt Beirut International (Beirut), Feb. 23, 2013.
[8] An-Nahar, Mar. 2, 2013.
[9] Saidaonline (Sidon), Jan. 24, 2013.
[10] El-Nashra (Beirut), Sept. 5, 2011.
[11] Ibid.
[12] An-Nahar, Feb. 9, 2013.
[13] See Bulus Na’man, “The Maronite Way of Life: Constants and Variables of Living,” Haliyyat, 39 (1985), pp. 11-28.
[14] An-Nahar, Mar. 11, 2013.
[15] Lebanese Broadcasting Corporation (Beirut), Feb. 7, 2013.
[16] BBC Arabic (London), Jan. 25, 2013.
[17] Ibid.
[18] Al-Jazeera TV (Doha), Oct. 5, 2012.
[19] Al-Mustaqbal (Beirut), Mar. 12, 2013.
[20] Beirut Observer (Beirut), Oct. 2, 2012.
[21] Al-Rai (Kuwait City), Mar. 2013.
[22] Naharnet, Jan. 14, 2013.
[23] Ibid., Mar. 9, 2013.
[24] El-Nashra, Mar. 18, 2013.
[25] As-Safir (Beirut), Mar. 12, 2013.
[26] The Daily Star, Feb. 28, 2013.
[27] Al-Qabas (Kuwait City), Apr. 6, 2013.

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Middle East

Battling for the Future: Arab Protests 2.0

Dr. James M. Dorsey

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Credit: Institute of Security Studies

Momentous developments across Arab North and East Africa suggest the long-drawn-out process of political transition in the region as well as the greater Middle East is still in its infancy.

So does popular discontent in Syria despite eight years of devastating civil war and Egypt notwithstanding a 2013 military coup that rolled back the advances of protests in 2011 that toppled Hosni Mubarak and brought one of the country’s most repressive regimes to power.

What developments across northern Africa and the Middle East demonstrate is that the drivers of the 2011 popular revolts that swept the region and forced the leaders of Egypt, Tunisia, Libya and Yemen to resign not only still exist but constitute black swans that can upset the apple cart at any moment.

The developments also suggest that the regional struggle between forces of change and ancien regimes and militaries backed by the United Arab Emirates and Saudi Arabia is far from decided.

If anything, protesters in Algeria and Sudan have learnt at least one lesson from the failed 2011 results: don’t trust militaries even if they seemingly align themselves with demonstrators and don’t surrender the street until protesters’ demands have been fully met.

Distrust of the military has prompted an increasing number of Sudanese protesters to question whether chanting “the people and the army are one” is still appropriate. Slogans such as “freedom, freedom” and “revolution, revolution” alongside calls on the military to protect the protesters have become more frequent.

The protests in Algeria and Sudan have entered a critical phase in which protesters and militaries worried that they could be held accountable for decades of economic mismanagement, corruption and repression are tapping in the dark.

With protesters emboldened by their initial successes in forcing leaders to resign, both the demonstrators and the militaries, including officers with close ties to Saudi Arabia and the UAE, are internally divided about how to proceed.

Moreover, neither side has any real experience in managing the crossroads at which they find themselves while it is dawning on the militaries that their tired playbooks are not producing results.

In a telling sign, Sudan’s interim leader Abdel Fattah Abdelrahman Burhan praised his country’s “special relationship” with Saudi Arabia and the UAE as he met this week with a Saudi-Emirati delegation at the military compound in Khartoum, a focal point of the protests.

Saudi Arabia has expressed support for the protests in what many suspect is part of an effort to ensure that Sudan does not become a symbol of the power of popular sovereignty and its ability to defeat autocracy.

The ultimate outcome of the dramatic developments in Algeria and Sudan and how the parties manoeuvre is likely to have far-reaching consequences in a region pockmarked by powder kegs ready to explode.

Mounting anger as fuel shortages caused by Western sanctions against Syria and Iran bring life to a halt in major Syrian cities have sparked rare and widespread public criticism of president Bashar al-Assad’s government.

The anger is fuelled by reports that government officials cut in line at petrol stations to fill up their tanks and buy rationed cooking gas and take more than is allowed.

Syria is Here, an anonymous Facebook page that reports on economics in government-controlled areas took officials to task after state-run television showed oil minister Suleiman al-Abbas touring petrol stations that showed no signs of shortage.

Is it so difficult to be transparent and forward? Would that undermine anyone’s prestige? We are a country facing sanctions and boycotted. The public knows and is aware,” the Facebook page charged.

The manager of Hashtag Syria, another Facebook page, was arrested when the site demanded that the oil ministry respond to reports of anticipated price hikes with comments rather than threats. The site charged that the ministry was punishing the manager “instead of dealing with the real problem.”

Said Syrian journalist Danny Makki: “It (Syria) is a pressure cooker.”

Similarly, authorities in Egypt, despite blocking its website, have been unable to stop an online petition against proposed constitutional amendments that could extend the rule of President Abdel Fattah el-Sisi until 2034 from attracting more than 320,000 signatures as of this writing.

The petition, entitled Batel or Void, is, according to Netblocks, a group that maps web freedom, one of an estimated 34,000 websites blocked by Egyptian internet service providers in a bid to stymie opposition to the amendments.

Mr. El-Sisi is a reminder of how far Arab militaries and their Gulf backers are potentially willing to go in defense of their vested interests and willingness to oppose popular sovereignty.

Libyan renegade Field Marshall Khalifa Belqasim Haftar is another, Mr. Haftar’s Libyan National Army (LNA) is attacking the capital Tripoli, the seat of the United Nations recognized Libyan government that he and his Emirati, Saudi, and Egyptian backers accuse of being dominated by Islamist terrorists.

The three Arab states’ military and financial support of Mr. Haftar is but the tip of the iceberg. Mr. Haftar has modelled his control of much of Libya on Mr. El-Sisi’s example of a military that not only dominates politics but also the economy.

As a result, the LNA is engaged in businesses ranging from waste management, metal scrap and waste export, and agricultural mega projects to the registration of migrant labour workers and control of ports, airports and other infrastructure. The LNA is also eyeing a role in the reconstruction of Benghazi and other war-devastated or underdeveloped regions.

What for now makes 2019 different from 2011 is that both sides of the divide realize that success depends on commitment to be in it for the long haul. Protesters, moreover, understand that trust in military assertions of support for the people can be self-defeating. They further grasp that they are up against a regional counterrevolution that has no scruples.

All of that gives today’s protesters a leg up on their 2011 counterparts. The jury is out on whether that will prove sufficient to succeed where protesters eight years ago failed.

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As Marsha Lazareva languishes in jail, foreign businesses will “think twice” before investing in Kuwait

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IF THERE IS one thing to glean from the case of Marsha Lazareva, it’s that foreign businesses must now think very carefully before investing in Kuwait.

For more than a year, Lazareva, who has a five-year-old son and is one of Russia’s most successful female investors in the Gulf, has been held in the Soulabaiya prison by Kuwaiti authorities. Those authorities claim she ‘stole’ half a billion dollars, a claim she strenuously denies.

Human rights groups and prominent officials, including the former FBI director, Louis Freeh, and Jim Nicholson, former Chairman of the Republican Party and former US Ambassador to the Vatican, have called for her release and expressed concerns about the apparent absence of due process in a country where Lazareva has worked for over 13 years. Both Freeh and Nicholson visited Kuwait in recent weeks with Neil Bush, son of the late President George H. W. Bush. Bush has said Lazareva’s incarceration ‘threatens to darken relations between the U.S. and Kuwait, two countries that have enjoyed a long and prosperous relationship.

Russian officials have been equally concerned. Vladimir Platonov, the President of the Moscow Chamber of Commerce and Industry, confirmed that a single witness gave testimony in Kuwaiti court, and only for the prosecution. ‘I myself worked in prosecution for more than eight years, and I cannot imagine any judge signing off on an indictment like this,’ he said. ‘One fact of particular note is that Maria was given 1,800 pages of untranslated documents in Arabic.’

Serious questions surrounding the safety and future viability of investing in Kuwait are now being raised. Through The Port Fund, a private investment company managed by KGL Investment, Lazareva has contributed hundreds of millions of dollars to local infrastructure and economic development projects during her time in the country. Until 2017, when a Dubai bank froze $496 million without cause, she had worked largely unobstructed.

But as things stand, more foreign investment is unlikely to be forthcoming. Jim Nicholson has said that the ‘imprisonment and harassment’ of Lazareva ‘threatens’ U.S. support. adding that the ‘willingness of the U.S. to do business with Kuwait’ is based on ‘its record as a nation that respects human rights and the rule of law’. Mark Williams, the investment director of The Port Fund and a colleague of Lazareva’s, has called on international investors to ‘think twice before doing business in this country’. 

These comments will surely concern the Kuwaiti government, who said last year that FDI was ‘very crucial’ to the success of its Kuwait Vision 2035 road map. In September 2018, the FTreported that the government planned to reverse its traditional position as an investor in order to diversify its economy, carrying out a series of reforms designed to facilitate foreign investment and assist investors.

But despite these changes, which have propelled Kuwait to 96th—higher than the Middle East average—in the World Bank’s ‘Ease of Doing Business’ report, investors may be unwilling to take the risk so long as Lazareva remains in jail. Lazareva’s lawyers have accused Kuwait of violating international law by breaching a long-standing bilateral investment treaty with Russia. Lord Carlile of Berriew, QC has brought the case to the attention of the British public and the EU, writing in The Times that ‘there is no evidential basis to justify any claim of dishonesty, corruption or any other criminal wrong’. He added: ’Anyone thinking of doing business in Kuwait should read on with mounting concern.’

What’s worth remembering is that Kuwait is an important, long-standing ally of the UK, and a country generally seen as stable and fair. It is equally a major non-NATO ally of the United States, where there are more than 5,000 international students of Kuwaiti origin in higher education. But these relationships, and the investment to which they have historically led, have been cast into doubt. And it now seems certain that relations will continue to sour so long as Marsha Lazareva languishes in Soulabaiya.

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Economic reform in the Gulf: Who benefits, really?

Dr. James M. Dorsey

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For Gulf leaders, long-overdue economic reforms were never going to be easy.

Leaders like the crown princes of Saudi Arabia and the United Arab Emirates, Mohammed bin Salman and Mohammed bin Zayed, quickly discovered that copying China’s model of economic growth while tightening political control was easier said than done. They realised that rewriting social contracts funded by oil wealth was more difficult because Gulf Arabs had far more to lose than the average Chinese. The Gulf states’ social contracts had worked in ways China’s welfare programmes had not. The Gulf’s rentier state’s bargain—surrender of political and social rights for cradle-to-grave welfare—had produced a win-win situation for the longest time.

Moreover, Gulf leaders, struggling with mounting criticism of the Saudi-UAE-led war in Yemen and the fall-out of the killing of journalist Jamal Khashoggi, also lacked the political and economic clout that allowed China to largely silence or marginalise critics of its crackdown on Turkic Muslims in the troubled northwestern province of Xinjiang.

The absence of a welfare-based social contract in China allowed the government to power economic growth, lift millions out of poverty, and provide public goods without forcing ordinary citizens to suffer pain. As a result, China was able to push through with economic reforms without having to worry that reduced welfare benefits would spark a public backlash and potentially threaten the regime.

Three years into Mohammed bin Salman’s Vision 2030 blueprint for diversification of the economy, Saudi businesses and consumers complain that they are feeling the pinch of utility price hikes and a recently introduced five per cent value-added tax with little confidence that the government will stay the course to ensure promised long-term benefit.

The government’s commitment to cutting costs has been further called into question by annual handouts worth billions of dollars since the announcement of the reforms and rewriting of the social contract to cushion the impact of rising costs and quash criticism.

In contrast to China, investment in the Gulf, whether it is domestic or foreign, comes from financial, technology and other services sector, the arms industry or governments. It is focused on services, infrastructure or enhancing the state’s capacities rather than on manufacturing, industrial development and the nurturing of private sector.

With the exception of national oil companies, some state-run airlines and petrochemical companies, the bulk of Gulf investment is portfolios managed by sovereign wealth funds, trophies or investment designed to enhance a country’s prestige and soft power.

By contrast, Asian economies such as China and India have used investment fight poverty, foster a substantial middle class, and create an industrial base. To be sure, with small populations, Gulf states are more likely to ensure sustainability in services and oil and gas derivatives rather than in manufacturing and industry.

China’s $1 trillion Belt and Road initiative may be the Asian exception that would come closest to some of the Gulf’s soft-power investments. Yet, the BRI, designed to alleviate domestic overcapacity by state-owned firms that are not beholden to shareholders’ short-term demands and/or geo-political gain, contributes to China’s domestic growth.

Asian nations have been able to manage investors’ expectations in an environment of relative political stability. By contrast, Saudi Arabia damaged confidence in its ability to diversify its oil-based economy when after repeated delays it suspended plans to list five per cent of its national oil company, Saudi Arabian Oil Company, or Aramco, in what would have been the world’s largest initial public offering.

To be sure, China is no less autocratic than the Gulf states, while Hindu nationalism in India fits a global trend towards civilisationalism, populism and illiberal democracy. What differentiates much of Asia from the Gulf and accounts for its economic success are policies that ensure a relatively stable environment. These policies are focused on social and economic enhancement rather than primarily on regime survival. That may be Asia’s lesson for Gulf rulers.

Author’s note: first published in Firstpost

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