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Economic reform in the Gulf: Who benefits, really?

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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

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africaas well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.

Middle East

China-US and the Iran nuclear deal

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Chinese Foreign Minister Wang Yi told his Iranian counterpart Hossein Amirabdollahian that Beijing would firmly support a resumption of negotiations on a nuclear pact [China Media Group-CCTV via Reuters]

Iranian Foreign Minister Hossein Amir Abdollahian met with  Chinese Foreign Minister, Wang Yi on Friday, January 14, 2022 in the city of Wuxi, in China’s Jiangsu province.  Both of them discussed a gamut of issues pertaining to the Iran-China relationship, as well as the security situation in the Middle East.

A summary of the meeting published by the Chinese Foreign Ministry underscored the point, that Foreign Ministers of Iran and China agreed on the need for  strengthening bilateral cooperation in a number of areas under the umbrella of the 25 year Agreement known as ‘Comprehensive Cooperation between the Islamic Republic of Iran and the People’s Republic of China’. This agreement had been signed between both countries in March 2021 during the Presidency of Hassan Rouhani, but the Iranian Foreign Minister announced the launch of the agreement on January 14, 2022.

During the meeting between Wang Yi and Hossein Amir Abdollahian there was a realization of the fact, that cooperation between both countries needed to be enhanced not only in areas like energy and infrastructure (the focus of the 25 year comprehensive cooperation was on infrastructure and energy), but also in other spheres like education, people to people contacts, medicine and agriculture. Iran also praised the Belt and Road Initiative (BRI) and said that it firmly supported the One China policy.

The timing of this visit is interesting, Iran is in talks with other signatories (including China) to the JCPOA/Iran nuclear deal 2015 for the revival of the 2015 agreement. While Iran has asked for removal of economic sanctions which were imposed by the US after it withdrew from the JCPOA in 2018, the US has said that time is running out, and it is important for Iran to return to full compliance to the 2015 agreement.  US Secretary of State Antony Blinken in an interview said

‘Iran is getting closer and closer to the point where they could produce on very, very short order enough fissile material for a nuclear weapon’

The US Secretary of State also indicated, that if the negotiations were not successful, then US would explore other options along with other allies.

During the course of the meeting on January 14, 2022 Wang Yi is supposed to have told his Chinese counterpart, that while China supported negotiations for the revival of the Iran nuclear deal 2015, the onus for revival was on the US since it had withdrawn in 2018.

The visit of the Iranian Foreign Minister to China was also significant, because Foreign Ministers of four Gulf Cooperation Council (GCC) countries – Saudi Arabia, Kuwait, Oman and Bahrain — and Secretary General of GCC,  Nayef Falah Mubarak Al-Hajraf were in China from January 10-14, 2022 with the aim of expanding bilateral ties – especially with regard to energy cooperation and trade. According to many analysts, the visit of GCC officials to China was driven not just by economic factors, but also the growing proximity between Iran and Beijing.

In conclusion, China is important for Iran from an economic perspective. Iran has repeatedly stated, that if US does not remove the economic sanctions it had imposed in 2018, it will focus on strengthening economic links with China (significantly, China has been purchasing oil from Iran over the past three years in spite of the sanctions imposed by the US. The Ebrahim Raisi administration has repeatedly referred to an ‘Asia centric’ policy which prioritises ties with China.

Beijing is seeking to enhance its clout in the Middle East as US ties with certain members of the GCC, especially UAE and Saudi Arabia have witnessed a clear downward spiral in recent months (US has been uncomfortable with the use of China’s 5G technology by UAE and the growing security linkages between Beijing and Saudi Arabia). One of the major economic reasons for the GCC gravitating towards China is Washington’s thrust on reducing its dependence upon GCC for fulfilling its oil needs. Beijing can utilize its good ties with Iran and GCC and play a role in improving links between both.

The geopolitical landscape of the Middle East is likely to become more complex, and while there is not an iota of doubt, that the US influence in the Middle East is likely to remain intact, China is fast catching up.

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Middle East

Egypt vis-à-vis the UAE: Who is Driving Whom?

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Image source: atalayar.com

“Being a big fish in a small pond is better than being a little fish in a large pond” is a maxim that aptly summarizes Egyptian regional foreign policy over the past few decades. However, the blow dealt to the Egyptian State in the course of the 2011 uprising continues to distort its domestic and regional politics and it has also prompted the United Arab Emirates to become heavily engaged in Middle East politics, resulting in the waning of Egypt’s dominant role in the region!

The United Arab Emirates is truly an aspirational, entrepreneurial nation! In fact, the word “entrepreneurship” could have been invented to define the flourishing city of Dubai. The UAE has often declared that as a small nation, it needs to establish alliances to pursue its regional political agenda while Egypt is universally recognized for its regional leadership, has one of the best regional military forces, and has always charmed the Arab world with its soft power. Nonetheless, collaboration between the two nations would not necessarily give rise to an entrepreneurial supremacy force! 

Egypt and the UAE share a common enemy: political Islamists. Yet each nation has its own distinct dynamic and the size of the political Islamist element in each of the two countries is different. The UAE is a politically stable nation and an economic pioneer with a small population – a combination of factors that naturally immunize the nation against the spread of political Islamists across the region. In contrast, Egypt’s economic difficulties, overpopulation, intensifying political repression, along with its high illiteracy rate, constitute an accumulation of elements that serves to intensify the magnitude of the secreted, deep-rooted, Egyptian political Islamists.

The alliance formed between the two nations following the inauguration of Egypt’s President Al Sisi was based on UAE money and Egyptian power. It supported and helped expand the domestic political power of a number of unsubstantiated Arab politicians, such as Libya’s General Khalifa Haftar, Tunisia’s President Kais Saied and the Chairman of Sudan’s Transitional Sovereignty Council, Lieutenant-General Abdel-Fattah Al-Burhan. The common denominator among these politicians is that they are all fundamentally opposed to political Islamists.

Although distancing political Islamists from ruling their nations may constitute a temporary success, it certainly is not enough to strengthen the power of the alliance’s affiliates. The absence of true democracy, intensified repression by Arab rulers and the natural evolution of Arab citizens towards freedom will, for better or for worse, lead to the re-emergence of political Islamists. Meanwhile, Emirati wealth will always attract Arab hustlers ready to offer illusory political promises to cash in the money.   

The UAE has generously injected substantial amounts of money into the Egyptian economy and consequently the Egyptian State has exclusively privileged Emirati enterprises with numerous business opportunities, yet the UAE has not helped Egypt with the most critical regional threat it is confronting: the Grand Ethiopian Renaissance Dam. Meanwhile, Egyptian President Abdel Fatah El Sisi’s exaggerated fascination with UAE modernization has prompted him to duplicate many Emirati projects – building the tallest tower in Africa is one example.

The UAE’s regional foreign policy that hinges upon exploiting its wealth to confront the political Islamist threat is neither comprehensible nor viable. The Emirates, in essence, doesn’t have the capacity to be a regional political player, even given the overriding of Egypt’s waning power. Meanwhile, Al Sisi has been working to depoliticize Egypt completely, perceiving Egypt as an encumbrance rather than a resource-rich nation – a policy that has resulted in narrowing Egypt’s economic and political aspirations, limiting them to the constant seeking of financial aid from wealthy neighbors.

The regional mediating role that Egypt used to play prior to the Arab uprising has been taken over by European nations such France, Germany and Italy, in addition of course to the essential and ongoing role of the United States. Profound bureaucracy and rampant corruption will always keep Egypt from becoming a second UAE! Irrespective of which nation is in the driver’s seat, this partnership has proven to be unsuccessful. Egypt is definitely better off withdrawing from the alliance, even at the expense of forgoing Emirati financial support.

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Middle East

Kurdish Education in Turkey: A Joint Responsibility

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Turkish elites often see Kurds as posing a mortal threat to their homeland’s territorial integrity. Kurdish elites often harbor pan-Kurdish dreams of their own.

Modern Turkish nationalism based its identity on statist secularism practiced by Muslims who are Turks. The secularist paradigm of a “Turkish Nation” struggled hard with accommodating Christians (Armenians, Greeks, Assyrians) and Kurdish-speaking Muslims. Kurdish coreligionists were expected to become Turks, i.e., to abandon their cultural heritage for the “greater good” of a homogenous Turkish nation.

This cultural-identity conundrum led to a century-long violent conflict, but also to genuine efforts by many Kurds and Turks to reach a common vision that would accommodate both Turkey’s territorial integrity and Kurdish cultural rights.

The rise to power of Erdogan’s Islamist Justice and Development Party (AKP) in 2002 appeared to imply a watershed, bringing about a measure of cultural liberalization toward the Kurds. More Islam seemed at first to signal less nationalistic chauvinism.

IMPACT-se, a think tank focusing on peace and tolerance in school education, pointed out in “Two Languages One Country,” a 2019 report that showed liberal elements being introduced in the Turkish curriculum by the AKP government. These “included the introduction of a Kurdish language elective program, the teaching of evolution, expressions of cultural openness, and displays of tolerance toward minorities.”

And while no open debate was permitted, IMPACT-se noted “a slight improvement over past textbooks in recognizing the Kurds, although they are still generally ignored.” Yet, the name “Kurd” is no longer obliterated from the curriculum. Kurdish-language textbooks were authored as part of a wider Turkish-Kurdish rapprochement.

In June 2012, the Turkish government announced for the first time, that a Kurdish elective language course entitled: “Living Languages and Dialects” (Yaşayan Diller ve Lehçeler), would be offered as an elective language for Grades 5–7 for two hours per week.

IMPACT-se studied these textbooks (published in 2014 and 2015 in Kurmanji and Zazaki) in its report  and found that the elective Kurdish-language program strengthens Kurdish culture and identity, while assuming a pan-Kurdish worldview devoid of hate against Turks. Included are Kurdish-historic places in Turkey, Iran and Iraq (but not Syria). The textbooks cover issues such as the Kurdish diaspora in Europe, the Kurdish national holiday of Newroz, with the underlying revolutionary message of uprising against tyranny. Children’s names are exclusively Kurdish. Turks and Turkey are not represented in the elective Kurdish books (but are obviously present across the rest of the curriculum).

The latter is a surprising and counter-intuitive finding. Textbooks published by Turkey’s Ministry of Education focus solely on the Kurdish side, with pan-Kurdish messaging, and no Turkish context. There could be several explanations for this, but the fact remains that Turkish-Kurdish relations are still not present in Turkey’s Kurdish language program.

The overall conclusion of IMPACT-se has been that this program is pioneering and generally excellent. There are some problems, however. One problem is that the elective program is minimalistic and does not meet Kurdish cultural needs. However, the program ignores the Turkish-Kurdish dilemma, hence projecting an inverted mirror image of the Turkish curriculum at large, which ignores the Kurdish question. There is no peace education in either curriculum. Therefore, IMPACT-se recommended enhancing the Kurdish-language program, while adding a healthy dose of pertinent peace education to the curriculum’s Turkish and Kurdish textbooks.

Sadly, the last few years have also seen broader moves by the Turkish government to quash Kurdish cultural and educational freedoms. The armed conflict between separatist groups and the Turkish military resumed in 2015, followed by the 2016 detention of high-ranking officials of the peaceful pro-minority People’s Democratic Party (HDP). By 2020, 59 out of 65 elected Kurdish mayors on the HDP ticket in previous years had been forced out or arrested by security forces.

Simultaneously, elective programs such as Kurdish have been neglected and largely replaced by religious “elective” courses, which are often mandatory. Specifically, elective Kurdish courses are being clamped down or de facto erased in certain schools (despite being originally offered in 28 cities and with an expected enrollment as high as 160,000).

And then there is the question of full education in Kurdish. Article 42 of the Turkish Constitution bans the “teaching of any language other than Turkish as a mother tongue to Turkish citizens at any institution of education.” And yet, Turkish authorities looked the other way between 2013 and 2016, as five fully Kurdish elementary private schools were opened in the southeastern provinces of Diyarbakır, Şırnak and Hakkari. The last of these schools, Ferzad Kemanger in Diyarbakır, was closed on October 9, 2016. Apparently these schools conveyed pan-Kurdish messaging (Ferzad Kemanger was an Iranian-Kurdish elementary school teacher. He was wrongly accused of being a terrorist and executed by Tehran in 2010).

There can be no Kurdish heritage without Kurdish languages, making the current situation untenable. Kurdish education should become a priority again.

But this is not enough. A common Turkish-Kurdish vision should be developed. Educationally, a serious effort should be directed toward educating both Turks and Kurds about the other’s identity, culture, shared history, commonalties, conflicts and interactions. 

Two ethnicities sharing one homeland in a volatile region pose a great challenge for both. A careful educational plan can lay the groundwork for peace and prosperity. Kurdish education in Turkey should be considered a joint responsibility leading to a common vision.

The views and opinions expressed in this article are those of the author and do not necessarily reflect an official position of IMPACT-se.

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