Commentary: Economics of the Middle East-2
www.upi.com
By Sam Vaknin
UPI Senior Business Correspondent
From the Business & Economics Desk
Published 2/27/2003 1:34 PM
SKOPJE, Macedonia, Feb. 27 (UPI) -- The "Arab Human Development Report 2002," published last June by the U.N. Development Program, was composed entirely by Arab scholars. It charts the predictably dismal landscape: one in five inhabitants survives on less than $2 a day; annual growth in income per capita over the last 20 years, at 0.5 percent, exceeded only sub-Saharan Africa's; one in six is unemployed.
The region's three "deficits", laments the report, are freedom, knowledge and labor. Arab polities and societies are autocratic and intolerant.
Illiteracy is still rampant and education poor. Women -- half the workforce -- are ill-treated and excluded. Pervasive Islamization replaced earlier militant ideologies in stifling creativity and growth.
In an article titled "Middle East Economies: A Survey of Current Problems and Issues," published in the September 1999 issue of the Middle East Review of International Affairs, Ali Abootalebi, assistant professor of political science at the University of Wisconsin, Eau Claire, concluded: "The Middle East is second only to Africa as the least developed region in the world.
"It has already lost much of its strategic importance since the Soviet Union's demise ... Most Middle Eastern states ... probably do, possess the necessary technocratic and professional personnel to run state affairs in an efficient and modern manner ... (but not) willingness or ability of the elites in charge to disengage the old coalitional interests that dominate governments in these countries."
The looming war with Iraq will change all that. This is the fervent hope of intellectuals throughout the region, even those viscerally opposed to America's high-handed hegemony. But this might well be only another false dawn in many. The inevitable massive postwar damage to the area's fragile economies will spawn added oppression rather than enhance democracy.
According to The Economist, the military build-up has already injected $2 billion into Kuwait's economy, equal to 6 percent of its gross domestic product. Prices of everything -- from real estate to cars -- are rising fast. The stock exchange index has soared by one third.
American largesse extends to Turkey -- the recipient of $5 billion in grants, $1 billion in oil and $10 billion in loan guarantees. Egypt and Jordan will reap $1 billion apiece and, possibly, subsidized Saudi oil as well. Israel will abscond with $8 billion in collateral and billions in cash.
But the party might be short-lived, especially if the war proves to be as decisive and nippy as the Americans foresee.
Stratfor, the strategic forecasting consultancy, correctly observes that the United States is likely to encourage American oil companies to boost Iraq's post-bellum production. With Venezuela back on line and global tensions eased, deteriorating crude prices might adversely affect oil-dependent countries from Iran to Algeria.
The resulting social and political unrest -- coupled with violent, though typically impotent, protests against the war, America and the political leadership -- is unlikely to convince panicky tottering regimes to offer greater political openness and participatory democracy.
War will traumatize tourism, another major regional foreign exchange earner. Egypt alone collects $4 billion a year from eager pyramid-gazers -- about one-ninth of its GDP. Add to that the effects of armed conflict on traffic in the Suez Canal, on investments and on expat remittances -- and the country could well become the war's greatest victim.
In a recent economic conference of the Arab League, Egyptian Minister of State for Foreign Affairs, Faiza Abu el-Naga, pegged the immediate losses to her country at $6 billion to $8 billion. More than 200,000 jobs will be lost in tourism alone.
Egypt's Information and Decision Support Center distributed a study predicting $900 million in damage to the Jordanian economy and billions more to be incurred by oil-rich Saudi Arabia.
The Arab Bank Federation foresees banking losses of up to $60 billion due to contraction in economic activity both during the war and in its aftermath. This might be too pessimistic.
But even the optimists talk of $30 billion in lost revenues. The reconstruction of Iraq could revitalize the banking sector -- but U.S. and European banks will probably monopolize the lucrative opportunity.
War is likely to have a stultifying effect on the investment climate.
Saudi Arabia and Egypt each attract around $1 billion a year in foreign direct investment -- double Iran's rising rate. But global FDI halved in the last two years. This year, flows will revert to 1998 levels. This implosion is likely to affect even increasingly attractive or resurgent destinations such as Israel, Turkey, Iraq and Iran.
Foreign investors will be deterred not only by the fighting but also by a mounting wave of virulent and increasingly violent xenophobia. Consumer boycotts are a traditional weapon in the Arab political arsenal. Coca-Cola's sales in these parched lands have plummeted by 10 percent last year. Pepsi's overseas sales flattened due to Arabs shunning its elixirs. American-franchised fast food outlets saw their business halved. McDonald's had to close some of its restaurants in Jordan.
Foreign business premises have been vandalized even in the Gulf countries. According to The Economist, "in the past year overall business at Western fast-food and drinks firms has dropped by 40 percent in Arab countries. Trade in American branded goods has shrunk by a quarter."
This is bad news. Multinationals are sizable employers. Coca-Cola alone is responsible for 220,000 jobs in the Middle East. Procter & Gamble invested $100 million in Egypt. Foreign enterprises pay well and transfer technology and management skills to their local joint venture partners.
Nor is foreign involvement confined to retail. The $35 billion Middle Eastern petrochemicals sector is reliant on the kindness of strangers: Indian, Canadian, South Korean and, lately, Chinese.
Singapore and Malaysia are eyeing the tourism industry, especially in the Gulf. Their withdrawal from the indigenous economies might prove disastrous. Nor will these battered nations be saved by geopolitical benefactors.
The economies of the Middle East are off the radar screen of the Bush administration, says Edward Gresser of the Progressive Policy Institute in a recently published report titled "Blank Spot on the Map: How Trade Policy is Working Against the War on Terror".
Egypt and most other Moslem countries are heavily dependent on textile and agricultural exports to the West. But, by 2015, they will face tough competition from nations with contractual trade advantages granted them by the United States, he says.
Still, the fault is shared by entrenched economic interest groups in the Middle East. Petrified by the daunting prospect of reforms and the ensuing competitive environment, they block free trade, liberalization and deregulation.
Consider the Persian Gulf, a corner of the world which subsists on trading with partners overseas. Not surprisingly, most of the members of the Arab Gulf Cooperation Council joined the World Trade Organization a while back. But their citizens are unlikely to enjoy the benefits at least until 2010 due to obstruction by the club's all-powerful and tentacular business families, international bankers and economists told the Times of Oman.
The rigidity and malignant self-centeredness of the political and economic elite and the confluence of oppression and profiteering are the crux of the region's problems. No external shock -- not even war in Iraq -- comes close to having the same pernicious and prolonged effects.
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Part 1 of this analysis appeared Wednesday. Send your comments to: svaknin@upi.com.
'It Can Be Done!': Interview with British MP George Galloway
palestinechronicle.com
Wednesday, February 19 2003 @ 02:11 AM GMT
"The Arabs have to have a mentality that says “I want to be like Hizbullah, I want to be like the Intifada, I want to be like the resisting Iraqis.” And if they can, nothing can stop them. Nothing .."
George Galloway is Vice Chairman of the Labour Party and a Member of Parliament. He is also one of the world’s most prominent and outspoken activists, seeking to bring public attention to the other side of British and American foreign policy, and speaking harshly against the sanctions imposed on the Iraqi people.
Two years ago, he drove a red double-decker bus filled with medicine from London to Baghdad. He also challenged the flight embargo imposed on Iraq by commissioning the first peaceful flight from London to Baghdad after the beginning of the sanctions. He also founded an organization called “Mariam Appeal,” which provides medicine, in spite of the sanctions, to Iraqi children.
In an exclusive interview to IslamOnline, dated December 19, 2002, Galloway shared his experience in opposition to British foreign policy and his strong stance against the war on Iraq. He also addressed the Arab and Muslim masses…
The first question is actually in reference to an earlier quote of yours in which you referred to the deployment of troops, the dispatching of 250,000, as a strong “crusader army.” Obviously the word has a lot of implications in the Arab world. Why the choice of words? Why “crusader” army?
- The choice was made not by me but by George W. Bush. He is the one who, after September 11, declared that he was about to embark upon a crusade. And I am not implying that the United States and imperialism in general has a specific hatred for Muslims. After all, they are now trying to overthrow the president of Venezuela, they have for 40 years been trying to overthrow the president of Cuba, they have invaded Columbia in the last two years and none of these are Arab or Muslims countries. But there comes a point in which if all the bombs falling in the world are falling from Western countries, and all the victims since September 11 are Muslims, that, as we say in English, if it looks like a duck, walks like a duck, and quacks like a duck, the chances are that it is a duck. And I think that that’s how we must view the current situation.
They are against Muslims not because they are Muslims but because those people, because they are Muslims, are resisting them. They are resisting slavery… materialism… They are resisting the amorality of the western bourgeois society. And therefore, they are de facto enemies of the imperialist system. So in the sense that Muslims are untamed, the west has a particular animus towards them. This is allied to… the presence in western countries now of substantial numbers of Muslims who are untamed, and who are resisting the treatment of their co-religionists and their compatriots, in many cases, by the imperialist countries.
So I think it is a crusade, or more importantly, it will be seen by the victims as a crusade, and that perception in politics is old…
This is why I say, I should make it clear here that I am not with bin Laden, I’m against bin Laden… But bin Laden’s actions are coming out of a concrete reality and his words and actions are finding an echo amongst the 1.5 billion Muslims around the world, because what I call the swamp of injustice and double standards has produced many mosquitoes, and mosquitoes are proliferating and becoming more virulent.
Do you actually share the optimism expressed by Mr. Charles Rees with regards to us having an ability to stop the war at this point? You mentioned it was the 11th hour. Do you think there is any turning back at this point? I noticed on the flyer, a demonstration is scheduled on the 15th of February. Many people share the assumption that by the 15th of February most Iraqis are going to be smoldered in ruins.
- The demonstration will be changed if the war begins. Our plan is for mass civil disobedience around the country on the day the war begins, a mass demonstration in London on the first Saturday after the war begins, and a demonstration in London every Saturday while the war continues.
War is not inevitable. Wars are never inevitable, even when wars have begun they can be stopped. The enemy wants us to believe that it is inevitable because it hopes thereby to stun us with horror and paralyze us. So we have to continue to say that war is more likely than not but it is not inevitable and it can be stopped but it only can be stopped very quickly and with a huge movement of protests around the world and that’s what I was calling for today.
You’ll find that many people in the Arab world are not as aware of what goes on in the British Parliament as they are of what goes on in Congress. Someone in Parliament recently referred to the fact that one of his constituents sent in a letter saying that there have been no votes pertaining to the war on Iraq. How do you explain the discrepancy if so many of your constituents, and other constituents around the UK are so interested in war. How has it been kept out of discussion in parliament so effectively, or, if it has been brought to the attention of Parliament what has been going on in terms of the governments “stone wall” blocking of the issue?
- Well, it’s not that it hasn’t been discussed in Parliament; it has been discussed many times. But it has not been voted upon. This is because, to our embarrassment, I think, Britain does not have a constitution. It is one of the few countries in the world that does not have a constitution. And so the prime minister has vested in him the power which the queen holds, as the head of state, to make war.
They defend this medieval concept… and this means that there will be no vote in the British parliament authorizing the war, unlike the US Congress. We have tried every conceivable procedural trick to force some kind of division on whether the house should finish at 10 or 11 pm, whether we should paint the walls green or cream! Anything which had the effect of dividing the house and allowing people to show some opposition, so far we have not been successful.
But the most accurate test you can give is that 161 members of the parliament have signed their names against the war, there are more than this who are against it. Some are waiting, some are frightened, some are praying that it doesn’t happen.
But I think you can safely say there are hundreds of members of the British Parliament who are not with the war. The British foreign office is not with the war, the British foreign office which was cheating the Arabs when the Americans were still cowboys chasing the red Indians and exterminating them. The British foreign office knows the Arabs very well and it is strongly against the war because it knows that [Secretary General of the Arab League] Amr Moussa is right that the gates of Hell will be opened by this, and nobody knows what will emerge from those gates. Even the British ambassadors in the region are strongly against the war.
You can be sure there are British spies in the room today who will be reporting back to London that the Arab public opinion is boiling mad about this.
But alas, the British prime minister has locked himself into this undignified relationship with the American president. And even that I believe that he personally would like to avoid the war, if it happens he will be in it. If it goes wrong – and it has a very big possibility of going wrong – he will pay the ultimate price. The price that Eden paid in 1956 after Suez will be paid by Mr. Blair.
A few months ago you visited Saddam in Iraq. A very highly publicized visit. Why visit Saddam? Do you think there is a certain purity attached to your cause as long as you keep it independent from the figure of Saddam Hussein? A lot of anti-war figures have been accused by their detractors of being apologists, such as [former Attorney General] Ramsey Clark, Christopher Higgins has been on his case for a very long time. Why speak to Saddam specifically?
- I met Saddam twice in my life; once in 1993 and once nine years later, in 2002. In that time, I visited Iraq maybe 100 times. So I wouldn’t like you to have the impression that I take tea regularly with the president of Iraq. I wanted to talk to him on this occasion for a very precise reason: to encourage him to admit the weapons inspectors. All of Iraq’s friends were doing that, and I felt that I had to do it as well. On balance, I think it was right to do so. I hope, in fact I pray, that the next few weeks won’t show that it was me who was the fool. And that in asking the Iraqis to allow this Trojan Horse into their country I hope… I pray, that I haven’t weakened their defenses.
My position about Saddam Hussein is a very clear one. I never visited Iraq before the Gulf War. I would have been arrested on arrival if I had. I was a known opponent of the regime in Baghdad. I used to be demonstrating outside the Iraqi embassy when British ministers and businessmen were inside selling them guns and gas. I’m a founder member of the campaign for democratic rights in Iraq in the 1970s. So I have no connection whatsoever to the Iraqi regime.
But my opposition to imperialism is greater than my opposition to the character of the Iraqi regime. You have to make these choices in life. Imperialism is the biggest criminal in the world. America is the biggest rogue state in the world. Britain is an auxiliary of a criminal rogue state. So there is no choice but to stand beside the people of Iraq. And if you stand beside them and travel to Iraq you can’t avoid meeting their government. They are not a government I would myself choose, but they are the government of Iraq.
We have a saying in English, that in the land of the blind, the one-eyed man is king. And Saddam Hussein has one eye.
Going back to your comment on the inspectors, doesn’t the debate over them appear to be of pretence? Knowing well that it was not a question of the inspectors?
- We gambled that this was a way in which we could avoid the war. If it turned out that the Iraqis have accepted the inspectors and they get the war… It doesn’t look like the inspectors’ issue is delaying the war, it looks like it is being used as a trigger for it.
Does your Scottish background have an effect on your stand against imperialism?
- I have Scottish and Irish background, my mother family is Irish and my father’s Scottish. So that does give you an insight into the nature of imperialism. If you saw the film Brave Heart you will see that we have been fighting imperialism from an early time.
But it’s really a question of ideology rather then ethnicity or nationalism. I am ideologically anti-imperialist… I don’t myself feel a part of a country; I feel a part of an idea, of a faith,
How can you involve yourself in the interests of a country and then be very much opposed to those interests?
- First of all the policy is not in the interest of our country. But even if it was I would be against it. It was in the interest of my country, for example, to have an empire on which the sun never set, but I would have been against it whether it I was in our interests or not, because it’s immoral to steal other people’s things, and the end product of an empire is to steal other people’s things. It’s not for any civilizing. They had the bible in one hand and the gun in the other. But the gun was the only important thing. It is immoral to steal, whether if I were to steal your recorder now or for my country to steal the wealth of your country.
Inside the imperialist countries, there has always been a substantial wedge of opinion which rejects this role. In 1956, there was a mass movement against the invasion of Egypt by Britain, France and Israel. Trafalgar square was overflowing with people, some of whom who are still alive today still speak with us now in Trafalgar square against the invasion of Iraq. Tony Ben for example spoke in 1956 and he spoke in 2002.
We are a part of the same unbroken line of people who reject imperialism and who do so for ethical, religious, moral, political and ideological reasons. We survive because we are not afraid and because there is some democratic space in our countries that wasn’t given to us; it had to be taken. Had to be fought for. All the freedoms we have had to be fought for, and they could be taken away. Some of them are being taken away on the wake of September 11.
But we don’t face soldiers with guns like the children of the Intifada. We don’t even face soldiers with water cannons and tear gas like the people in Cairo. But one day we might. These big imperialist countries can absorb a certain amount of opposition because they are not threatened, their regime is not threatened. And regime survival is the biggest imperative for any regime, whether in America, Britain, or Baghdad. As long as their regime is not threatened they can absorb a certain amount of opposition, but when the confrontation or the opposition becomes particularly acute and dangerous for them, they move to a different level…
We have some space, we live in that space. It might only be a few inches, but we live in it. And by the grace of God we will continue to fight in it. Either we will win or we won’t, but we’ll never give up.
Did you ever regret anything that once happened to you because you stand for these points of view?
- No. People say in the newspapers I could have been a cabinet minister or even a prime minister. But this is meaningless, because I am what I am, and to be a cabinet minister and to say things I don’t believe and not to say things I do believe, to betray my friends, my principles, is impossible, can’t even be contemplated.
Western policy is radicalizing Arab and Muslim students. I’ve been warning them from this for many years in Parliament. You can go back and see what I said in the 1980s in Parliament; that by your double standards, by your support for Israeli crimes, by your embrace of the corrupt kings and the puppet presidents, you rule against the interest of your own people. You are radicalizing the Arab and Muslim students in a way which in the end will not be in your interest.
Moving to Arab countries, Wein El Arab [where are the Arab?] is a song that has been sung for decades now, and nothing happened. Do you think that something will happen?
- Yes. I brought a red London bus all the way from London to Baghdad in 1999. From Marrakech to Baghdad, every person spoke the same language, every person prayed to the same God, every person ate the same food and listened to the same music, and they had one slogan in every country: Sha’ab arabi Wahed [one Arab people]. And I believe that one day this will be achieved, because this situation cannot go on. We cannot face another century like the one we passed.
The Arabs have everything… God gave them everything: They have oil, gas, water, people, culture, land, resources, seas and oceans, and look how they live. The Europeans speak 45 languages. In the last 60 years they massacred each other in tens of millions, and now they are united, and becoming more united as each day goes by, because it is in the interest of their people to do so, and it is in the interest of the Arabs to unite.
One day these corrupt kings and puppet presidents will be swept away, I have this faith, maybe I won’t see it, maybe my children will see it, if not then their children will see it.
History is a big thing. We live for a very short time. It’s a pity. This is a small period of time, 100 years, and when history comes to be written, it will be very different.
If you could address our readership in general, and if you could address the Muslim world as a whole, is there anything in particular that you would like to say?
- The Arabs were the first people to write down the alphabet… the first people to plant agriculture, the first people to make law. As a matter of fact much of that happened in the country that is about to be destroyed.
The Arabs are a great people. Islam is a great religion. But it has to, and they have to, stand up. We have a saying in our country: the great only appear great as long as the rest of us are on our knees. When we stand up, they don’t look so great. They are not supermen. George Bush in no superman. Everyone can see that. The Arabs and the Muslims are capable of making a new future for themselves, but it is not cheap.
I asked somebody once… when Sharon was massacring the Palestinians in Jenin, why the huge demonstrations in the Arab countries didn’t continue? Why did they go away? They answered because a student was killed in Alexandria. I am very sorry for the student and his family, but the Palestinians are losing their children everyday, yet it doesn’t stop them from coming out the next day.
So it can be done. Hizbullah drove the enemy running from their country. Fares Uday, a 14 year-old boy, stood in front of an Israeli tank and attacked it with his hands. And when they killed him, his brother and his neighbors came in his place.
The Iraqis have resisted all these years the bombing and the siege without surrendering.
The Arabs and Muslims are potentially great, I just gave you three examples. And you know in Cuba, each and every day, the teacher asks the school children in every school, what do you want to when you grow up? And the children answer: I want to be like Che.
The Arabs have to have a mentality that says “I want to be like Hizbullah, I want to be like the Intifada, I want to be like the resisting Iraqis.” And if they can, nothing can stop them. Nothing.
-[IslamOnline & News Agencies (islamonline.net).] Published at the Palestine Chronicle.