Mullahs and Merchants
At a recent seminar at the Foreign Policy Institute in Calcutta on the goings on in West Asia-North Africa, during a Q & A about the Egyptian revolution, someone asked, “How can we be certain democracy won’t result in fundamentalist parties coming to power?”
The answer, of course, is we can’t. But Egypt will probably retain an independent and Islamicist-unfriendly military. Political legitimacy has fallen on a new generation of non-ideological street leaders.
In the long-term, however, Arab countries like Egypt need strong civil societies, expanding middle classes and rising incomes to keep the spectre of fundamentalism contained within certain political confines. The Arab political discourse has been dominated by secular despotism and an Islamicist alternative.
There are no shortage of things the new reformist regimes in the Arab world need to do. Among the most important is to liberate the Arab entrepreneur.
Sadly, economic reform has a dirty connotation in Egypt. Egyptian officials of the ancien regime used to tell me how their country was following the “Dubai model” and how this had dramatically driven up economic growth rates. But there were a number of problems with what was happening in Egypt. One was that the bulk of the foreign investment in the country was flowing into the petroleum sector, and nowhere else. Two was that Mubarak’s inner circle controlled so much of the economy that all the fruits of economic growth were falling into their laps. This wasn’t growth as much as rent-seeking.
Not surprising, then, that young Egyptians were among the most negative of all Arabs when it came to ranking the business-friendliness of their country, showed Gallup polls. Only Yemen got similar results.
Stephen Blain in his book Mullahs, Merchants and Militants gives a wealth of anecdotal evidence of how difficult it is for Arab merchants to function because of the “ham-fisted” interference of the state – of which corruption was only one of the ways.
This borders on tragic. The Arabs were among the greatest trading communities of history. The forerunners of today’s Lebanese, the Phoenicians, could almost said to have invented international trade. But the past half century has seen the Levant and the Maghrib in particular take to a series of economic policies, ranging from socialist to crony capitalist, that were largely designed to ensure economic activity lay with the state or a small group who controlled the state. The difference was minimal.
Dubai regularly gets listed as among the most entrepreneur and business friendly places in the world. The Dubai model was touted as the economic future of the Arab world. I always had my doubts, however. Glain is among those who points out the rhetoric of economic reform was always undermined by the reality of crony capitalism.
One, while Dubai did a fair amount of genuine competitive economic work, way too much of its boom came from salted away oil and gas revenues. Hence its recent real estate bubble. The Arab world needs to move on from natural resources and more to knowledge based economic work if it is to avoid just being a refueling stop for the rest of the world.
Two, the Dubai model was about open economic activity in a tightly closed political environment. This was exactly what the doctor did not order for the Arab world. And it only strengthened the perception that the market went hand in hand with despotism.
The Arab world is young. Half the Arabs in the world are younger than 25. They will need jobs. And they will need something to make them constructively active, give them a sense of self-worth.
The mullahs will urge them to consider piety, religion and, in a few cases, terrorism. The real alternative is business. But one where a genuinely competition-driven private corporate sector can arise again in the Arab world. Not one which is dependent on the greasing of palms or connections to a ruling family. Or is simply a derivative of the peddling of black gold.
This, more than anything, will provide a commercial underpinning to the revival of Egyptian and potentially Arab society. It will give secularism and liberalism a good name. And build a strong bulwark against exactly the kind of jasmine-inspired fundamentalism that many people continue to fret about.