Adam Hanieh: Gulf states, neoliberalism and liberation in the Middle East

October 6, 2014 – rs21 – Adam Hanieh is a senior lecturer at and School of Oriental and African Studies in London and author of Lineages of Revolt: Issues of Contemporary Capitalism in the Middle East. He spoke to Bill Crane about his book and on the trajectories of the Arab revolutions since 2011.

You talk in your book about how the International Monetary Fund and the World Bank see bureaucracy hindering economic growth as the central problem of the Middle East – and hence tried to recast the Arab uprisings as pro-market. Can you explain what’s wrong with this perspective?

The twinning of “democracy promotion” and neoliberal economic prescriptions in the Middle East is not new. It was a perspective articulated by the Bush administration and continued throughout the Obama presidency. It essentially aims at harnessing rhetorical support for “democracy” as a means of deepening economic liberalisation.

This is quite clear if you look at the post-2011 record, particularly the way that international financial institutions (IFIs) have reentered the region, promoting notions such as “democracy”, “good governance”, “voice, transparency and consultation” – but linking these tropes to policies such as privatisation, the opening up of markets, deregulation and the expansion of foreign direct investment.

A very clear example of this approach is offered by the Deauville Partnership, an initiative launched by Western governments and IFIs at the May 2011 G8 summit in France. The partnership pledged up to $40 billion in loans and other assistance towards what they termed the “Arab countries in transition”.

Since that time, the partnership has led the renewal of IFI intervention in countries such as Egypt, Tunisia, Morocco, and Jordan. The basic message of this renewed lending has been the linking of “free elections and free markets” – to borrow a phrase used by Bush in 2004.

Obama noted in May 2011 that US policy in the Middle East would be based upon “ensuring financial stability, promoting reform, and integrating competitive markets with each other and the global economy”. Robert Zoellick, president of the World Bank, argued in 2011 that the revolts in Tunisia occurred because of too much “red tape”. The 2011 uprisings are reframed as being pro-market in essence.

Of course this rhetorical support for political democracy does not exclude continued Western backing of authoritarian regimes – Egypt’s Sisi provides a good illustration of this. But the core problem is that it promotes an analytical separation between political and economic power – private sector growth happens in one place, and “democracy” (generally conceived as narrow electoral competitions between sections of the elite) happens in another.

One thing I try to argue in my book is that we need to see these spheres as inextricably linked. Authoritarian states have been the enabler of neoliberal reform in the region. Political and economic power is fused to a remarkable degree. Real democracy – and any hope of achieving the social justice aspirations of the uprisings – requires a fundamental challenge to the position of those who own and control the wealth (and political power) in the region.

Can you outline the trends of neoliberalism in the region prior to the uprisings – the privatisation of public sector businesses, the rents raised on agricultural land and the resulting mass migration from the countryside to the cities? How did these processes play out in the crisis that resulted in the Arab revolts?

There have been vast differences in the scale and pace of neoliberal change across the region, but there remains a uniform consistency to the underlying policy logic. This includes policies such as privatisation (linked to the opening up to foreign capital), which has acted to undermine social support structures in countries like Egypt and Tunisia, and has also been a key mechanism through which national and foreign investors have been enriched.

Another very important shift – as you note – has been the commodification of land in rural areas. This has increased the precariousness of farmers’ lives and their ability to remain on the land through liberalising land ownership laws and rent controls, and integrating rural agricultural production into regional and global agribusiness chains. One of the reasons for the massive growth in urban slums that surround many Arab cities is the rural-to-urban migration precipitated by these changes to land ownership and tenancy rights.

A further important policy has been labour market deregulation. There has been a sustained push to weaken the conditions of work in the public sector (linked to privatisation). This has made it easier to hire and fire people, undermined pensions, and undermined access to healthcare and education for workers in these countries. Labour market deregulation is a major emphasis of the recent renewal of loans that I mentioned earlier.

Beyond these standard neoliberal policies, the operation of the state itself changed. There are two trends that can be highlighted here. One is the centralisation of economic power in the hands of elites. Tunisia and Egypt show this very clearly – economic policy-making was driven by secret committees – unelected and unaccountable committees that essentially wrote policy, enshrined that policy in law, and pushed it through before any debate or discussion.

This centralisation of power was consciously supported by institutions such as the World Bank, IMF and USAID. It is one further indication of how the authoritarian state form was integrally linked to neoliberal reform processes.

The other side to this, however, was a push towards the decentralisation of governance. This is not unique to the Arab world, but it is widespread in such sectors as water, electricity, and municipal matters, where there has been an emphasis on giving so-called autonomy to local governments over fiscal decisions.

What this actually does in practice is further entrench a logic of liberalisation by setting different sectors and different communities against one another. They are forced to compete over a smaller pie. Local governments start to offer fee-based provisions for water, electricity and healthcare. They attempt to attract funding through offering concessions or subcontracting of government services.

Again, this is often justified through a language of greater community control, better governance, more community participation. But the reality of decentralisation, particularly when twinned with a concomitant centralisation of overall economic policy, is that it deepened the process of neoliberal reform.

Since 2011 a number of activists and academics have focused on the “national bourgeoisie” in countries such as Egypt as a potential agent for liberation. What’s your opinion on this?

I think this is largely a hold-over from older Arab nationalist movements. “Stage-ist” concepts of revolution continue to be popular among parts of the Arab left. There is an attempt to identify a so-called “patriotic bourgeoisie” (ra’s al-maal al-watani) which is viewed as a potential ally against foreign capital.

The last few years have confirmed the problems with this perspective. Virtually without exception, leading sections of the national bourgeoisie have been fully incorporated into international circuits of capital accumulation. They have been a prime beneficiary of the neoliberal period – indeed, this incorporation was an important feature of how neoliberalism changed the political economy of the region.

In contrast to these perspectives, I think there is no fundamental difference between “foreign” and “Arab” capital beyond the normal competitive pressures of the capitalist market. Local capital bears significant culpability for the authoritarian states that emerged over the previous decades. One of the aims of my book is to demonstrate the weaknesses inherent to a strategy that invests hope in the alleged patriotic spirit of the Arab capitalist class.

Your first book, Capitalism and Class in the Gulf Arab States, focused on the unique political economy of the Gulf states, particularly the millions of Asian workers that form a migrant working class in these countries. With the exception of Bahrain, we did not see the Arab Spring emerge in the Gulf. What makes this part of the region different?

At least half of the labour force in the Gulf states is made up of temporary migrant workers, in some cases much higher than that. This structure allows Gulf elites to use migrants as a disposable workforce – your residency status is tied to your work permit, and if you lose your job you have to leave the country. Migrants are denied the right to organise in unions. They lack any effective route to permanent status in the country.

At times of political or economic crisis, Gulf states have been able to displace problems to labour sending countries. We saw this in Dubai during the financial crisis of 2008. Construction companies in particular just laid off workers and sent them home, thereby partially averting the crisis. This is not unique to the Gulf states, although the degree to which it exists is unique. A labour force without organising or citizenship rights can be controlled in a very effective manner.

This does not mean migrant workers in the Gulf have no ability to struggle for improvements in their conditions. Again in Dubai, we saw a number of important strikes last year that won some gains. But migrant workers are not simply a source of cheap labour – they are structurally central to how Gulf capitalism reproduces itself.

Bahrain differs somewhat from the rest of the Gulf in that there has been, for historical reasons, a much greater degree of proletarianisation of the citizen population, overlaid by the sectarian nature of the al-Khalifa monarchy. This has meant a much longer and richer experience of trade union and leftwing struggle.

One of the problems today, however, is that left and workers’ movements in the Arab world tend to leave the question of migrant workers to the side, or implicitly treat migrants as encroaching on “Arab jobs”. Again, this isn’t unique to the Gulf, but is perhaps more pronounced there than elsewhere.

What about the role of Gulf capital in regional patterns of accumulation?

Since the 1970s we’ve seen the development of large conglomerates, often family-based in origin, that span the circuits of capital accumulation in the Gulf: productive sectors, such as construction and the production of aluminium, steel, and cement; commodity imports, holding agency rights for particular kinds of commodities and the sale of these commodities in malls and shopping centres; as well as finance and the banking sector. These conglomerates are very closely linked to the state apparatus and Gulf ruling families, and have taken a major position in the economies of the Gulf states.

Over the past 20 years the activities of these conglomerates have internationalised in two major respects. One is through the Gulf Cooperation Council (GCC), a regional integration project launched in 1981 that brings together Saudi Arabia, Kuwait, Qatar, Bahrain, the United Arab Emirates and Oman. We see increasing levels of capital flows through the GCC – for example, investments by large Gulf construction companies in neighbouring GCC states, or retail activities controlled by one conglomerate that take place throughout the GCC.

Gulf companies and investors have also expanded across the wider Arab world. This is linked to the deepening of neoliberalism that I described above. Gulf capital has gained tremendously from the opening of the regional economy. Neoliberalism is not just a process that enriches national capitalist classes. It has also accentuated the uneven development of the region as a whole – one in which Gulf capital is both a prime mover as well as a prime beneficiary.

You can see the weight of Gulf capital when you look at important economic sectors in particular Arab countries. Take Egypt as an example: the banking, agribusiness and real estate sectors have been key focal points of liberalisation, and you see a very significant position of Gulf investment within those sectors. And alongside this internationalisation of capital comes a political role. This may not always be a direct one, and shouldn’t be interpreted in a crude manner, but it gives a sense of Gulf capital’s vital stake in the region.

Various diaspora communities across the Middle East have also come to base themselves in the Gulf states – Palestinian communities, Lebanese, Iraqis. We’re talking about layers of these communities, small numbers but significant elements, who have become incorporated into Gulf capital as a whole. We see this particularly in the West Bank – the big Palestinian conglomerates that dominate the economy really have their base within the Gulf.

It’s not just Saudi capital or UAE capital that’s coming in and taking a role in neighbouring economies – it is also a question of these regional diaspora capitalist groups that have become integrated into Gulf capital.

You write in Lineages that alongside Israeli colonialism, Gulf capital in the Palestinian territories has served to “hothouse capitalism”, impoverishing the vast majority of Palestinians while giving rise to a rich elite connected to the Palestinian Authority. What are the implications of this for the political economy of Palestine and the struggle for national liberation?

This relates to what I was saying earlier about the role of the so-called “national bourgeoisie”. The case of Palestine is a very good example of this, particularly in the West Bank, where the Abu Mazen-led PA has been strongly supported by international institutions and Western governments.

The developmental strategies pursued by the PA in the West Bank have completely reflected the policy framework and logic of neoliberalism. We’re talking here about free market economics, the liberalisation of key sectors including housing, real estate and finance. This PA economic strategy has acted to strengthen the largest Palestinian conglomerates (often linked to the Gulf as I mentioned above), while simultaneously widening inequality levels in Palestinian society.

The PA itself has become complicit with Israel’s domination of the area. We saw this very clearly during the recent Israeli war against Gaza, to which the PA presented no substantive challenge. This is a model that does not in any sense confront the Israeli occupation or settler colonialism. It does not present a viable route for any liberation project that encompasses the entire Palestinian people – including Palestinian refugees and those who remain as citizens in Israel.

What this means politically is that the question of Palestinian class structure – who benefits from the status quo? – cannot be ignored. We’ve seen this over the last few years through the emergence of economic protests in the areas governed by the PA. But there has yet to be an effective political challenge to its role.

It’s been a year since your book was published. Since then Sisi has come to power in Egypt alongside a number of major political changes in the region. What do you see as the most important developments in the region over the past year?

The recent rise of sectarian and reactionary forces such as the Islamic State is of course a major feature of the current moment. These forces are not the reflection of some sort of existential conflict between Sunni-based fundamentalism and other religious and ethnic groups. They have very real material causes.

There are three important features that should be highlighted in this regard. The first is the war waged by the US, UK and other powers against Iraq in 2003. Not only did this war lead to the deaths and permanent injury of millions of Iraqis, it completely tore apart the country, entrenching a sectarian political system that excluded large parts of the Sunni population. For anyone who remembers the images of Fallujah and Abu Ghraib through the mid-2000s, is it any surprise that sectarian religious forces have found a fertile ground of recruitment in the country?

The second feature in the rise of these forces is the war waged by the Assad regime against the Syrian uprising since 2011. Assad deliberately cultivated sectarianism, releasing jihadist prisoners through 2011, while arresting thousands of protesters across the country. The ongoing bombardment of civilian areas, the hundreds of thousands of displaced people, and the blockade of many Syrian cities created the conditions in which sectarian forces found ready support.

Finally, we can’t separate out the growth of these forces from the role of the Gulf states (and private actors in those states). These states have attempted to build their own alignments within the Syrian uprising, undermining the prospects of democratic and non-sectarian forces. They have helped to cultivate the environment for the growth of organisations such as ISIS (despite the fact that this organisation is virulently opposed to the Saudi monarchy).

Given these three features – and there is much else that could be said about this – I think the current Western intervention is a disastrous course of action that will only exacerbate the problem.

In this context, it has become fashionable among some commentators to say that the Arab uprisings were a failure, that there’s no hope, no future etc. More extreme accounts try to attribute the 2011 mobilisations to some kind of Western plot. Without wishing to deny the very difficult situation at the moment, I believe it is important not to underestimate how these uprisings continue to leave a positive trace on the consciousness of millions of people. None of the basic conditions that underlay these revolts have been resolved, and the popular sentiments that drove them remain widespread.

This is not something that you can pick up from the mainstream press coverage, but I do believe that a generation of young activists across the region continue to be inspired by what was shown to be possible in 2011. The very fact that what we are witnessing now is an attempted negation of 2011 is one indication of this. Despite the disastrous impact of sectarianism, there remains a yearning for real social justice.

This is not going to be achieved through Western intervention, nor through a reconstitution of the autocratic regimes that existed prior to 2011. To a large degree the problem remains the renewal of an effective Arab left. This is not just a necessary condition – it is also a possible one.

[Adam Hanieh’s book Lineages of Revolt is published by Haymarket Books.  He is currently coediting, Transit States, for Pluto Press with Omar AlShehabi and Abdulhadi Khalaf, a collection of essays on the question of labour in the Gulf. Bill Crane is an rs21 member studying for a masters degree in labour, social movements and development at SOAS.]