Economic Liberalisation Programs in the Middle East Have Weakened the Resilience of Authoritarian Regimes

This essay will argue that overall, economic liberalisation programs in the Middle East have weakened the resilience of authoritarian regimes. This argument will be demonstrated using three case studies. Ben Ali’s Tunisia, Hosni Mubarak’s Egypt and the Hashemites’ Jordan. These were the fullest embracers of economic liberalisation programs and thus provide the clearest view on how these programs impacted the resilience of their respective regimes (Cammett & Diwan 2015, p.44). Whilst the removal of government regulation upon the economy did increase growth rates, the consequences of the methods used weakened the resilience of authoritarian regimes. This was because the nature of the reforms fundamentally broke the social contract between the government and its people. Additionally, the corruption evident in ‘crony capitalism’ further turned the population against the regime – thus weakening it. The Arab Spring demonstrations of 2011 in Cairo and Tunis were therefore sparked by economic liberalisation programs (Gause 2011, p.83). On the other hand, economic liberalisation was also used by regimes to successfully reinforce authoritarianism. The reforms led to a new base of support for the regime and allowed greater state penetration into the economy, thus creating greater reliance upon the government. Furthermore, regimes were able to gain further support from the military, thereby bolstering their strength. In the long run though, these strengths would turn into weaknesses.

A Broken Social Contract.

The reform process of economic liberalisation dismantled the government’s ‘social contract’, and the opposition formed from this weakened the resilience of authoritarian regimes. On the surface, strong economic growth[1] from liberalisation programs would have expected to bolster regime strength. However, this short term “decent economic growth” masked decreased stability caused by the uneven distribution of the newly generated wealth (Gause 2011, p.82). In the long run Egypt and Tunisia fared worse than other states that did not liberalise to the same extent (Billmeier & Nannicini 2013, p.997). This was because ‘Structural Adjustment Programs’ disproportionately hurt the poor and benefitted the rich elites (Cammett & Diwan 2015, p.147). Currency devaluation, new taxes, cutbacks in subsidies and scrapped welfare provisions broke the social contract upon which the state was founded and legitimised with (Hinnebusch 2006, p.384). Widespread unemployment in Tunisia and high rates of poverty in Egypt coupled with sudden rising prices were linked to eruptions of mass protest (Bellin 2012, p.136; Ehteshami & Murphy 1996, p.766). The outcome of the polarisation of income distributions was seen in the ‘bread-riots’ in Egypt (1977), Tunisia (1984) and Jordan (1989) (Kramer 1994, p.201). Clearly these economic reforms intensified the discontent felt from difficult socio-economic conditions. For example, Egypt after independence had a quasi-socialist ideological basis with strong welfare policies (Guazzone 2009, p.326). The neo-liberal agenda slashed subsidies from an already inadequate welfare system upon which many people relied on to “stave off hunger” (Norton & Wright 1994, p.15). It therefore cut off support from the majority of the population and destabilised the regime by alienating its former supporters. By breaking the social contract, economic liberalisation programs have eroded the legitimacy of authoritarian regimes.

The discontent fostered through taxation reforms also weakened the resilience of authoritarian regimes. Prior to economic liberalisation, rentier states implemented little to no personal taxation in return for tolerance of a closed political system (Clement & Springborg 2001, p.765). The taxation imposed by structural adjustment fundamentally rewrote the relationship people had with the regime. It weakened authoritarian rule because to legitimise these reforms, regimes would need to implement some form of ‘taxation with representation’ (Luciani 1995, p.217). Even if this was only through a “system of controlled and limited representation of the social groups that benefited from economic reforms”, it still weakened the regime because any distribution of power lessened its autonomous decision-making ability (Guazzone 2009, p.6). Furthermore, since the working class remained excluded from any significant political processes, it made them even more discontent. 

As an example, Jordan’s adherence to economic liberalisation programs weakened its resilience. Since 1921, government sponsored welfare was exchanged for political quiescence. In 1989, the state removed subsidies, privatised industries, and cut state employment. For example, ending wheat subsidies effectively tripled the cost of bread (Baylouny 2008, p.293). This coupled with the reduction of custom duties directly impoverished the population. Poverty increased from 20% in 1991 to 30% in 2000 (Baylouny 2008, p.296). Overall, economic liberalisation programs dismantled the social provisioning upon which the state of Jordan had been built, dating from the mandate era. The removal of social policies therefore marginalised the regime’s previous working-class supporters, thereby weakening it. 

Likewise, its dependency on aid damaged the Jordanian regime’s legitimacy. The Hashemites received significant aid from the US after neo-liberal policies were implemented, totalling $4.5 billion in the from 1971 to 2001 (Baylouny 2008, p.301). This helped “preserve the rent-funded clientele networks that buttressed monarchic authoritarianism” (Hinnebusch 2006, p.387). However, the foreign policy realignment towards the US and its peace treaty with Israel damaged the regime’s legitimacy. Capitulating to the requirements of foreign aid donors eroded public support for the regime, thereby weakening its resilience (Gause 2011, p.81). Overall, the dependency on aid, entrenched by liberalism, weakened the regime’s sovereignty. The regime needed to be able to respond to the contradictory demands of international donors, internal elites, and popular movements (Guazzone 2009, p.346). The difficulty of this hindered its strength.

The increased popularity of Islamist movements due to the broken social contract also weakened the resilience of authoritarian regimes. The worsened inequalities caused by economic liberalisation promoted more religious and ethnic extremism (Monshipouri 1997, p.61). Ehteshami (1996, p.769) notes the tendency for Islamic groups to fill the political vacuum the reforms created, because they became the face of a social movement against neo-liberal policies. Islamic movements filled the welfare gap left by the regime’s withdrawal from such responsibilities by providing services such as healthcare and education to the alienated poor of the population (Pool 1993, p.385). For example, this happened with Ennahda in Tunisia, and the Muslim Brotherhood in Egypt. Here, the disenfranchised poor switched allegiance to these Islamist opposition groups. They formed a strong base of opposition to the regime and thus damaged the strength of the state. Given the interconnectedness of economics and politics in the Middle East, the consequences of economic liberalisation in breaking the social contract in authoritarian states ultimately damaged their resilience (Macqueen 2018, p.184).

Crony Capitalism.

On the other hand, economic liberalisation programs also bolstered the resilience of authoritarian regimes because it allowed a deeper penetration of the State into the economy. Guazzone (2009, pp.1,7) argues that the reforms legitimated the restructuring of the power system which allowed the economy to “increasingly represent the sum of the private interests of members of the regime.” Authoritarian leaders used the privatisation of public assets as a tool to perpetuate state domination by selling to political and economic elites with close ties to the regime (King 2003, p.25; Hinnebusch 2006, p.384). Thus, crony-capitalists used their privileged access to secure state monopolies, and this allowed the regime to be less accountable to its own citizens. This meant that ruling elites could “reorganise or, better, shift patronage networks towards the private sector without undermining the power of the state.” (Guazzone 2009, p.5). Through this process, economic liberalisation facilitated the creation of a state bureaucracy run by those close to the president, which further strengthened state power (Owen 2013, p.2). For example, in Egypt, the economic portfolios in Ahmed Nazif’s cabinet were given to businessmen close to Gamal Mubarak (Guazzone 2009, p.30). Regime persistence was bolstered because economic liberalisation embedded state power into the economy and ensured that there was no equal countervailing power to the state in society (Bellin 2004, p.139). By re-drawing the borders between ‘public’ and ‘private’, a modernised model of authoritarian governance could thrive.

On the other hand, the privileged class of wealthy businessmen, and family members of presidents became targets of popular ire. The “popular revulsion to the corruption and crony-privatisation” from economic liberalisation reforms fostered opposition to the regime (Gause 2011, p.82). The regime shaking Arab Spring protests proved that the anger caused by the corruption severely damaged regimes’ resilience.

Egypt.

Egypt’s intifah in the 1990’s allowed the Mubarak regime to consolidate its power whilst avoiding political liberalisation (Waterbury 1985, p.65). Partial economic liberalisation appeased society’s push for change without reducing state power (Monshipouri 1997, p.60).  For example, state privatisation was implemented largely in secret in the 1990’s. Additionally, the Egyptian army became a greater source of strength for the Mubarak regime. Following neo-liberal reforms, US aid of $2 billion per year as a rent source gave Mubarak discretionary resources which ensured that security forces were paid regardless of overall economic health in Egypt. For example, in one year, subsidies on basic goods dropped 14% whilst military spending increased by 22% (Bellin 2004, p.148). This nurturing of a strong coercive apparatus contributed to authoritarian robustness. Furthermore, deep crony-capitalist links with the regime in key industries ensured that security forces had a vested interest in Mubarak’s survival (Joya 2011, p.353). As such, for years the military reimposed regime authority over any democracy-favouring opposition (Kienle 2001, p.187). Rent such as aid also buffered the regime from accountability to its population. Overall, the political consequences of economic liberalisation reinforced authoritarianism.

Privatisation had other weakening effects on authoritarian regimes because the empowered bourgeoise and market elites disrupted the internal balance of power (Norton, 15). These parties provided revenue to the regime and had a stake in the regime’s survival because they relied on state connections for wealth (Joya 2011, p.352). Hinnebusch (2006, p.384) argued that this consolidation of support from this social force expanded the authoritarian power structure. However, for authoritarian states, any movement of control out of the regime weakens government power (MacQueen 2018, p.189). Economic liberalisation saw the state cede important fiscal resources to the private sector which caused the commercial bourgeoisie to demand further freedoms and representation. Therefore, by empowering a new class, economic liberalisation inherently planted the seeds for further change because it “unleashed social forces which challenged the state itself.” (Ehtshami & Murphy 1996, p.764). For example, in Egypt, the intifah (economic-liberalisation) in 1974 saw the Arab Socialist Union split into three factions. The multiplicity of parties costs the regime their monopoly on power, however the governments of Egypt, Tunisia and Jordan were careful to only legalise parties that posed no real challenge (Ehteshami & Murphy 1996, p.765). Overall, privatisation exposed the fragility of overcentralised authoritarian states to new social forces (Nathan 2003, p.1). Regimes had to either suppress or fulfil these requests, and both actions could weaken the regime in some way.

Tunisia.

In Tunisia, economic liberalisation first deepened the strength of authoritarian rule by further incorporating society into Ben Ali’s system of domination (Plattner & Diamond 1994, p.4). However, eventually this ended up damaging the regime’s resilience. Externally, Ben Ali gained praise from Western powers because of the normative assumption that economic liberalism would lead to democratisation (Tsourapas 2013, p.27). This strengthened the regime’s resilience abroad and legitimised the government’s suppression of dissent as necessary to safeguard economic gains accrued from neo-liberal policies (Tsourapas 2013, p.27). However, internally the facade of ‘incremental political liberalisation’ saw the resurgence of clientelism and deepened dispersion of authoritarian power into society (King 2003, p.3). For example, restructuring of the financial system meant that small-business owners and farmers turned to the Tunisian Solidarity Bank (BTS) and the National Solidarity Fund (FSN) for borrowing needs (Tsourapas 2013, p.24). Likewise, the BTS and FSN targeted youth unemployment through temporary jobs. This solidified societal ties with the state as they would periodically return for employment. Thus, the marginalised poor became dependent on the state’s support, and traded jobs for political deference. As one Tunisian poet noted, “Tunisia is a zoo in which the residents are fed and housed by their guardians” (Tsourapas 2013, p.23). Since the party and the state became so interwoven in Tunisia, regime resilience was reinforced.

However, these same instruments eventually were the catalyst for the regime’s downfall. Wikileaks released proof of corruption, and exposed the bribery and clientelism regarding the FSN’s financial mismanagement (Tsourapas 2013, p.29). Such attacks dismantled the appeal of Ben Ali’s personality cult and blame and outrage coalesced around his figure. Such grievances over repression, economic hardship and corruption played a vital role in motivating protests, which spiralled into the Arab Spring uprising (Bellin 2012, p.136). These revolts and the downfall of Ben Ali’s regime are intricately connected to the process of economic liberalisation.

Conclusion

Economic liberalisation programs have overall weakened the resilience of authoritarian regimes in the Middle East because it damaged the key tools that they used to survive. Although it allowed the further integration of the regime into society, the breaking of the social contract and the prevalence of crony-capitalism turned popular support away from the government and toward opposition groups. The profoundness of their discontent can be witnessed in the 2011 Arab Spring uprisings. Likewise, although these neo-liberal reforms created new supporters for the regime, their empowerment still challenged the autonomy of the ruler. Case studies in Tunisia, Egypt and Jordan have illustrated that whilst initially economic liberalisation had benefitted the regime, in the long run it generally turned the population against it. Therefore, the resilience of the regimes deteriorated.

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[1] Tunisia’s GDP impressively grew 5.2% the first 5 years after they implemented reforms, and Egypt’s GDP grew over  7% (Cammett & Diwan 2015, p.145; Guazzone 2009, p.30). This conformed to a trend that economic liberalisation programs had at least a “non-negative” effect on income per capita (Billmeier & Nannicini 2013, p.1000).