Institute for Domestic & International Affairs, Inc.
United Nations Development Programme Strengthening Governance in the Middle East Director: Stuart Carroll
Š 2010 Institute for Domestic & International Affairs, Inc. (IDIA) This document is solely for use in preparation for Philadelphia Model United Nations 2010. Use for other purposes is not permitted without the express written consent of IDIA. For more information, please write us at idiainfo@idia.net
Policy Dilemma ________________________________________________________ 1 Chronology____________________________________________________________ 3 1901 – First Oil Contract Signed in the Middle East ______________________________ 3 14 May 1948 – Israel Declares Independence ____________________________________ 3 1970s and 1980s – Jordanian Reforms __________________________________________ 3 June 2003 – Saudi Crown Prince Launches National Dialogues _____________________ 4 2006 – Hamas Democratically Elected to Lead Palestinians ________________________ 4
Actors and Interests _____________________________________________________ 5 Government Entities ________________________________________________________ 6 Lebanon ________________________________________________________________________7 Saudi Arabia _____________________________________________________________________8
Oil________________________________________________________________________ 9
Possible Causes _______________________________________________________ 11 Corruption _______________________________________________________________ 11 Centralization of Government________________________________________________ 12 Lack of Resources__________________________________________________________ 13
Projections and Implications _____________________________________________ 14 Falling Oil Inventories ______________________________________________________ 14 Increasing Tensions ________________________________________________________ 15 Perceptions of Instability ____________________________________________________ 16
Conclusion ___________________________________________________________ 18 Discussion Questions ___________________________________________________ 19 Bibliography__________________________________________________________ 20 For Further Reading _______________________________________________________ 20 Works Cited ______________________________________________________________ 21
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Policy Dilemma One of the primary focuses of the United Nations Development Programme (UNDP) is to facilitate the establishment and continue the implementation of democratic governance. Spreading democracy is one of the core values of the United Nations, and it is a goal of this agency to ensure a political voice for all citizens around the world. Only through legitimate, democratic governance can states develop economies and social programs as well as guarantee human rights to all citizens. Through stronger governance, states are able to accomplish the objectives laid out by the Millennium Development Goals (MDGs). At the 2005 World Summit, leaders declared, “We acknowledge that good governance and the rule of law at the national and international levels are essential for sustained economic growth, sustainable development and the eradication of poverty and hunger.”1 Governance, unlike democracy, is not a political form of government but is instead an indicator of the efficacy of a government system. The effectiveness of a state’s government is crucial to the success of development within that state. Currently, the most significant factor hindering many states in the Middle East is political corruption. Examples of such corruption can be found in fraudulent elections, which are often staged by political officials with no accountability. Additionally, since power is often centralized, public participation and local governance is often limited. Strong, central governments often ostracize citizens and create tyrannical structures of government. Human development is nearly impossible in states that do not guarantee basic human rights and freedoms.2 The lack of suitable governance in the Middle East region is almost startling, when compared to other regions of states with similar characteristics. The World Bank, 1
The United Nations Development Programme, “Democratic Governance: Overview,” http://www.undp.org/governance/about.htm (Accessed: 2 December 2009). 2 The World Bank, “Enhancing Governance in MENA,” Governance in the Middle East and North Africa, http://siteresources.worldbank.org/INTMENA/Publications/20261857/Overview.pdf (Accessed: 30 December 2009) 2-3.
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using its governance index based on evaluating quality of administration and public accountability, ranked the Middle East region last against other regions and groups of states. All states in the region scored particularly poorly in the public accountability index. The study claims that the governance gap for Middle East states can be directly related to the lack of per capita economic growth in the region.3 The challenge of strengthening governance in the Middle East is present in practically every state in the region. The lack of strong governance has negatively impacted the region in many developmental factors. The realization of the objectives of the MDGs, for example, could very well rely on states’ willingness to promote inclusiveness and accountability in their systems of governance. In addition to satisfying the demands of the MDGs, stronger governance can lead to further economic development, and increased private investment.4 The UNDP has taken multiple approaches to enabling states to form more democratic systems. The agency offers policy support to officials in charge of government administration, in order to direct states onto paths that have been proven to lead to increased efficiency in governance. The UNDP also assists with parliamentary development and electoral processes, a practice that guarantees a voice to all citizens by ensuring fair elections and proper representation in national legislatures. The UNDP has countered with programs aimed at educating citizens of their rights, in order to foster political involvement and civic action, as well as support for accountable public officials.5 While these programs address have seen success in regions such as Central America and Africa, the Middle East is still facing many obstacles. It is imperative that students evaluate how to best encourage good governance while respecting cultural and religious differences; it is important to evaluate the feasibility of a democracy in the Middle East and the measures needed to strengthen governance.
3
Ibid. Ibid. 5 The United Nations Development Programme 4
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Chronology 1901 – First Oil Contract Signed in the Middle East Some forty years after petroleum was first discovered in Pennsylvania, the Persian government signed a contract with an Englishman William D’Arcy, in what would become the first oil contract in Middle East history. In exchange for 20,000 British Pounds, and 16 per cent of profits, Persia granted D’Arcy access to its oil fields, beginning perhaps the greatest economic transformation in history.6 Of note, early oil reserves estimates suggested that Saudi Arabia had by far the largest inventory of oil in the world.
14 May 1948 – Israel Declares Independence After an unsettled, drawn out battle in the United Nations, Israel declared independence in 1948 with the foundation of the strongest Democracy in the region. While many thought a democratic Israel would encourage similar reforms in the rest of the region, the immediate invasion of Israel by its neighbors and the continuing ArabIsraeli conflict suggests that a quick transition to democracy is impossible.
1970s and 1980s – Jordanian Reforms In 1967 during the Six-Day War, and ensuing internal conflicts, Jordan lost control over the West Bank, and struggled to defeat Palestinian separatists seeking sovereign power. As a result, Jordanian King Hussein began the process that would dramatically alter the future of his country. In 1988 Jordan officially relinquished its claims to the West Bank, and a year later, reinstated the parliament. Further, in 1992, political parties were legalized, granting considerable government participation to the general population for the first time. Further signs of Jordanian reform can be seen in the 1994 peace treaty between Israel and Jordan.7
6 7
Yergin, Daniel. The Prize. New York: Simon & Schuster, 1991. “Jordan”. CIA World Factbook. https://www.cia.gov/library/publications/the-world-factbook/geos/jo.html
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June 2003 – Saudi Crown Prince Launches National Dialogues As a result of growing pressure from both domestic and international sources, Saudi Crown Prince Abdullah announced an initiative to address the concerns of these groups. Viewed by some as a token attempt to appease critics, the dialogues were successful in bringing often contradictory interests to the same table. For the first time, Sunni and Shi’ite Muslims were each given the opportunity to talk to government leaders in this Sunni kingdom.
The result of these conversations was a list of eighteen
recommendations, ranging from popular elections for local government officials, a separation of powers among the executive, legislative, and judicial branches, and efforts to modernize the economy.8 Among the loudest messages at these meetings was a call to transform the Saudi government to a constitutional monarchy. While the royal family appeared interested in promoting reform, there has been growing question as to the level of follow-through that will take place.
2006 – Hamas Democratically Elected to Lead Palestinians In 2006, much to the surprise of most Western governments, Hamas, a group considered to support, and sometimes to actively participate in terrorist attacks, was elected to rule the Palestinian state, in an election deemed to be “free and fair.” As a result, a group that had been founded on the basis of its efforts to destroy the state of Israel, now had sovereign power over the formerly Occupied Territories of the West Bank and Gaza Strip. Post-election analysis determined that Hamas had won the support of its voters, largely by providing the things that they needed – money, medical supplies and attention, and education.
Whereas the Palestinian Liberation Organization, the
previous leading power of the Palestinians, had focused on the establishment of peace with Israel, and did little to help the suffering of typical Palestinians, Hamas won over these individuals through its efforts to build community.
8
“Can Saudi Arabia Reform Itself?”, International Rescue Group, 20.
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Actors and Interests The important actors for economic growth vary greatly upon the nature of the individual state. While the independent business sector might be a critical economic engine in the United States where entrepreneurial activity is seen as a driving force to economic growth, the individual businessperson is not important in China, where a more authoritarian regime manipulates the economy to promotes its values. That said, in a state like China, the truly important actor is the state government, which has almost ultimate economic power, ranging from the manipulation of its exchange rate, to the establishment of safety standards in industry, to the allocation of resources to various sectors of the economy. A state with economic potential rely on efforts to maintain access to export markets, while floundering states might see the potential for prosperity through foreign aid. Effective governance is critical to the development of any state. In capitalistic markets, of which most of the Middle East tends to be, the free flow of capital is necessary to feed the engine of growth – the more this capital is lost to inefficiencies and corruption, the less there is available to expand economies, and to provide populations with the services that they need. As many Middle East countries have a significant factor of the economy in the oil sector, it would seem that development in the region would not be difficult. In practice, though, the staggering wealth brought about by oil exploitation seldom reaches the open market, and what does arrive there lacks the necessary structures and transparency to allow for true economic growth. When exploring effective economies throughout the world, a few important factors should be taken into consideration. First, economic stability relies upon political stability; states that survive without conflict are able to focus their resources on economic activity, instead of rebuilding infrastructure or financing conflict. Second, states with access to valuable resources have a significant advantage over those that do not. Indeed, there should be no question that a state like Saudi Arabia, with the world’s largest proven oil reserves, should have better potential for growth than a state like Gambia in West
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Africa, which relies almost entirely on the peanut export – a commodity that has consistently declined in value for the past decades. Third is a requirement for free access to capital and to markets. While governments can encourage certain sectors of the economy through tariffs and subsidies, there can be no substitute for true economic activity in the private sector. States with populations that have access to loans and other financing, and that are encouraged to pursue their entrepreneurial spirit will be the ones to grow the work force, and to build an economy based upon diverse factors, instead of singular exports. It is also important that states do not punish this economic activity through excessive and unfair taxation. Finally, and perhaps most controversially, states with democratic forms of government tend to correlate with those who see economic growth. If the general population has no power over activities of government, then it is unlikely that they will take and maintain an active stake in the growth of the economy. States that limit access of individuals from political activities tend to be those that control every aspect of economic production. This government control then tends to impede on the free flow of capital, goods, and entrepreneurialism, while doing little more than further entrenching the governing bodies. When assessing the potential of a state for economic growth, it is important to assess their current position based upon the above factors. Those who succeed in these areas are more likely to experience periods of economic growth and prosperity. Those that suffer unrest, or that limit the ability of individual businessmen and women are less likely to build a broad-based economy, and instead will suffer from severe boom and bust cycles – for a state dependent upon oil, the economy can expand tremendously when the price of oil increases, but when it drops, the state has little power to intervene, and can suffer severe economic ramifications at the hands of other states
Government Entities Perhaps the most important factor to consider when focusing on economic growth is the manner in which the government functions. In the Middle East, there is significant
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difference in the manner in which governments function. Israel is a stable democracy in which leaders are elected and serve pre-determined terms. As the ideological pendulum shifts, so do the economic and social policies of the government. Compare the free democratic system of Israel with that of Saudi Arabia, and the differences are staggering. Whereas Israelis elect their leaders, the Kingdom of Saudi Arabia relies upon the support of the royal family, the House of Saud, which has been in power ever since Saudi Arabia’s unification in 1932. Lebanon In 1920, France proclaimed that it had control over Greater Lebanon, in an area very similar to today’s borders, and six years later, the Lebanese passed a constitution based upon that of their colonial master.9 This constitution, ahead of its time in the region, called for a parliament, a president, and a cabinet. The parliament, which was popularly elected, would elect the president to lead the state.
After predominantly
friendly relations with the French, Lebanon was declared independent in 1941, although the French remained very active in governance.
In 1943, a democratically elected
government in Lebanon amended its constitution, formally ending the French mandate over their territory.
The French responded by arresting government leaders, but
acquiesced later that same year.
Despite the tension, the French built considerable
infrastructure throughout the country, and is seen as being pivotal to the future success of the state.
Lebanon would remain peaceful and prosperous until 1970 – often being
referred to as the “Switzerland of the Middle East”, and its capital Beirut was the “Paris of the Middle East.” In a region fraught with poverty and despair, a stable Lebanon was seen as the political leader in the region. On 8 August 1973, Syrian dictator Hafez Assad declared his intention to annex Lebanon, in an attempt to rescue Syria’s own floundering economy. By annexing a successful state, Assad sought to exploit the successful economy while further 9
History of Lebanon, Lebanese Global Information Center. http://www.lgic.org/en/history_lebanon1516.php
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entrenching himself as a strong political leader in the region. The 1970s saw a variety of conflicts in Lebanon with various other Middle Eastern states, and due to infiltration by the Palestinian Liberation Organization. The once successful Lebanese state was now ravaged by war – in 1972, real GDP grew by 12.2%, and by 1983, economic activity was shrinking at a rate of 36.3%. Per capita GDP, which one should expect to at least pace inflation, during that period increased just 12%, instead of the expected 30%.10 Saudi Arabia Along with Egypt, Saudi Arabia is considered one of the strongest, most stable powers in the Middle East. Unlike the democratic prosperity found in Lebanon during the post-World War II period, Saudi Arabia has never seen democratic governance. When the state was unified in 1932, the House of Saud became the royal family in charge of Saudi government affairs. In the early years, all government affairs were managed by Saudi King Ibn Saud, the founder of the modern Saudi state. The king appoints all government ministers who serve at his pleasure, and the most important ministries, Defense, Interior (with control over oil fields), and Foreign Affairs are reserved for direct members of the royal family. Lesser ministerial appointments are typically given to commoners, although their efforts are closely monitored by members of the Saud family. This system has served the Kingdom well, as Saudi Arabia has seen peace and prosperity for decades. There are problems with this system, however. Due to the close nature of the royal family and government, ministers have been accused of mingling state and personal assets, using state funds as if they were their own, and have appointed their sons to important positions in the ministry. There have been royal abuses of government funds, property rights and contracts. Royal influence has also abused civil and criminal justice procedure, both against Saudis and foreign businessmen. Various princes have use their influence to obtain shares of private businesses and the profits from oil sales and state-financed corporations. They have interfered or profiteered in contract awards, the allocation of money from oil sales, offest programs, and contracts for the delivery of arms imports 10
International Monetary Fund. World Economic Outlook: Lebanon. Available at http://www.imf.org.
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It is not uncommon for ministers to appoint brothers when their ministry has a significant budget or influence – both to share the burden of the work, but also seemingly to reap financial benefit. Since 1932, Saudi Arabia has had three kings – the transition from one to another being peaceful each time, largely due to the absolute monopoly of power maintained by the royal family. Moreover, princes like Bandar bin Sultan, although with no official government title, have significant over government policy and implementation. In addition, while the royal family has spent the last seventy years consolidating and increasing its power, the life of the average Saudi national has suffered. While per capita GDP peaked in 1981 at some USD $18,000, it fell to just USD $8,424 in 2002.12 In a disturbing study, the Saudi workforce is expected to increase from 3.3 million in 2000 to 8.3 million in 2020 – compounding on Saudi Arabia’s already troublesome 30 per cent unemployment rate.13 While the Saudi government has garnered great criticism for its management of government affairs and its social positions, it has seen great success over the years. The royal family has remained strongly in power, and has been able to resist calls for economic and social reform. The oil sector has continued to expand, and it maintains strong support in the West from allies like the United States. What the royal family has been unable to control, however, is the growing extremism taking place within its borders. Some nineteen of twenty-one hijackers from the terrorist attacks of 11 September 2001 were Saudi nationals, and a longstanding open border with Yemen to the South has led to almost unfettered access to the kingdom by extremist groups. There is growing concern that an already suffering Saudi population is beginning to see extremist forces as closer aligned with their interests than is the long-serving Saudi royal family.
Oil It is no surprise that oil is the driving force between much political, economic, and social activity in the Middle East. But the challenge of oil in the region is that not every state has this lucrative commodity. States that have been exploiting oil fields for years 11
Anthony H. Cordesman, Saudi Arabia Enters the Twenty-First Century, (Westport, 2003), p.142 “Can Saudi Arabia Reform Itself?”, International Rescue Group. P 15. 13 Saudi American Bank, "Saudi Arabia Employment Profile", October 2002, p. 21. 12
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have seen considerable finances flow into their systems, however this money is seldom dutifully brought into the broader economy. As can be seen during the first stages of the American invasion of Iraq in 2003, the preponderance money garnered from the oil sector manages to find its way into the hands of small, ruling populations. Instead of sharing the money earned from oil exports, former Iraqi leader Saddam Hussein built monolithic palaces throughout the country.
Rather than fulfill the needs of their suffering
populations, Middle Eastern despots have a long history of spending money to promote their own power, building larger palaces, statues of rulers, and other efforts to develop a cult of personality. The developed world is dependent upon oil, and there is no doubt that Middle Eastern governments have prospered from the discovery of oil under their territory. In January 1970, oil sold for just USD $1.80 per gallon and peaked in 2008 at USD $127.77, meaning that billions of dollars were earned every day by the various sectors of the oil industry.14
The problem is that very little of this money made its way to address
domestic policy issues. Moreover, the price of oil fluctuates dramatically. Whereas oil peaked at over USD $100 in 2008, it traded as low as USD $38 in early 2009, meaning a significant drop in available finances for government initiatives. While high oil prices did little to support the needs of a poverty-stricken population, low oil prices are an even larger threat: billions of dollars of building projects have been suspended or canceled, meaning that job creation and investment is no longer possible.15 Unemployment before the 2009 economic crisis was believed to average around 15 per cent for the bulk of the Middle East, and joblessness for the 15-24 age bracket was thought to be double that, according to Amat Alsowa, head of the United Nations Development Programme Middle East Regional Office. Some 20% of Egyptians live below the poverty line of just USD $2 per day. As food and commodity prices continue to rise, the purchasing power of the 14
“EIA World Nominal Price Chronology: 1970-2009”, U.S. Energy Information Administration. http://tonto.eia.doe.gov/country/timeline/oil_chronology.cfm 15 “The New Danger in the Middle East,” Jamal Dajani. http://www.huffingtonpost.com/jamal-dajani/the-newdanger-in-the-mid_b_166696.html.
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typical Middle Eastern inhabitant continues to decline, putting more pressure on governments and international aid organizations to promote true and meaningful reform.
Possible Causes Corruption One highly notable factor that facilitates weak governance is corruption. It can be found on practically all levels, and quite substantially within developing nations. While all states face certain degrees of corruption, states that are struggling to develop socially and economically are particularly inundated by corruption. The complex, bureaucratic structures of public administration systems in developing states allow them to become breeding grounds for corruption.16 In poorer countries, the practice of patrimonialism is common. This phenomenon occurs when political and administrative positions are essentially “bought” buy those with economic power. This is itself a form of corruption. By rewarding public offices to wealthy bidders, rather than qualified applicants, the efficiency of governance systems is significantly undermined. Often times, it is locally known and accepted that these positions are determined by monetary incentives, rather than a fair selection process. This complacency by the public ultimately allows the corruption to continue, unhindered. Another factor that contributes to corruption is the low pay of civil service positions in developing nations. As wages are typically low, due constraints on spending, officials will commonly resort to petty corruption as a means of increasing their income. For this reason, jobs in public administration can be highly sought after in developing states, as kickbacks paid to corrupt officials can be highly lucrative. Stagnant private economies raise interest in public employment, which in turn leads to more corruption, inefficiency, and further debilitates the development of local economies.17 16
Irene Hors, “Fighting Corruption in the Developing Countries,” OECD Observer, No. 220, April 2000. http://www.oecdobserver.org/news/fullstory.php/aid/291/Fighting_corruption_in_the_developing_countries.html (Accessed: 4 February 2010). 17 Ibid.
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The scenario just introduced leads to a conundrum of establishing progressive development. Weak economies can negatively affect the efficiency of governance, while corrupt, unaccountable governance stymies the development of the economic sector. As both institutions are reciprocally influenced by one another, it makes finding a starting point for remediation particularly challenging. However, due to this reciprocal relationship, it means that any enhancement of the one sector should positively impact the other.
Centralization of Government Another cause of weak governance, which relates to corruption, is centralization of government. The most democratic forms of government are those that have been found to dispense governance evenly among the populace, allowing for local control and representation. States with stronger, central governments tend to be less transparent, unaccountable, repressive of civil liberties, and ineffective at delivering civil services to citizens. When officials are chosen by a central government, rather than a local populace, corruption is more likely to occur.18 Citizens living in states where governance is centralized can often feel alienated and disenfranchised. Many do not understand the functions of their government and civil administrations, and thus choose not to involve themselves. When locals have little to no participation or political voice in their public administrations, their ability to utilize them is notably strained. They are unfamiliar with their government-appointed administrators, and likewise these officials are not responsive to the needs of the local population. Centrality of government limits the extent to which citizens can exercise their civil liberties. In many cases, significant numbers of citizens are not even aware of what rights they might have. By delegating significant degrees of governance to local populations,
18
Pranab Bardhan and Dilip Mookherjee, “Corruption and Decentralization of Infrastructure Delivery in Developing Countries,� http://grade.org.pe/eventos/lacea/papers/ddinf1.pdf (Accessed: 4 February 2010).
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governments can potentially expand political participation, and ultimately achieve a more stable, democratic level of governance, which is crucial to development.19
Lack of Resources Perhaps the most encompassing cause of weakened governance, lack of resources offers many different challenges to development. In any developing state, lack of a particular resource or in many cases numerous resources is the direct cause of slow development. Furthermore, the government and public administrations of developing states are strained by minimal resources. The resources that are lacking can typically range from material or technological resources, to human resources, and perhaps most significantly, intellectual resources. A lack of education and general knowledge of governance in many populations of developing states significantly hinders democratic processes from taking place. Modern telecommunications and media are not widely found in developing states, preventing many citizens from accessing information that could help them achieve political solidarity within their communities. A general ignorance of government and public administration by poorer citizens keeps legitimate progress from being made.20 Many of these states are unable to create significant change within their governance structures without outside assistance. Due to the corruption and negligence of central governments and the lack of information being received and synthesized by citizens, internal change faces insurmountable challenges. However, external aid efforts and programs by the UNDP and other organizations such as the World Bank offer solutions to developing the resources needed for establishing a strong, sustainable economy, and an efficient, responsive government.
19 20
Ibid. Hors.
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Projections and Implications Despite its myriad problems related to governance, the Middle East has survived the vicissitudes of economic turbulence. Since achieving independence beginning in the 1930s, Middle Eastern governments have largely been stable, as most have been led by despots or dictators. With absolute power comes the ability of individuals to stay in power despite considerable odds. Civil war and petro-imperialism have caused much destruction and despair, and for the most part, oil revenues continue to finance the lifestyles of ruling families, and not the broader population. While this system seems to have worked in the past, there is growing evidence than a failure to reform will put the entire region in peril.
Falling Oil Inventories Between 2002 and 2007 oil prices soared from just above USD $20 to just below USD $70 suggesting that royalties gained from exploiting oil fields were almost without bound. It would seem that a state with considerable oil reserves would seek to flood the market to take advantage of the high price, in an attempt to shift the equilibrium price of oil higher. Strangely, though, during that same period, Saudi oil exports spiked from some 7 million barrels per day to just below 9.5 billion, before settling at just 8.5 million per day.
If the market was surging, there is little economic support for a country
decreasing its exports. Moreover, records of the number of active oil rigs increased steadily during that period, meaning that the productivity of each well head was declining.21 While there are arguments that the challenging political climate of the Middle East and relations with the Organization of Petroleum Exporting States (OPEC) call for dramatic shifts in oil production, there is growing belief that Saudi Arabia’s dominant Ghawar oil field is in decline. This decline is not limited just to Saudi Arabia. According to estimates the world’s seventeen largest oil-producing states have about
21
“Running Dry”., James Hamilton. The Atlantic Monthly, October 2007.
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1,243 billion barrels of proven oil reserves, but at a production rate of some 63.5 million barrels per day, these oil reserves will run out in just 54 years.22,23
Increasing Tensions A problem not unique to the Middle East is the rise of extremism that has plagued most of the world for the past decade. Whether it is the known terror networks such as Al Qaeda or Abu Sayyaf, the much smaller ETA or Hamas, or even the more local movements like those plaguing states like Somalia, extremism is on the rise, and even the strongest governments are facing new challenges – regardless of their ideological beliefs. The Kingdom of Saudi Arabia has seen peace and prosperity for nearly eighty years, however there is evidence that struggles are brewing just beneath the surface. Whether it is the terrorist hijackers who were Saudi nationals, or the states perceived support of native son Osama bin Laden, the royal family is seemingly not in total control. Yemen, a U.S. ally with a strong central government lacks meaningful influence in tribal regions. These areas rely upon tribal leaders, instead of elected or formally recognized officials. In respond to growing stress on the Arabian Peninsula Saudi Arabia has recently begun building a fence along its previously unsecured southern border. While extremism is an obvious cause for concern among Middle Eastern states seeking to continue in power, another growing concern is the rise of oppressed populations. In Iraq, the formerly shunned Kurdish population is asserting increased sovereignty over its territory in northern Iraq. While still part of the fledgling state of Iraq, Kurds have long sought control over their homeland, and over oil resources exploited there. Their recent efforts at independence, or at the very least, increased sovereignty, neighboring states have become concerned about the potential for unrest. States like Turkey and Syria are concerned that a concerted independence movement from the Kurds could erupt into armed conflict within and along their borders.
22
PennWell Corporation, Oil & Gas Journal, Vol. 105.48 (December 24, 2007 This estimate is a little deceiving – it assumes that the world can continue to pump oil at a rate of 63.5 million barrels a day, but the rates at which states will run out of oil varies. For example, Mexico is expected to run out of oil around 2016, while Canada is believed to have almost 150 years worth of oil available to be exploited. The end of Mexico’s 3.5 million barrels a day of production does not imply an increase in other states. 23
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Perceptions of Instability The story of the Middle East is not restricted to the control over oil, or the governance of royal families.
The long-running Arab-Israeli conflict has brought
continual stress to the region. The potential for economic growth is not dependent solely upon transparent and effective governance – the potential for armed conflict, whether it be civil or interstate warfare can cripple even the strongest economy. As can be seen from Lebanon, even a strong state can suffer from prolonged conflagration. Foreign investment, long considered the only solution to the economic development concerns of the Middle East can be fickle. Investors, while sometimes magnanimous, typically seek a return on their financial commitments. While some seek opportunities to bring jobs to a previously depressed region, most will look to make money on their endeavors.
The challenge of the Middle East is the perception of
instability. While a government might not hesitate to invest money in a stable country like Australia or Hungary, they might have second thoughts about investing significant sums of money in areas where they fear a loss of their investment. The Arab-Israeli conflict has been bringing stress to the region for some seventy years with just a few periods in which bullets were being fired, however the recent conflict between Israel and Hezbollah in Lebanon proved that it could become a shooting war at virtually any time. The ongoing struggles of the Palestinian people to establish their own homeland and support their own economy has shown that the conflict is not limited to the Occupied Territories. Recent riots in Egypt, Jordan, and Syria indicate the economic stability can be disrupted by outside influences, quite often out of the control of a given state. Perhaps the strongest deterrent to investment in the Middle East revolves around recent saber-rattling with Iran. A recently declared nuclear state, Iran and Israel have been lobbing threats to each other, suggesting that a tactical attack or full-scale war might be on the horizon. The tension is not limited to the Middle East, however: there is growing concern among the world’s strongest powers about Iran’s ability to enrich Uranium. While most states have stressed diplomatic efforts and the use of economic
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sanctions, virtually all have indicated their position that Iran cannot develop nuclear weapons technology. As this potential for conflict remains, states and corporate interests that might otherwise invest in the region may reconsider their intentions.
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Conclusion Development in the Middle East has long been a complicated issue. While the region has the potential to be one of the richest in the world, the inability of Middle Eastern governments to transfer even some of this wealth to their populations has resulted in decades of marginal economic growth, leading to poverty, instability, and social unrest. Despite increasing oil prices, unemployment rates ranging from 15 to 30 per cent represent some of the highest in the world, and growing concerns about the depletion of oil inventories suggest more trouble is on the horizon. The trouble with the Middle East is not, however, limited to the ups and downs of oil. Almost since its history began, states in the Middle East have suffered from crippling corruption. Until these issues are addressed, the economic potential of the region cannot be realized.
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Discussion Questions •
Is oil the cause or the answer to the problems in the Middle East?
•
What are the strongest forces withholding reform in the Middle East? Dictators and royal families? Extreme poverty? Importance of oil?
•
When corrupt government officials are the ones in power, what can be done to reform the system? How can the United Nations ensure that the needs of poverty-stricken populations are being provided?
•
In order to grow the economy, should states in the Middle East focus first on reducing corruption or on developing new products for export?
•
Can foreign direct investment or foreign aid solve this problem? Has foreign aid worked in the past?
•
While the situation in the Middle East is largely stable now, what will happen once oil starts to run out?
•
What can be done to limit the influence of extremist groups? Should the United Nations promote efforts by the United States and other Western states to grow the military and police potential of governing powers, or should more be done to win the “hearts and minds” of these disenfranchised populations?
•
Is economic growth and sustainability realistic?
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Bibliography For Further Reading “Can Saudi Arabia Reform Itself?”, Middle East Report, International Crisis Group. 1 July 2004. Saudi Arabia is often considered as having the best chance of meaningful reform in the Middle East. This study examines recent efforts at reform from both internal and external forces, and accesses progress made by the Saudi royal family. It also provides a list of recommendations for the Saudi government to best proceed. “About the Democratic Governance Practice”. United Nations Development Programme. http://www.undp.org/governance/about.htm Important insight into what the United Nations Development Programme seeks to do in terms of democratic governance. Annual Report 2007. Democratic Governance Group, United Nations Development Programme. http://content.undp.org/go/newsroom/updates/gov-wwwhome/DGG2007.en A report on the initiatives undertaken by the UNDP to promote democratic governance reform. Assesses success and failures of these efforts, and provides UNDP’s focus for the future.
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Works Cited Bardhan, Pranab and Dilip Mookherjee, “Corruption and Decentralization of Infrastructure Delivery in Developing Countries,” http://grade.org.pe/eventos/lacea/papers/ddinf1.pdf (Accessed: 4 February 2010). “Can Saudi Arabia Reform Itself?”, Middle East Report, International Crisis Group. 1 July 2004. Cordesman, Anthony H. Saudi Arabia Enters the Twenty-First Century, (Westport, 2003). “EIA World Nominal Price Chronology: 1970-2009”, U.S. Energy Information Administration. http://tonto.eia.doe.gov/country/timeline/oil_chronology.cfm History of Lebanon, Lebanese Global Information Center. http://www.lgic.org/en/history_lebanon1516.php Hors, Irene. “Fighting Corruption in the Developing Countries,” OECD Observer, No. 220, April 2000. http://www.oecdobserver.org/news/fullstory.php/aid/291/Fighting_corruption_in_t he_developing_countries.html (Accessed: 4 February 2010). International Monetary Fund. World Economic Outlook: Lebanon. Available at http://www.imf.org. “Jordan”. CIA World Factbook. https://www.cia.gov/library/publications/the-worldfactbook/geos/jo.html “The New Danger in the Middle East,” Jamal Dajani. http://www.huffingtonpost.com/jamal-dajani/the-new-danger-in-themid_b_166696.html. PennWell Corporation, Oil & Gas Journal, Vol. 105.48, December 24, 2007. “Running Dry”., James Hamilton. The Atlantic Monthly, October 2007. Saudi American Bank, "Saudi Arabia Employment Profile", October 2002.
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The United Nations Development Programme, “Democratic Governance: Overview,” http://www.undp.org/governance/about.htm (Accessed: 2 December 2009). The World Bank, “Enhancing Governance in MENA,” Governance in the Middle East and North Africa, http://siteresources.worldbank.org/INTMENA/Publications/20261857/Overview.p df (Accessed: 30 December 2009) 2-3. Yergin, Daniel. The Prize. New York: Simon & Schuster, 1991.
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