Tuesday, June 30, 2020

A Specter is Haunting the Arab World: the Threat of Failed States شبح يلاحق العالم العربي: تهديد الدول الفاشلة

Arab states are facing unprecedented threats to their stability.  Economic challenges, civil strife, environmental degradation, authoritarian, corrupt and ineffective governance and a global health pandemic.  What do these challenges tell us about the future of the Arab world and what efforts are being made to address them?

What do we mean by a failed state?  Clearly, the collapse of the central government is at the core of state failure. However, citizens’ loss of trust in their government produces a loss of legitimacy, deep disaffection with social services and their standard of living and a lack of hope about future aspiration all point to many “quasi-failed states” and the possibility of future collapse.

Using a 5 point scale, we can rank Arab states as having become failed states or facing that prospect in the foreseeable future.  If 5 represents the worse-case scenario, then Libya and Yemen already qualify as having collapsed, politically, socially and economically. Neither has a central government, and both are rent with sharp political cleavages and internal conflict which shows no sign of abating anytime soon.

Syria does not face as dire situation as Libya and Yemen.  However, after 8 years of civil war, the country is bankrupt as its currency is virtually worthless and its economy is in tatters, much of the country’s cities and infrastructure has been destroyed, and deep divisions plague its social fabric. President Bashar al-Asad seems determined to follow a “scorched earth” policy even if leads to Syria’s complete destruction.

Neighboring Lebanon has seen a state-sponsored Ponzi scheme, which was used to fund the country over many years, collapse, causing inflation to spire out of control. Lebanon’s political elite is deeply divided and neither able to address the political or economic challenges facing the country.  Much of its highly-educated citizens, especially the young, have already fled and migrated to other Arab countries or the West.

Other countries in the region also face serious challenges, not only economic but environmental.  Egypt’s tourist sector, which at its peak in 2010 comprised 11% of GDP and employed 12% of the population, had been suffering through 2016.  The Arab Spring uprising of 2011 and attacks on tourists in the Red Sea area by an ISIS affiliate in the Sinai Peninsula led to a serious drop in visitors to the country iconic cultural sites.  By 2019, just Egypt had recouped its 2010 level of tourist visitors, the tourist industry collapse once again due to the Covid-19 pandemic.

Egypt faces a more existential environmental crisis resulting from Ethiopia’s decision to build the Grand Ethiopian Renaissance Dam which it fears would deprive it of Nile River waters which are critical to its ability to survive as a nation-state.  Egyptian farmers could be adversely affected by a decline in water availability. Because Egypt’s continues to experience rapid population growth, which intrudes on agricultural farmland, the long term fear is feeding its population.  Although only 6% of Egypt’s population currently faces the problem of “water stress,” the government estimates 25% of its agricultural population would be adversely affected by the filling of the Renaissance Dam

Jordan and Palestine (the PNA) likewise face a potential water crisis as the aquifer on which they depends is controlled by Israel and is being depleted.  Jordan has one of the highest indices of “water stress” of any Arab state which affects 87% of its population.  Gaza, which has no desalinization plant, faces both water shortages and sewerage processing problems. 

Still another group of Arab states are facing economic problems due to the precipitous drop in the global price of oil.  Although oil prices have recovered from their lows of $10/bbl last month and were hovering around $40/bbl at the time of this writing, they are still too low for countries like Iraq and Algeria which depend on them to finance their national budgets.

Iraq requires a price of at least $60/bbl to meet its budgetary needs. Both the Federal Government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil employ 65% of the workforce.  Recently, the new government of Prime Minister Mustafa al-Kadhimi  was forced to take a loan to meet government salaries this June. While “double salaries” and the extravagant benefit packages enjoyed by members of parliament and high level government officials are to be cut, there is strong resistance to al-Kadhimi’s proposed moves.

Algeria is also suffering from declining oil prices.  A price of $30/bbl would cut its GDP by 22%.  According to the World Bank, Algeria’s GDP is expected to experience a negative growth rate of -3%.  Like Egypt, Iraq and Syria, Algeria suffers from a bloated and inefficient public sector and weak government support for private sector development.  Human resources are wasted as women and youth fail to receive state support to develop entrepreneurial ventures which could offset stagnant public sector growth in the future.

Tunisia is one of the Arab world’s bone fide democracies, perhaps the only one worthy of that title.  It is resource poor and has always depended on European tourism, like another North African state, namely Morocco.  Many Tunisian youth have soured on democracy because they don’t see the economic benefit they expected from the ouster of the authoritarian ruler, Zein al-Din Ben Ali in early 2011. Youth unemployment is high, and the country still faces a social and economic cleavage between the more prosperous, and often Francophone, population on the country’s coast and the poorer segments of the interior who struggle to make ends meet.

We might place Egypt between 3 and 4 in the category of potential failed states, especially since the al-Sisi regime has done little to offset the negative impact of the Covid-19 virus. Iraq, Algeria, and Tunisia, on the other hand, should be placed in the 3 category. Will they be able to ride out the current health pandemic? And will they be able to use the pandemic as an argument to make inroads in the fight against corruption.

Saudi Arabia and the Arab Gulf States will be able to weather the dual challenge of falling oil prices and the corona virus.  However, Saudi Arabia is still mired down in its war with the Houthi rebels in Yemen who continue to confront its facilities with rocket attacks.  The tourist industry envisioned by Crown Prince Muhammad Bin Salman is on hold and the kingdom has bene forced to drastically cut the number of pilgrims. Bin Salman’s Vision 2030, which seeks to diversify the economy and move it away from oil dependency, is facing serious challenges.

For the Arab Gulf states, which have small populations, the ability to bring necessary labor from South Asia and East Asia as it has done in the past, will be severely constrained by the downturn of the global economy. Dubai’s role as a global financial hub is likely to see much of its capital resources dissipate.  These states also will face growing environmental problems as temperatures in the Gulf rise into the 60 degree Celsius range as we move towards 2050 which will limit human behavior during the heat of the mid-day.

What can Arab states do to offset the economic, environmental and health threats which they confront?  How can they avoid following in the path of Yemen, Libya, Syria and Lebanon?  First, these countries require honest leadership.  Such leadership is sorely lacking throughout the Arab world.  Perhaps one positive sign is the appointment of Mustafa al-Kadhimi this past May to become Iraq’s prime minister. Already, al-Kadhimi has been straightforward with Iraq’s citizenry, earning him a high degree of respect which he will need to make hard decisions regarding Iraq’s economic woes.

Second, Arab leaders need to tap into the human resources which have been largely sidelined in most Arab states. Women, who often comprise up to 70% of university student populations, have been largely neglected in the process of economic development.  Likewise, youth, who constitute 70% of the population under the age of 39 in many Arab countries, lack resources to begin businesses and social entrepreneurial ventures.

Third, corruption must be tackled.  Lebanon is the poster child of a country which went off the rails in large measure due to massive corruption, which existed well before the refugee crisis caused by the Syrian civil war.  Only Mustafa al-Kadhimi has made corruption a central issue in his effort to bring it under control in Iraq, which ranks as 169 of 174 on Transparency International’s list of the world’s most corrupt countries. 

Fourth, environmental challenges have to be addressed head on.  Much of the water scarcity in the Middle East is not as much a function of droughts and  declining sources, but also caused by the lack of water management programs implemented by Arab states.  If the state could use education and a form of the US’ agriculture extension agents who help farmers learn how to conserve water, positive change could be made in this area.

Greater use of solar energy, as we already seeing in Egypt and Morocco, and the use of wind, for example in the Atlas mountains, the Lebanese mountains and the mountains of Iraq’s KRG could offer cheap and abundant energy, reduce pollution, provide new areas of employment, and promote greater technological innovation in the Arab world.

Finally, the Arab world needs to take economic cooperation seriously.  The Gulf Cooperation Council has yet to fulfill this need but does suggest how regional bodies could be used to begin the process. hopefully creating the functional equivalent resembling the European Economic Community in the near future.