Since taking office four years ago, President George W. Bush has often spoken of the need for political reform in the Arab world. Ordinary Arabs, however, have had good reason to be skeptical of his much-discussed "forward strategy of freedom in the Middle East." After all, their region has been mired in political stasis for years, thanks in part to U.S. support for many of the Middle East's dictators. For most of the last five decades, Washington has done little to promote Arab democratization, relying instead on the autocratic leaders of Egypt, Saudi Arabia, and other countries to help protect vital U.S. interests in the neighborhood.

This skepticism, however, may no longer be warranted. On the morning of September 11, 2001, U.S. priorities in the Middle East changed. Suddenly, the Bush administration came to see democratization, which it had previously ranked below security and stability in its list of concerns for the Arab world, as the critical means by which to achieve these other goals. Indeed, the toppling of the World Trade Center and the attack on the Pentagon fundamentally shifted the underlying assumption of U.S. Middle East policy. Arab authoritarianism could no longer be viewed as a source of stability; instead, it was the primary threat to it. To "drain the swamp" that had incubated Islamist radicals such as Osama bin Laden, it became critical to promote political liberalization, even democratization, in the Middle East, and this goal became a central feature of U.S. national security policy.

Even before this shift, Washington had already begun to try to promote reform in the Middle East--albeit quietly, and never with anything like Bush's rhetorical zeal or fixation on democracy. The United States had, in recent years, pursued three different approaches toward the Arab world: punishing its enemies with diplomatic isolation, sanctions, and invasion; bolstering civil society; and promoting economic development in friendly states. Assuming that these last two tactics would gently drive political liberalization, the United States funded good-governance programs in Egypt, promoted industrial zones in Jordan, and provided various forms of economic assistance to the Palestinian Authority and, more recently, Yemen.

Unfortunately, none of these policies proved very effective, and the failure of the United States to generate political reform in the Arab world before now should serve as a source of caution. Washington's poor track record, however, must not dissuade U.S. policymakers from trying again; the cost would simply be too high. Although the process may be difficult and fraught with risk, promoting the rise of liberal democratic political systems in the Arab world is the only way to reduce, over the long run, the odds of another attack on Americans by Middle Eastern terrorists. It is time, therefore, for Washington to refocus on the challenge: How can it best foster an environment in the Middle East that is conducive to reform? And how can it do so without sacrificing its key interests?

To answer these questions, U.S. policymakers need first to consider what exactly hinders Arab political development, and then to think about what will convince Arab leaders to change. As they build a new strategy, one principle should guide U.S. leaders: punitive policies have proven, time and again, to be of limited value or even counterproductive. Washington needs, instead, to adopt an incentive-based approach, one that will lead Arab countries to fundamentally revise their institutions.


If the United States hopes to craft a more successful pro-democracy strategy for the Middle East, U.S. officials will have to abandon two central tenets of their past and present approach: reliance on civil society and pressure for economic reform, both of which, it has long been thought, contribute to democratization in authoritarian states.

"Civil society" is political science shorthand for private voluntary groups, including nongovernmental organizations dedicated to issues such as human rights and good governance. Within both the scholarly and policy communities, civil society is often seen these days as a leading force for democratization. As such groups proliferate, the argument runs, individuals become more assertive in demanding their political rights. Once these demands reach a certain pitch, authoritarian leaders are forced to make meaningful changes or risk being swept away. The policy implications of this theory are neat and tidy: to encourage liberalization in repressive states, simply encourage the growth of civil society.

This philosophy has, in fact, been the lodestar of U.S. democratization policy toward the Middle East for some time. One of the primary goals of the Middle East Partnership Initiative (MEPI), launched by the Bush administration in 2002, is to "strengthen democratic practices and civil society." Throughout the 1990s, in addition to providing much-needed technical and economic assistance to friendly Arab countries, the U.S. Agency for International Development (USAID) pursued programs to encourage the development of civic groups in Egypt, Jordan, and the Palestinian territories. Federally funded U.S. organizations such as the National Democratic Institute and the International Republican Institute also worked hard to do the same.

The U.S. faith in civil society dates from the end of the Cold War, when such groups played a major role in toppling communist regimes in the Soviet Union and Eastern Europe. Unfortunately, however, there is little evidence to suggest that such groups are likely to play a similar role in the Arab world today. To begin with, although many Arab countries are already awash in civic organizations (according to one study conducted in the late 1990s, Egypt alone boasts some 19,000 of them), these countries remain oppressive. Civil society in Arab countries may provide critical social services, such as medical care, education, and legal representation, but many of the groups involved, such as those affiliated with radical Islamist movements, are decidedly undemocratic. Others have proven too willing to cooperate with local nondemocratic regimes: Egyptian human rights activists, for example, serve on the government-created Egyptian National Council for Human Rights, which has no power to compel the government to change its predatory practices and serves only as window dressing. Likewise, in Algeria, Syria, Tunisia, and other Arab countries, labor unions and business organizations enjoy government patronage in return for collaboration with the state.

Washington's effort to promote democracy through civil society has run into another problem as well, one related to the United States' dismal image in the Arab world. Put simply, many local activists refuse to work with Americans. Washington's policies toward the region--from the Iraq war and the war on terrorism to its support for Israel--are so unpopular that Arab activists cannot embrace the United States, or even be seen to cooperate with it, without compromising their credibility within the communities they serve.

Washington's second major misapprehension about how to spur democracy--through economic development--stems from a confusion of correlation with causation. Economic development and democratization may in fact often go hand in hand, but this does not mean that the former causes the latter. In fact, social science research indicates that, although economic growth is critical to sustaining democracy, it is not enough to create it. Yet Washington acts as though it is: programs run by the Partnership for Progress (an initiative by the G-8 group of highly industrialized countries plus Russia to promote political change in the Middle East), MEPI, and USAID are all predicated on the assumption that economic development produces new entrepreneurs, who inevitably demand greater political openness.

The Middle East, however, has refused to conform to this model. Whenever Arab leaders have reformed their economies--as during Egypt's much-vaunted infitah (opening) in the late 1970s or Algeria's version of the same in the 1980s--the result has been economic liberalization without either the institutionalization of market economies or the emergence of democracy. As expected, economic development has given rise to new classes of entrepreneurs. But these business leaders, whose fortunes have remained tied largely to the state, have been easily co-opted by local repressive regimes.

Not only have these two approaches failed to achieve the intended result in the Middle East, so have Washington's more punitive alternatives. Over the last decade, the United States has subjected Libya, Iran, and, most famously, Iraq to military, economic, and diplomatic sanctions in an effort to contain their rogue governments and, it was hoped, to compel them to alter their behavior. Although one can argue that containment stopped some problems from getting worse and even helped produce positive results in some cases (such as Libya's move away from radicalism), it cannot be said that punitive measures (short of invasion) actually resulted in any political liberalization. In fact, sanctions have tended to be counterproductive, with Saddam Hussein having been particularly adept at manipulating them to stoke nationalist resentment and rally Iraqis behind his regime.

Of course, the ultimate punitive policy instrument is war, and, as its code name suggests, "Operation Iraqi Freedom" was, among other things, intended to bring democracy to Iraq and the greater Middle East. It is far from clear, however, that the war has contributed anything to the drive for democracy in places such as Amman, Cairo, Damascus, or Riyadh. The arrival of U.S. troops in Iraq may alter the behavior of some states on the country's borders, but this does not mean that the new Iraq will somehow act as a catalyst for political liberalization and democracy in the region. In fact, as security in Iraq continues to deteriorate, many Iraqis are starting to think fondly of the benefits--such as stability and order--that a strongman can provide. With Iraq's transformation into an ostensibly liberal pluralist state growing ever bloodier, democracy--imported at the tip of an m-16 rifle--is looking less and less appealing to many Arabs.

Punitive measures have been no more successful with U.S. allies in the region. Congress, under the prodding of Representative Tom Lantos (D-Calif.), has recently considered measures such as shifting $325 million of the funds currently given to Egypt for military assistance to economic support. Rather than prompt reform, however, the proposal has caused an uproar in Cairo, with Hosni Mubarak's government portraying the measure as a cut in U.S. aid designed to weaken Egypt. (The fact that Lantos is a long-time supporter of Israel and did not propose similar cuts to Jerusalem's aid package did not help.)


The reason that the promotion of civil society, economic development, and sanctions have not led to political reform in the Arab world is that none of them addresses the real obstacles to change in the region: flawed institutions. Institutions are the organizations, arrangements, laws, decrees, and regulations that constitute the political rules of the game in any given society. Contrary to conventional wisdom, Arab states boast such institutions in spades; the problem is not with their number but with their nature. In the Arab world, these institutions are designed to ensure the authoritarian character of the regimes. Rather than guarantee rights or give citizens a voice, Arab political institutions tend to restrict political participation, limit individual freedom, and vest overwhelming power in the executive branch of government.

So far, all of the discussion about Arab reform seems to have achieved more talk but not much institutional change. Minor modifications have been made, but authoritarian politics prevail throughout the Middle East. Bahrain, for example, kicked off an experiment in political liberalization in 2002. But authorities recently closed the country's leading human rights organization and jailed its leader (he was eventually released, and his organization reopened, after much political wrangling). Citizens of Qatar, meanwhile, have enjoyed greater political rights since the promulgation of a new constitution in September 2004, but that same constitution also institutionalized the absolute power of the emir and his family.

As such examples suggest, U.S. policymakers have yet to come up with a way to press such countries to liberalize their institutions. And indeed, such change is hard to effect. But it is also critical to the emergence of democratic politics in the Arab world. Washington should therefore focus on coming up with ways to make it easier for democratic politics to emerge. Although this might be easier said than done, with some creative thinking, Washington can figure out how to use its massive financial, military, and diplomatic resources to drive institutional change.

The best way to do so would be to move away from negative pressures and toward more positive, incentive-based policies. In the abstract, such policies involve getting others to do what you want by promising them something valuable in return. In this case, the United States can use the prospect of increased aid or membership in international clubs and organizations as levers to encourage Arab progress toward the establishment of pluralism, the rule of law, power sharing, property rights, and free markets.

To start the ball rolling, the United States should offer Arab states additional money, contingent on their undertaking reform. The advantage of this approach is that nothing is coerced. Countries are not forced to change--they are invited to, in exchange for serious financial rewards.

U.S. relations with Egypt--the second-largest recipient of U.S. economic and military aid--were once based on this principle. In 1978, Washington promised Cairo that if Egypt would make peace and normalize relations with Israel, the United States would underwrite the modernization of Egypt's armed forces and economy. Egypt complied, and ever since, it has technically upheld its end of the bargain by keeping the peace--albeit a frosty one--with Israel. The United States, however, should demand more for its money. Even as Washington continues to send Cairo billions of dollars annually, Egyptian-Israeli relations have deteriorated precipitously (although they have improved somewhat since the death of Yasir Arafat). And such aid has become institutionalized: the $2.2 billion Egypt gets each year has morphed from an incentive for the Egyptians to maintain good relations with Israel into a vested bureaucratic and legislative interest.

Elsewhere in the Arab world, Bahrain, Jordan, Morocco, and, more recently, Algeria and Yemen have enjoyed U.S. support without being asked to make any reciprocal commitment to the United States. Some policy experts have argued that Washington cannot afford to put conditions on these gifts: to do so would jeopardize key U.S. priorities in the region, such as access to the Suez Canal, Riyadh's general cooperation, and Amman's constructive role in Arab-Israeli peacemaking. But this argument underestimates the importance of the United States to the countries in question. Washington's Arab friends need it as much as, if not more than, the United States needs them. Could Cairo really afford to deny U.S. warships transit through the Suez Canal?

Precisely because the United States is the predominant foreign power in the Middle East--and because the Arab states have no alternative ally--Washington is well positioned to implement new incentive-based policies. Apart from Egypt, other strong precedents exist to show just how effective such an approach can be. In the 1990s, for example, the United States employed incentives to encourage Ukraine to abandon the nuclear weapons it had inherited from the Soviet Union. Washington promised Kiev economic aid, investment, joint research and development programs, and a guaranteed share of the space-launch market if the latter would create credible export-control mechanisms for sensitive materials and technologies, cancel its plans to upgrade its missiles, and renege on an agreement to supply Iran's nuclear program; Ukraine, eager for Western aid, quickly complied.

Perhaps the best example of a successful incentive-based approach is with Turkey, which has long sought to join the European Union. When Turkey petitioned the EU for membership, Brussels responded by setting clear political, economic, legal, and social standards for Ankara to meet first. The huge benefits offered by EU membership created a vast constituency for reform in Turkey. As a result, the Turkish parliament has been able to pass eight reform packages in the last three years. Turkey's Islamists have come to support the program, which they see as their best chance for securing formal political protections. The Islamists have cleverly recognized that, since the EU demands that its members institutionalize freedom of religion, Turkey, to become a candidate, will have to loosen government control on religious expression and Islamist political participation. Meanwhile, Turkey's long-dominant military has also signed on to the reform project. Although some of the changes demanded by Brussels will reduce the military's influence, Turkey's general staff has realized that it cannot oppose the project without looking like an enemy of modernization--something the inheritors of Mustafa Kemal Atatürk's legacy cannot afford.


Of course, the United States cannot offer the Arab world anything equivalent to EU membership. Still, it is important for U.S. policymakers to recognize how effective Brussels' approach to Ankara--based almost exclusively on incentives--has been.

The Bush administration has, in fact, already embraced a more-honey-than-vinegar approach to democracy promotion through the Millennium Challenge Account (MCA). This initiative, announced in 2003, promises to reward poor countries with increased aid if they meet 16 different standards on issues ranging from good governance, the rule of law, and public education to health care and economic transparency. The MCA has the potential to become a powerful new tool for promoting democracy in the Middle East and beyond. But Washington has yet to emphasize the program or to apply it systematically to countries in the Middle East.

Here again, the Bush administration should draw lessons from the Turkey-EU story. Although Washington cannot offer Arab countries membership in its own exclusive club, the United States does have a number of bilateral and multilateral policy levers it could use. Such a new approach would not require major new financial investment. It would, however, demand a significant amount of political will.

On the bilateral front, Washington should start by reconfiguring its military assistance to Egypt. Given the importance of this largesse, changes in how it is disbursed would put serious pressure on Cairo. At the moment, Egypt gets $1.3 billion from the United States each year for its military. This money comes with no strings attached. To help jump-start reform, Washington should actually up the offer to $2 billion. Of this amount, $1.3 billion, or the current total, would remain free from any conditions. But to get the extra $700 million, Cairo would have to embrace a range of reforms, ensuring, for example, greater transparency, government accountability, and wider political inclusion. This would give Egypt strong incentives to comply--especially since Cairo's aid package, which has remained constant for 26 years, has actually decreased by more than half when adjusted for inflation; $700 million more per year would go a long way toward rebalancing the figure.

Such a program would offer a number of benefits both to the United States and to Egypt. First, restructuring U.S. military assistance in this manner would safeguard U.S. interests in the region by helping ensure that Egypt's military becomes technologically advanced and capable. Second, this new way of doing business would give Egyptians a more dignified role in their relationship with the United States: Cairo would be encouraged to undertake reform, but the ultimate choice would be theirs. Moreover, putting subtle pressure on the Egyptian leadership to reform will bolster U.S. credibility with the Egyptian public and help assuage general Arab skepticism toward Washington--which has long talked about political progress in the region while doing painfully little to make it happen.

Reconfiguring the U.S. aid package to Egypt would also reduce the risk of a rift developing between the two countries. Relations between Washington and Cairo have been strained in recent years by the war on terrorism, the invasion of Iraq, and the Arab-Israeli conflict. Cutting military aid now, as some have suggested--or even transferring military aid into economic assistance--would create a serious backlash in Cairo that could lead to a major break. Washington could ill afford such an event: Egypt can often be a fractious ally, but the pursuit of U.S. interests in the Middle East would become immeasurably more difficult if the Egyptian leadership decided to actively oppose them.

In the multilateral arena, the United States could offer to sponsor Arab participation in clubs such as the World Trade Organization (WTO), NATO's Partnership for Peace, or a new Community of Democracies--if, that is, Arab states first agreed to conduct serious political liberalization and economic reform. With the WTO, for example, the United States, in concert with its European allies, could require potential Arab members to embrace specific reforms--beyond what the WTO already requires--in return for U.S. and European support for their candidacies. Such reforms might include changes to electoral and political party laws to broaden participation, or penal code reform that would improve human rights by guaranteeing due process and instituting safeguards against torture. Arab leaders might complain that this requirement is unfair: after all, no one put such conditions on China, with its deplorable human rights record, when it joined the WTO. Like it or not, however, Arab leaders would retain the choice of whether to comply or not.

To be realistic, there are limits to what incentive-based policies can achieve. Offering new military aid will be more effective with Egypt and Jordan than with Morocco or Saudi Arabia, for example. Saudi Arabia needs the money much less and has such a critical strategic position that it can better resist pressure from the United States. As for Morocco, it is one of the few Arab states that has a viable alternative to the United States as a patron: Europe.

Consequently, U.S. policymakers interested in pursuing an incentive-based approach with such countries will need to look to other areas where the United States can leverage its influence to encourage political and economic change. In the Saudi case, the answer might be a free trade agreement or a U.S. promise to sponsor Saudi membership in a variety of international organizations.

Caveats aside, the fact remains that incentives are a critical--and critically underused--tool for effecting reform and spurring democratization in the Arab world. Current U.S. policy is based on a mix of defective assumptions: about the role of civil society, about the transformative effect of economic development, and about the efficacy of punitive policies to force change. If it is serious about finally spurring progress in the Middle East, the United States needs to focus more explicitly on political targets and embrace a more positive set of means. An incentive-based approach offers a more coherent, less intrusive, and ultimately more promising strategy toward the Arab world. As the attacks of September 11 showed, the old approach is broken. It's time for a fix.

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