China’s Economic Reckoning
The Price of Failed Reforms
Since the middle of the twentieth century, the Middle East has seen regional hegemons come and go. The 1950s and 1960s were Egypt’s era: Cairo was the Arab World’s capital and the home of its charismatic postcolonial leader, Gamal Abdel Nasser. But Israel’s victory over Egypt, Jordan, and Syria in the 1967 war; Nasser’s death, in 1970; and the spike in oil prices after the 1973 war brought that era to an end. As millions of Egyptians and other Arabs left home for the oil-wealthy Gulf, the gravity of Arab politics went with them. As the Gulf’s fortunes rose, especially in Saudi Arabia, so too did Riyadh’s political clout. Iraqi leader Saddam Hussein’s invasion of Kuwait in 1990, however, and the subsequent U.S.-led war, which was launched from Saudi soil, made clear that oil could buy Gulf countries, including Saudi Arabia, a lot of influence, but they still needed American protection.
After the Gulf War, in the first half of the 1990s, the Oslo Agreement between the Israelis and the Palestinians and the Israeli-Jordanian Peace Treaty, shepherded by Prime Minister Yitzhak Rabin, gave rise to Israel’s moment in the Middle East. Regional economic cooperation took center stage, casting the politics of the previous four decades aside with the optimism of peace and integration. Rabin’s assassination in 1995 abruptly dashed those hopes. The peace process floundered by the end of the decade, as a new rightwing in Israeli politics rose to power, hardly disposed to any closeness to its neighbors.
Then there was a void; the 2000s was no one’s decade. No Arab country had the power, resources, or credibility to assert itself across the whole region. Sectarianism spread, fuelled by the U.S. occupation of Iraq and ensuing civil war. Arab republics, such as Egypt, Syria, and Tunisia, witnessed shocking levels of corruption that eroded the foundation upon which they were built in the 1950s: social equality and the consent of the lower middle classes to the reigning regimes. In the Gulf, the ruling dynasties sought to turn their desert towns into glittering cities, modeled on Hong Kong and Singapore, and detached themselves from the problems of their other Arab neighbors. Whereas in previous decades the region’s strategic landscape had depended on one country’s ascendancy, by 2011, with so much of the region muddling through and failing to put together serious national or regional political projects, the dominant players in the Middle East seemed to be economic actors, from multinational corporations to regional financial interests.
The Arab uprisings of the last three years shook up the balance of power once more, toppling three of the Arab republics, Egypt, Libya, and Tunisia; threatening Arab monarchies in the Gulf; and sewing chaos around Israel. Whereas most observers evaluate the uprisings in terms of the political changes they did -- or did not -- usher in, there are other forces at play. A larger power struggle has emerged out of the ashes of revolution, repression, and war from Tunisia to Syria, which is reshaping the entire strategic landscape of the Middle East. Its outcome will transform the entire region more than any regional rivalry or the rise or fall of any single power in the preceding half century.
At the heart of this transformation are two groups of countries and political forces with opposing objectives. The first, led by Islamist forces in Iran, Qatar, Turkey, and the large Arab political Islamist groups such as the Muslim Brotherhood, aims to channel the energy of the Arab uprisings toward a gradual Islamization of the region. The definition of that Islamization varies depending on the ideologies, backgrounds, and social and political circumstances of each country. The camp’s unifying conviction, however, is that political Islam is the sole framework for governing. Its members believe that, unlike the old rhetoric of secular Arab nationalism or republicanism, Islamism can actually win the support of the widest social segments in the region -- and keep it. To promote its goals, the camp uses a loosely organized network of media, religious authorities, and financial interests to rouse wide sections of the more than 180 million Arabs who are under 35 years old to demand bottom-up change.
The other camp, led by Saudi Arabia and other Gulf monarchies, such as Kuwait and the United Arab Emirates, and supported by Egypt, Israel, and Jordan, sees this transformation as a threat. They -- the traditionalists -- believe that Islamization will bring further fragmentation in some countries, such as Iraq, Lebanon, and Syria; highly disruptive political and social discord in others, such as Egypt; and the strengthening of jihadist groups across the region. Favoring a more gradual, managed, and cautious evolution of the existing order, the traditionalist camp relies on militaries, security apparatuses, media and financial interests, and other state or state-backed institutions to enforce a message of national preservation and shield their countries from the upheaval unfolding across the region.
The battle between the two groups is a new kind of fight in the Middle East. Previous struggles between Arab secularists and Islamists (for example, between Nasser and the Egyptian Muslim Brotherhood in the 1950s, or between the Assad regime and the Brotherhood in the late 1970s and early 1980s) were country and regime specific. The Arab-Israeli conflict, meanwhile, has been primarily over territories. And the contest between secular Arab republics and Gulf monarchies throughout the 1960s (such as between Nasser’s Egypt and Saudi Arabia) revolved around the survival of specific regimes. This emerging two-camp confrontation, however, is over the nature and future of the region’s societies, from North Africa to the Gulf.
TROUBLE IN EVERY DIRECTION
The struggle between these two camps will be determined by four factors. The first is Egypt’s future. With nearly 90 million people, the country is the home of a third of all Arabs and, for decades, has been the region’s cultural trendsetter. Political Islam has already shaped Egypt’s politics since the fall of President Mubarak, throughout President Mohamed Morsi’s year in office, and, since Morsi’s ouster last summer, in the ongoing struggle between the resurgent nationalists -- and at their core, the military establishment -- and the Islamists. But it is really Egypt’s economy that will determine the country’s course. If Egypt’s government, likely led by Field Marshal Abdel Fattah El-Sisi, who is widely expected to win a May 25–26 presidential election, can finally put forward badly needed economic reforms, including cutting back on unaffordable public subsidies, without losing popular support and risking another round of political protest, then Egypt could regain its status as a player in the region and significantly bolster the second camp. But that is a tall order. And if it fails, another round of unrest would doom the traditionalists’ camp.
The second variable is the future of Algeria, North Africa’s largest and richest country, thanks in large part to its oil and gas wealth. (Algeria is Europe’s third-largest energy supplier.) The military regime has been buying time until it can find a replacement for the ailing, aged President Abdelaziz Bouteflika. His replacement must be acceptable to the generals who have controlled the country for over four decades and be conciliatory to the political Islamists that fought the regime throughout the 1990s in a war that cost 100,000 lives. The regime still survives by buying off such dissenters and playing off the public’s fear of returning to the violence of the 1990s, which compels many Algerians to accept the lack of plurality in return for peace and stability. But although the Algerian regime survived the wave of protests in 2011 intact, it is hardly bulletproof. Algerian political Islam has evolved beyond its 1990s antagonistic worldview. New Algerian Islamist parties could reemerge as a serious rival to the military regime. And with Algeria’s immense financial resources, this would give the first camp a major strategic advantage.
The third factor is Saudi Arabia, where the royal family is digging in its heels. A rising middle class that has a huge stake in the economy -- and has been increasingly exposed to political and social currents outside the conservative kingdom -- has finally started to demand political representation. Meanwhile, Saudi Arabia’s economic prospects are slowly deteriorating. (The country is expected to become a net energy importer by 2030.) A sagging economy will only hinder the royal family’s ability to keep buying middle-class support through social welfare and public allowances. The threats of a low-level Shiite insurgency in the kingdom’s eastern province, a renewed Shiite Houthi militancy on the borders with Yemen, or a protest movement among young, disaffected Saudis could erode the government’s authority. A weakening of the Saudi regime would undermine the traditionalists’ camp by diverting the resources and dampening the will of its most powerful and assertive member.
But there is another scenario. King Abdullah, who is 89 years old, has shuffled responsibilities and positions within the ruling family, and the rising (relatively young) princes are aware of the challenges their political system faces. If, motivated by these existential threats, the Saudi regime can evolve and turn the kingdom into a functioning constitutional monarchy in which the political, social, and economic rights of large groups of young Saudis are respected, it could lead to a long but relatively stable transition. A new, assertive Saudi leadership, buoyed by political legitimacy, would imbue the traditionalists’ camp with strong momentum.
The fourth factor is just how much more chaos the Middle East sees over the coming decade. The civil war in Syria is likely to end with a semblance of a centralized authority in Damascus, surrounded by quasi-independent political entities. Several Salafist jihadist groups in the country could manage to entrench themselves in the increasingly lawless desert plains extending from eastern Syria to western Iraq, where they could try to establish Islamic statelets, isolated from the surrounding world (as similar groups have tried in Afghanistan and the Caucasus). Their presence will be a source of violence and political fragility, primarily for Syria and Iraq, but also for Lebanon and Jordan, opening more fronts in the battle between the two camps.
The camp that can turn the political contests in the region to their advantage, by deflecting potential chaos and inflicting its consequences on the other camp, will be better positioned to win this strategic struggle.
THERE’S A STORM COMING
As unpredictable as the Middle East will be over the next few years, there are a few certainties. First, following a pattern of the last five decades and increasingly spurred by demographics and the already palpable cultural trends within the region’s colossal youth segment, the wave of urbanization, Westernization, and increased liberalism will prove unstoppable. That will weaken the Islamists, because their attempts to evolve their rhetoric and political messages to match these trends will diminish their support among their core constituencies and gradually detach them from the Islamic frame of reference upon which their entire movement has been built. Second, because of competitive deficiencies in educational quality, technological advancement, and energy costs -- in addition to looming water crises in the Nile and Jordan River basins -- almost all large countries in the region will confront socioeconomic turbulence in the next decade. That will weaken the traditionalist camp, which relies on structured authority.
In a sense, then, both camps could lose. The socioeconomic challenges that all of these countries will confront could trigger a new youth rebellion, which, unlike the 2011 uprisings, would not be directed at the current rulers but at the entire political and economic establishments that control these countries. Such a movement could rapidly dilute the powers of entrenched institutions in old Arab republics as well as in Gulf monarchies. It could also undermine the prospects of political Islam. No matter what, then, adaptability will be key for Islamists and traditionalists alike. The camp that adjusts to these social, political, and economic waves will have better chances of withstanding the approaching storm.