Politics played a big role in the different institutional set ups at different levels and in the process impacted on the changing association between the state and the economy plus the society and the state. It emerges in the two cases that there was no fundamental change as it was perceived as a re-regulation process which witnessed the repositioning of the state. Simply put, the state was changing to remain in tandem with the emerging scenario at the international stage. This was occasioned by the need to protect the major interests of the states.
The economic restructuring in North Africa
Most North African countries engaged in state planning in the period between the 1960 and 1970s with a view to attaining rapid industrialization. During this period, there were tight controls on foreign capital and an unparalleled state expansion into service provision. Initially, sheer confusion and incoherence characterizing the planning was masked in the name of scientific management. At the same time success was readily realized due to protected markets. Despite this, the act of nationalizing foreign based industries and choosing to promote some local ones did not convince (Khapoya, 1998).
As time passed on, the distortions arising from state planning became apparent. Such included economic disruptions such as the doing away with market forces in favor of a type of planning which did not pay attention to both costing and pricing. However, with time, it became clear that opening up of economies was the way to go as opposed to running a closed economy. The inward-looking development program proved incapable of generating the much sought after revenue to develop the countries. It proved difficult to finance increasing imports and the needs of a welfare state (Khapoya, 1998).
In 1969, the Tunisian minister tasked with the responsibility of setting up an integrated system based on a socialist orientation Ahmed Ben Saleh was relieved of his duties. At the same time, a more decentralized developmental approach was introduced. However, this was short lived as in 1974, President Sadat introduced a working paper which paved way for the liberalization process infitah. The aim was to improve the efficiency of the Egyptian public enterprise, revitalize the private sector, and encourage foreign investment in the Egyptian country. A few years later, the Algerian country followed suit and introduced a shift of the countrys own on the economic orientation front. Following the sudden demise of the then president Boumedienne, Chadli Benjedid, his successor was quick to introduce new policy guidelines as captured in the five year plan publication of 1980-4 (Molefi, 2007). This presented a critical departure from his predecessors focus.
Instead of a focus on heavy industry under the public sector, a shift was proposed based on light industry and a greater focus on the private sector. The decentralization and liberalization policies were slowly developed in North Africa. This was premised on the fact that the oil boom coming during the late 1970s was good enough in aiding the countries navigate the pressures occasioned by both domestic and international indebt-ness. On another front, the attempt to raise prices of basic commodities and lower food subsidies led to riots both in Egypt and Tunisia in 1977 and 1984 respectively (Sandbrook, 2006). This temporarily halted the process and at the same time offered a political weapon to the earlier opponents of reforms.
Early liberalization efforts led to growth in unemployment rates and polarity between the poor and the rich (Martin and OMeara, 2006). A similar scenario occurred in morocco as the agreement with the World Bank and the International Monetary Fund to reduce subsidies saw an increase in prices leading to riots in1984. From the year 1986 and onwards, the three states were forced to seek the help of the IMF and the World Bank. This was as a result of falling prices of oil at the international stage resulting in a rise in both international and domestic debt. This turn of events forced the three states to revert to the early reform focus. In Egypt, a standby agreement was signed with the IMF which facilitated the extension of loans to the country in exchange for a promise by Egypt towards meeting certain IMF set targets. In reference to morocco, a strong commitment to privatization was guaranteed in the year 1989. In Tunisia, a renewed assurance to remove barriers concerning trade and investment was made. This notwithstanding, the most serious drastic measure was witnessed in Algeria(Roland and Atmore, 1994).
After years of falling living standards and forced austerity, riots ensued in 1988 (Roland and Atmore, 1994). In response to this, the then president, Chadli introduced policies with an aim of renewing the economic reform agenda. The country was also required to restructure its political system. This kind of pressure continued to intensify especially after the Gulf war. Following this, the Egyptian government took the initiative by offering both diplomatic and military support to the allied forces attacking Iraq in return for aid. This also captured a commitment to structural adjustments which witnessed an offer listing more than hundred companies up for sale. This also led to a cut in subsidies, an introduction of a new tax regime, revival of the stock exchange system, and freeing of the urban and agricultural sectors from poverty. Tunisia and morocco were equally pushed into reforming. At centre stage were the European Union, the World Bank, and the IMF. The restructuring was done poorly or was impeded by problems associated with poor management and indebt-ness meaning several arrangements had to be made to prepare the state businesses for sale. The states were partly to blame for this mess.
The Syria, Iraq and Jordan case
In Syria, the acts of nationalizing the economy were carried out in 1960s. The power seizure by President Hafiz al-Asad in 1970 led to a halt of the events. The leader sought to consolidate his position by loosening restrictions and facilitating freer trade by encouraging a return of Syrians who had fled the country to return and invest. In 1973, certain sections of the Syrian economy opened both to Arab and European investment. The opening of the service sector served as a precursor for economic growth witnessed in the subsequent ten years. The oil revenues were however key in the sustained success for the ten years. The Syrian president was also able to secure funding from Kuwait, Libya, and Saudi Arabia (Harrigan and El-Said, 2010).
The emergence of state tolerated corruption which saw individuals of position use public offices to enrich them served to undermine the move towards development. President Asad was thus enthroned in a position whereby he would reward his loyalists. This coupled with other economic wrongdoing led to mounting discontent in the country populace as exhibited n 1970. It also inhibited the Syrian intent of diversifying its economy. However, the countrys hard-line stance against Israel meant that oil rich countries steadied their aid supply to the country (Harrigan and El-Said (2010).
The loss of Russian markets and the persistent internal problems coupled with a reduction in aid forced the country to make a number of concessions with the private sector. This allowed private investors to take over the burden of investing in the country. As time went, the country passed legislation giving official way to foreign investment. In addition, the pro-allied stance of the state on the Gulf war meant aid freely flowed to the state (Lapidus, 2008).
The economic opening of the Syrian economy did not however translate to political openness. However, there was a degree of opening the economy but such could not pass as liberalization as the president continued to dominate the economy with a view to expanding on his power base. Non-state actors were basically locked out of politics.
By 1960 the private sector in Iraq was highly limited. The small number of private enterprises present was effectively destroyed by the nationalization agenda of 1960s. The 1970s establishments were mainly a creation of the Bathi reign. The idea was to prevent the expansion of foreign control into the oil industry. Half of the firms dealing in the oil business were exclusively from the Tkrit and Al-Anbar family from Saddam Husseins homeland (Lapidus, 2008).
The 1980s witnessed another wave of private sector promotion. This was stimulated by the food shortages griping the country during the war time with Iran. In 1988, various public enterprises were privatized. Other public firms were extended greater autonomy in reference to operation limits. The creation of Rafidain bank points to exemplify this. The war on Kuwait changed the economic face of Iraq as a number of sanctions were imposed on the country. The absence of state control in the Kurdish area meant that only private economics were applicable (Lapidus, 2008).
The Jordan case presents a divergent prospect. Of the Arab states, the Jordan country had the most open system. Despite this, after a decade of self-proclaimed liberalization, the state held a huge influence on economic activities in the state. However, as at 1988, the government was closely working with the IMF towards achieving an acceptable degree of liberalization. The first attempt was geared towards stabilizing the national debt and introducing structural adjustments towards the elimination of subsidies with other market imperfections. However, such policies provoked public outcry as exhibited in the 1989 and 1996 public disturbances. This notwithstanding, as of 1990, Jordan had made very limited progress towards liberalizing the economy due to vested political interests due to fear on the part of government bureaucrats on the potential loss of power (Alasdair and Blake, 1985).
The expanding need for military meant that there were limited funds to be used in the welfare state activities (McGrail, 2004). Equally important, investment activities were no longer possible from within as a result this encouraged a certain degree of investment in the countries. By the turn of the 1990s, the welfare orientation of the states had been reduced by great margins. At the same time the gap between the private and the public sector was reduced immensely as the state encouraged information sharing between public and private entities.
The failure to open up the economies as desired lay in the royal families interests in regards to this, thee were businesses to protect both public and private (Simon, 1995). On the other hand, there were fears that the move towards liberalization would attract discontent from the citizenry. The other factor rested on the fear of losing control over the economy to foreigners. It is discernable that opening up the economy directly posed dangers to the ruling elite as it derived a lot of power from the control on the economy.
Analyzing the two cases
Initially the North African countries were sing state planning towards achieving their goals. This case also holds for the gulf countries. The two cases were characterized by protected economies rich in oil, an aspect that guaranteed relative success. However, as pointed out, the two cases were fraught with domination occasioned by the ruling elite. Simply put, the ruling class was in control of these economies with a view to protecting their sectarian interests at the expense of the rest of the citizenry. a protected market meant there was considerable growth in the states as they were supported by the proceeds from oil. However, as changes came especially on international commerce, it became clear that a closed economy could not thrive. The falling oil prices could no longer guarantee the funds earlier available. This meant that the state was under no illusions, if it was to make progress, alternatives had to be found. To get the much needed funds, opening up was an option, however, the fear of foreign domination and the need to protect the powers held by the royal families implied that this option was not preferable. But the absence of funds greatly undermined the position of government in reference to offering subsidies. The absence of subsidies put the state on a collision course with its citizenry.
The shrinking of the oil market and the accompanied tumble in the prices at the global level meant there was need to seek alternative funding sources. Unfortunately, the funding was available only from the West. However, the West had a host of conditions pegged to its help which had to be fulfilled before coming in. This is the case applied both to the Gulf region and the north of Africa. The two groups of states chose to accept and promise to restructure. However, the restructuring led to a complication of an already difficult situation. Prices of goods rose partly due to elimination of reduction of government subsidies. The overall result was widespread discontent within the countries occasioning subsequent riots.
Some aspects relating to the adoption of the economic restructuring emerge. Economics is closely tied to politics as politics both directly and indirectly affect the way an economy is run. At the onset, the countries both from the north of Africa and the Gulf region were never keen on introducing economic reforms. This was primarily based on the idea of falling victims of foreign control and loss of political control within the countries. Economies were also arranged in a manner that protected leadership interests. As events changed, the country leaderships were forced to adopt the changes. The establishments then went ahead to undermine the restructuring exercise premised on the same idea.
Another issue that becomes clear in this review is the role of both internal and external forces on the politics and economics of a state. Whereas the west was pushing for the restructuring of the countries in perspective economies, it cannot be ruled out that there were vested interests. Opening up economies was to a ploy to locate business opportunities for western imperialism. In this sense, the IMF, the World Bank, and the European Union were pushing for reforms with a view to securing investment opportunities in the regions. Within the states, the citizenry was not keen on the restructuring exercise as it led to suffering due to increased prices and loss of jobs due to reorganization of public entities for privatization. The local elite were equally opposed to the measures on the basis of the pursuit of self-protectionism against foreign domination. However, thee local elite stands accused of protecting selfish interests as their activities were never aimed at protecting the citizenry.
It becomes clear that external conditions like falling oil prices and pressure from global bodies such as the World Bank and the international monetary fund were behind the adoption of liberal changes both in the north of Africa and the gulf region.
However, according to Harrigan and El-Said (2010), the restructuring system witnessed an expansion of state welfare programs, an attribute it intended to reign on. This case is seen n Egypt and Jordan where rising poverty levels and decline of welfare state programs due to liberalization led to an increase in Islamic welfare programs in the process improving the idea of Muslim brotherhood. This presents considerable opposition to the incumbent regimes.
Liberalization is both a political and economic exercise. However, the political attribute weighs heavily on the latter as it is political leaders who affect the course of economies in different states. It is on this basis that the international actors the World Bank and the IMF supported by the politically powerful west sought to force the two set of countries into restructuring their economies. The economic difficulties being experienced in the Gulf and the Northern part of Africa forced the two countries to adopt the measures. However, due to the intentions of protecting power and their sectarian interests, the leadership of the two countries only appears to have restructured the economies in limited ways. The fact that the restructuring affected the economies in an adverse way in reference to rising prices points to foster the point that the introduction was not done progressively.
On the basis of this paper, it emerges that attempts at liberalization were made. It should be noted that attempts to alter the structure of an economy are politically sanctioned. It is thus difficult to distance them from the general view. In this sense, while adjusting the economies of both the North Africa and the Gulf States, it is clear that the political establishments at the time were focused on reforming the economies in ways which served to reinforce their positions. Simply put, the restructuring of the economies was not aimed at bringing a new societal-state engagement with on the economy.
The introduction of structural adjustments programs were used as a yard stick in gauging the development of states albeit by the international community. However, it was realized that reforming other supporting sectors like the banking industry was of paramount importance.
The privatization in the countries did not take a plausible path. Most of the privatized industries ended up in the ands of cliques of individuals whose aim was to stifle competition and continue in the same early vein of economic domination. As a result, the desired goals of restructuring were limited.
The economic restructuring in North Africa
Most North African countries engaged in state planning in the period between the 1960 and 1970s with a view to attaining rapid industrialization. During this period, there were tight controls on foreign capital and an unparalleled state expansion into service provision. Initially, sheer confusion and incoherence characterizing the planning was masked in the name of scientific management. At the same time success was readily realized due to protected markets. Despite this, the act of nationalizing foreign based industries and choosing to promote some local ones did not convince (Khapoya, 1998).
As time passed on, the distortions arising from state planning became apparent. Such included economic disruptions such as the doing away with market forces in favor of a type of planning which did not pay attention to both costing and pricing. However, with time, it became clear that opening up of economies was the way to go as opposed to running a closed economy. The inward-looking development program proved incapable of generating the much sought after revenue to develop the countries. It proved difficult to finance increasing imports and the needs of a welfare state (Khapoya, 1998).
In 1969, the Tunisian minister tasked with the responsibility of setting up an integrated system based on a socialist orientation Ahmed Ben Saleh was relieved of his duties. At the same time, a more decentralized developmental approach was introduced. However, this was short lived as in 1974, President Sadat introduced a working paper which paved way for the liberalization process infitah. The aim was to improve the efficiency of the Egyptian public enterprise, revitalize the private sector, and encourage foreign investment in the Egyptian country. A few years later, the Algerian country followed suit and introduced a shift of the countrys own on the economic orientation front. Following the sudden demise of the then president Boumedienne, Chadli Benjedid, his successor was quick to introduce new policy guidelines as captured in the five year plan publication of 1980-4 (Molefi, 2007). This presented a critical departure from his predecessors focus.
Instead of a focus on heavy industry under the public sector, a shift was proposed based on light industry and a greater focus on the private sector. The decentralization and liberalization policies were slowly developed in North Africa. This was premised on the fact that the oil boom coming during the late 1970s was good enough in aiding the countries navigate the pressures occasioned by both domestic and international indebt-ness. On another front, the attempt to raise prices of basic commodities and lower food subsidies led to riots both in Egypt and Tunisia in 1977 and 1984 respectively (Sandbrook, 2006). This temporarily halted the process and at the same time offered a political weapon to the earlier opponents of reforms.
Early liberalization efforts led to growth in unemployment rates and polarity between the poor and the rich (Martin and OMeara, 2006). A similar scenario occurred in morocco as the agreement with the World Bank and the International Monetary Fund to reduce subsidies saw an increase in prices leading to riots in1984. From the year 1986 and onwards, the three states were forced to seek the help of the IMF and the World Bank. This was as a result of falling prices of oil at the international stage resulting in a rise in both international and domestic debt. This turn of events forced the three states to revert to the early reform focus. In Egypt, a standby agreement was signed with the IMF which facilitated the extension of loans to the country in exchange for a promise by Egypt towards meeting certain IMF set targets. In reference to morocco, a strong commitment to privatization was guaranteed in the year 1989. In Tunisia, a renewed assurance to remove barriers concerning trade and investment was made. This notwithstanding, the most serious drastic measure was witnessed in Algeria(Roland and Atmore, 1994).
After years of falling living standards and forced austerity, riots ensued in 1988 (Roland and Atmore, 1994). In response to this, the then president, Chadli introduced policies with an aim of renewing the economic reform agenda. The country was also required to restructure its political system. This kind of pressure continued to intensify especially after the Gulf war. Following this, the Egyptian government took the initiative by offering both diplomatic and military support to the allied forces attacking Iraq in return for aid. This also captured a commitment to structural adjustments which witnessed an offer listing more than hundred companies up for sale. This also led to a cut in subsidies, an introduction of a new tax regime, revival of the stock exchange system, and freeing of the urban and agricultural sectors from poverty. Tunisia and morocco were equally pushed into reforming. At centre stage were the European Union, the World Bank, and the IMF. The restructuring was done poorly or was impeded by problems associated with poor management and indebt-ness meaning several arrangements had to be made to prepare the state businesses for sale. The states were partly to blame for this mess.
The Syria, Iraq and Jordan case
In Syria, the acts of nationalizing the economy were carried out in 1960s. The power seizure by President Hafiz al-Asad in 1970 led to a halt of the events. The leader sought to consolidate his position by loosening restrictions and facilitating freer trade by encouraging a return of Syrians who had fled the country to return and invest. In 1973, certain sections of the Syrian economy opened both to Arab and European investment. The opening of the service sector served as a precursor for economic growth witnessed in the subsequent ten years. The oil revenues were however key in the sustained success for the ten years. The Syrian president was also able to secure funding from Kuwait, Libya, and Saudi Arabia (Harrigan and El-Said, 2010).
The emergence of state tolerated corruption which saw individuals of position use public offices to enrich them served to undermine the move towards development. President Asad was thus enthroned in a position whereby he would reward his loyalists. This coupled with other economic wrongdoing led to mounting discontent in the country populace as exhibited n 1970. It also inhibited the Syrian intent of diversifying its economy. However, the countrys hard-line stance against Israel meant that oil rich countries steadied their aid supply to the country (Harrigan and El-Said (2010).
The loss of Russian markets and the persistent internal problems coupled with a reduction in aid forced the country to make a number of concessions with the private sector. This allowed private investors to take over the burden of investing in the country. As time went, the country passed legislation giving official way to foreign investment. In addition, the pro-allied stance of the state on the Gulf war meant aid freely flowed to the state (Lapidus, 2008).
The economic opening of the Syrian economy did not however translate to political openness. However, there was a degree of opening the economy but such could not pass as liberalization as the president continued to dominate the economy with a view to expanding on his power base. Non-state actors were basically locked out of politics.
By 1960 the private sector in Iraq was highly limited. The small number of private enterprises present was effectively destroyed by the nationalization agenda of 1960s. The 1970s establishments were mainly a creation of the Bathi reign. The idea was to prevent the expansion of foreign control into the oil industry. Half of the firms dealing in the oil business were exclusively from the Tkrit and Al-Anbar family from Saddam Husseins homeland (Lapidus, 2008).
The 1980s witnessed another wave of private sector promotion. This was stimulated by the food shortages griping the country during the war time with Iran. In 1988, various public enterprises were privatized. Other public firms were extended greater autonomy in reference to operation limits. The creation of Rafidain bank points to exemplify this. The war on Kuwait changed the economic face of Iraq as a number of sanctions were imposed on the country. The absence of state control in the Kurdish area meant that only private economics were applicable (Lapidus, 2008).
The Jordan case presents a divergent prospect. Of the Arab states, the Jordan country had the most open system. Despite this, after a decade of self-proclaimed liberalization, the state held a huge influence on economic activities in the state. However, as at 1988, the government was closely working with the IMF towards achieving an acceptable degree of liberalization. The first attempt was geared towards stabilizing the national debt and introducing structural adjustments towards the elimination of subsidies with other market imperfections. However, such policies provoked public outcry as exhibited in the 1989 and 1996 public disturbances. This notwithstanding, as of 1990, Jordan had made very limited progress towards liberalizing the economy due to vested political interests due to fear on the part of government bureaucrats on the potential loss of power (Alasdair and Blake, 1985).
The expanding need for military meant that there were limited funds to be used in the welfare state activities (McGrail, 2004). Equally important, investment activities were no longer possible from within as a result this encouraged a certain degree of investment in the countries. By the turn of the 1990s, the welfare orientation of the states had been reduced by great margins. At the same time the gap between the private and the public sector was reduced immensely as the state encouraged information sharing between public and private entities.
The failure to open up the economies as desired lay in the royal families interests in regards to this, thee were businesses to protect both public and private (Simon, 1995). On the other hand, there were fears that the move towards liberalization would attract discontent from the citizenry. The other factor rested on the fear of losing control over the economy to foreigners. It is discernable that opening up the economy directly posed dangers to the ruling elite as it derived a lot of power from the control on the economy.
Analyzing the two cases
Initially the North African countries were sing state planning towards achieving their goals. This case also holds for the gulf countries. The two cases were characterized by protected economies rich in oil, an aspect that guaranteed relative success. However, as pointed out, the two cases were fraught with domination occasioned by the ruling elite. Simply put, the ruling class was in control of these economies with a view to protecting their sectarian interests at the expense of the rest of the citizenry. a protected market meant there was considerable growth in the states as they were supported by the proceeds from oil. However, as changes came especially on international commerce, it became clear that a closed economy could not thrive. The falling oil prices could no longer guarantee the funds earlier available. This meant that the state was under no illusions, if it was to make progress, alternatives had to be found. To get the much needed funds, opening up was an option, however, the fear of foreign domination and the need to protect the powers held by the royal families implied that this option was not preferable. But the absence of funds greatly undermined the position of government in reference to offering subsidies. The absence of subsidies put the state on a collision course with its citizenry.
The shrinking of the oil market and the accompanied tumble in the prices at the global level meant there was need to seek alternative funding sources. Unfortunately, the funding was available only from the West. However, the West had a host of conditions pegged to its help which had to be fulfilled before coming in. This is the case applied both to the Gulf region and the north of Africa. The two groups of states chose to accept and promise to restructure. However, the restructuring led to a complication of an already difficult situation. Prices of goods rose partly due to elimination of reduction of government subsidies. The overall result was widespread discontent within the countries occasioning subsequent riots.
Some aspects relating to the adoption of the economic restructuring emerge. Economics is closely tied to politics as politics both directly and indirectly affect the way an economy is run. At the onset, the countries both from the north of Africa and the Gulf region were never keen on introducing economic reforms. This was primarily based on the idea of falling victims of foreign control and loss of political control within the countries. Economies were also arranged in a manner that protected leadership interests. As events changed, the country leaderships were forced to adopt the changes. The establishments then went ahead to undermine the restructuring exercise premised on the same idea.
Another issue that becomes clear in this review is the role of both internal and external forces on the politics and economics of a state. Whereas the west was pushing for the restructuring of the countries in perspective economies, it cannot be ruled out that there were vested interests. Opening up economies was to a ploy to locate business opportunities for western imperialism. In this sense, the IMF, the World Bank, and the European Union were pushing for reforms with a view to securing investment opportunities in the regions. Within the states, the citizenry was not keen on the restructuring exercise as it led to suffering due to increased prices and loss of jobs due to reorganization of public entities for privatization. The local elite were equally opposed to the measures on the basis of the pursuit of self-protectionism against foreign domination. However, thee local elite stands accused of protecting selfish interests as their activities were never aimed at protecting the citizenry.
It becomes clear that external conditions like falling oil prices and pressure from global bodies such as the World Bank and the international monetary fund were behind the adoption of liberal changes both in the north of Africa and the gulf region.
However, according to Harrigan and El-Said (2010), the restructuring system witnessed an expansion of state welfare programs, an attribute it intended to reign on. This case is seen n Egypt and Jordan where rising poverty levels and decline of welfare state programs due to liberalization led to an increase in Islamic welfare programs in the process improving the idea of Muslim brotherhood. This presents considerable opposition to the incumbent regimes.
Liberalization is both a political and economic exercise. However, the political attribute weighs heavily on the latter as it is political leaders who affect the course of economies in different states. It is on this basis that the international actors the World Bank and the IMF supported by the politically powerful west sought to force the two set of countries into restructuring their economies. The economic difficulties being experienced in the Gulf and the Northern part of Africa forced the two countries to adopt the measures. However, due to the intentions of protecting power and their sectarian interests, the leadership of the two countries only appears to have restructured the economies in limited ways. The fact that the restructuring affected the economies in an adverse way in reference to rising prices points to foster the point that the introduction was not done progressively.
On the basis of this paper, it emerges that attempts at liberalization were made. It should be noted that attempts to alter the structure of an economy are politically sanctioned. It is thus difficult to distance them from the general view. In this sense, while adjusting the economies of both the North Africa and the Gulf States, it is clear that the political establishments at the time were focused on reforming the economies in ways which served to reinforce their positions. Simply put, the restructuring of the economies was not aimed at bringing a new societal-state engagement with on the economy.
The introduction of structural adjustments programs were used as a yard stick in gauging the development of states albeit by the international community. However, it was realized that reforming other supporting sectors like the banking industry was of paramount importance.
The privatization in the countries did not take a plausible path. Most of the privatized industries ended up in the ands of cliques of individuals whose aim was to stifle competition and continue in the same early vein of economic domination. As a result, the desired goals of restructuring were limited.
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