Libya Tribune

The Collapse of Authoritarianism in the Middle East

By Marwan Muasher

Two perfect storms have struck the Arab world in the past decade. In 2011, in what was at first optimistically called “the Arab Spring,” popular uprisings unseated autocrats across the region.

PART ONE

Hopes ran high that these peaceful protest movements would usher in a new era of democracy in the Middle East. But except in Tunisia, they ended in turmoil or deadly civil wars.

Then, in 2014, the region’s leaders were dealt another blow when the price of oil plummeted, threatening the basic model of governance on which their power rested.

Low oil prices since have made it difficult for regimes to fund bloated budgets, buy off elites, and hold up long-postponed reforms. This is not a temporary aberration: it is unlikely that the price of oil will ever again rise to its pre-2014 levels. 

On the surface, many Arab states appear to have weathered these two storms—however shakily. But there is more turbulence ahead. The shocks of 2011 and 2014 were just the first symptoms of a deeper transformation under way in the region: the fundamental bargain underpinning stability in Middle Eastern states is coming undone, and unless regional leaders move quickly to strike new bargains with their citizens, even larger storms will come.

For more than half a century, Middle Eastern governments have used oil wealth to fund a system of economic patronage. Known as “rentier states,” these governments derive a substantial portion of their revenue from selling off national resources or bargaining for foreign backing rather than extracting taxes from citizens.

In some countries, such as Saudi Arabia and the United Arab Emirates (UAE), the revenue has come from the sale of domestic oil resources; in others, such as Egypt and Jordan, they have come in the form of transfers from regional patrons with oil wealth.

Throughout the Middle East, governments have used oil resources to fund stable jobs, education, and health care, and in return, leaders have received political submission.

But as oil prices have remained low and the region’s demographics have shifted, that basic tradeoff has begun to seem unsustainable.

Without the revenue necessary to continue feeding bloated, inefficient systems, governments are struggling to hold up their end of the bargain. Their primary source of political legitimacy is slipping away. 

If they respond to these shifting fortunes by tightening their grip on power and failing to implement meaningful reforms, Middle Eastern governments risk unleashing social unrest on a scale beyond anything they’ve seen before.

The only way around such a disruption will involve economic and political reforms that create a fundamentally new social contract in the Middle East, one negotiated from the bottom up.

Without the rentier model to lean on, governments must build productive economies that are based on merit rather than loyalty and dominated by the private sector rather than the state.

Because such large structural changes will create pushback and problems of their own, they will be impossible without the buy-in of the public. Economic adjustments will not succeed without political changes that are at least as dramatic.

If Middle Eastern governments embrace economic reforms in conjunction with greater political accountability and participation, they may have a fighting chance at long-term stability. If they do not, the next, larger storm will arrive before long. 

The Broken Bargain 

The social contracts binding Middle Eastern governments and their citizens have traditionally been imposed from the top down. These authoritarian bargains, in which rulers secure legitimacy and support through public spending rather than participatory political processes, have been predicated on a rentier system.

Using oil wealth, governments would provide economic patronage, acting as the main purveyors of jobs, subsidies, and basic health care and education. The oil-producing states—Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, and the UAE—used revenue from the sale of their own oil.

Oil-importing states—Egypt, Jordan, Morocco, and Tunisia—relied on large grants from their flush oil-producing neighbors and remittances from their citizens working abroad in the oil industry.

The Gulf states supported oil-importing countries, especially Egypt and Jordan, for political reasons (to ensure that these countries’ positions were largely in line with their own) and economic ones (Egypt and Jordan provided cheap, educated labor).

By the turn of the century, grants and remittances accounted for, on average, over ten percent of Egypt’s and Jordan’s GDPs. Rentierism took different forms in different states, but in one way or another, oil revenues long allowed many oil-importing Middle Eastern countries to live beyond their means. 

In return for their patronage, states expected citizens to leave governing to a small elite, which, over time, became more and more isolated from the general population.

Meanwhile, oil rents helped regimes buttress themselves with political, economic, and bureaucratic circles whose loyalty was ensured and whose interests were tied to their own.

The more jobs and subsidies governments could provide, the better. But rather than creating jobs through productive systems based on merit and led by the private sector, they found that providing public-sector jobs, whether or not they were useful, was the best way to ensure allegiance and dampen demands for accountability. The ratio of public-sector jobs to private-sector jobs in the Middle East and North Africa was the highest in the world.

Social contracts predicated on rentierism functioned throughout the second half of the twentieth century—that is, for as long as citizens considered the services provided in exchange for their acquiescence to be at least minimally satisfactory. But in the 1990s, the conditions states needed to hold up their end of the deal had begun to disappear.

As governments grew, they needed the price of oil to remain high in order to fund expanding bureaucracies and the needs of elites. States were stretched well beyond their means.

In Jordan, for example, the government and the army employed a whopping 42 percent of the labor force by the early years of this century.

Energy subsidies provided by the government to citizens reached 11 percent of GDP in Egypt, ten percent in Saudi Arabia, nine percent in Libya, eight and a half percent in Bahrain and the UAE, and eight percent in Kuwait. 

Once the size of these states’ bureaucracies began to outpace the rise in oil prices at the turn of the century, something had to give. Governments could no longer afford to hire more people or pay for subsidies on commodities such as bread and gasoline.

Unemployment rates in the Middle East and North Africa reached an average of 11 percent in 2000; among young people, the average was 30 percent.

As governments struggled to maintain bloated states, the quality of health and educational services started to decline. But rather than offer citizens more political representation to help ease the blow, governments continued to insist that citizens uphold their end of the authoritarian bargain—refrain from demanding greater influence—even as leaders came up short on theirs. 

Shock Waves

Many Middle Eastern governments tried to address the fracturing of the old social contract by introducing economic reforms without accompanying political changes.

Although these reforms were largely intended to help regimes preserve their grip on power, some of them, if well implemented, could have also benefited citizens. But without the systems of checks and balances necessary to oversee economic transformations, even well-intended efforts—privatizing state-run industries, liberalizing trading systems, integrating into the global economy—ended up benefiting elites rather than the broader population. 

Without proper monitoring bodies, corruption skyrocketed. Most Middle Eastern publics came to associate the economic reforms of the beginning of this century with elite self-enrichment rather than their own betterment.

The ranking of several Middle Eastern countries on Transparency International’s Corruption Perceptions Index declined considerably. Jordan fell from a ranking of 43 (out of 133 countries) in 2003 to 50 (out of 178) in 2010. During the same period, Egypt’s ranking fell from 70 to 98, and Tunisia’s from 39 to 59.

In some cases, the breaking of the old social contract proved too much for societies to bear. Although it was by no means the only factor that led to the Arab uprisings of 2011, it contributed to the collapse of several regimes, particularly those in countries where institutions were already weak.

Tunisian President Zine el-Abidine Ben Ali and Egyptian President Hosni Mubarak were the first to fall. In Libya, Syria, and Yemen, where the sitting regimes had never been interested in building solid institutions, street protests overwhelmed weak states and led to the crumbling of the existing order and, ultimately, civil war.

In Bahrain, antigovernment demonstrations gave way to an ongoing low-level insurgency that has irritated but not seriously threatened the monarchy. The monarchies in Jordan and Morocco faced sustained protests but survived the upheaval relatively unscathed.

In the Gulf countries, regimes had a solution at hand, at least in the short term: throw money at the problem in order to pacify the public.

King Abdullah of Saudi Arabia promised an aid package of $130 billion that included higher salaries and more housing assistance for Saudi citizens.

Other Gulf governments offered similar packages, all made possible by high oil prices. In February 2011, the Kuwaiti government gave every citizen 1,000 Kuwaiti dinars (about $3,560) and free staple foods for over a year.

In Oman, the government funded 30,000 more jobs and 40 percent more university scholarships. In Jordan, King Abdullah responded to protests by immediately introducing ad hoc reform measures that helped temporarily stave off discontent.

A $5 billion aid package put together by various Gulf states helped the country withstand the pressure from the street. But even this turned out to be only enough to quell dissent until the next storm struck, in 2014.

The uprisings of 2011 should have taught Middle Eastern governments that serious attention to governance was long overdue.

The uprisings of 2011 should have taught Middle Eastern governments that serious attention to governance—not just economic reforms—was long overdue. But once the initial pressure had subsided, the surviving governments reverted to their old habits almost immediately.

They were bolstered in their turn back toward authoritarianism by the violence and enormous human suffering unfolding in Libya, Syria, and Yemen, as well as by the rise of Islamists in Egypt, which discouraged citizens elsewhere from pursuing further confrontations with the state. 

Then came the next shock. In August 2014, the price of oil, which had reached over $140 a barrel in 2008, fell below $100 a barrel. It reached a low of $30 a barrel in 2016 before rebounding to around $70 a barrel, where it remains today.

For Saudi Arabia, which needs the price of oil to stay above approximately $85–$87 a barrel to maintain a balanced budget and to fund lavish assistance to other regional governments, this decline meant that the government had to dramatically change its spending habits to avoid going into debt.

Other grant-giving countries, such as Kuwait and the UAE, also had to curtail their regional assistance. Across the Middle East, oil producers could no longer afford to function as welfare states, and oil-importing countries could no longer rely on grants awarded by oil-producing ones or remittances from their citizens working in those countries to finance their patronage systems. 

The end of the era of high oil prices triggered a new wave of protests. In 2018, demands for change escalated in Saudi Arabia, including by leading preachers, women, and political activists, and Jordan witnessed street protests for the first time since the Arab Spring.

These two countries illustrate particularly well the repercussions of the end of rentierism in the region. The first, Saudi Arabia, is an example of an oil-producing country that can no longer act as welfare state.

The second, Jordan, is an example of an oil-importing country that can no longer depend on oil money from abroad to fuel an inefficient economic and political system.

to continue in part 2

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MARWAN MUASHER is Vice President for Studies at the Carnegie Endowment for International Peace. He was Foreign Minister of Jordan from 2002 to 2004 and Deputy Prime Minister from 2004 to 2005. 

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