SITE Development Day 2012 – Arab Spring 2.0
On June 1, the Stockholm Institute of Transition Economics (SITE) and the Ministry for Foreign Affairs organized the second SITE Development Day. The theme for this year’s conference was the aftermath of the Arab Spring and what is in store for the future of the Middle East and North Africa region. The discussions focused on the current situation, remaining challenges for a peaceful transition towards politically open and economically successful societies, and lessons to be drawn from transitions in other regions.
Economic and Political Challenges
In the first session, Raj Desai (Georgetown University and Brookings Institution), Tarik Yousef (Silatech and Brookings Institution) and Anders Olofsgård (SITE and Georgetown University) discussed some of the main challenges to the economic and political transitions now underway in the Arab world. In particular, the discussions highlighted that the design, speed and mode with which reforms are undertaken should be such that they increase the likelihood of continued reform progress.
Historically, countries that have undertaken rapid democratic transitions have experienced recessions after their transition, and these recessions have typically been quite long-lasting.
Therefore, in order to maintain popular support for reforms, it was advised to start with reforms that are likely to generate benefits in the short-run and for a wider share of the population. On the other hand, since the new governments typically benefit from extraordinary political capital, they can get away with political reforms they would otherwise not, and therefore they should use the early window of opportunity to push forward on reforms that are typically associated with short-run costs but long-run benefits.
Overall, the sequencing of reforms and their design will largely be driven by what is politically feasible. Desai pointed out that the newly elected governments of Egypt and Tunisia are inheriting huge economic challenges. With high unemployment, poor and deteriorating public services, weak institutions, unattainable budget deficits, and low or negative growth, there is little room for maneuver. Unless the political transition quickly creates room for economic change, these new governments risk being caught up in a cycle of short-term crisis management that will satisfy no one.
This is of particular concern given that public support for democracy in this region tends to be closely linked to how the country performs economically, suggesting that if these new democracies do not deliver in terms of better services and better economic opportunities, the democratic transition is likely to fail, and political unrest may start again.
Rania A. Al Mashat (Central Bank of Egypt), who participated in the second session, said that despite last year’s events, the public still has confidence in the Egyptian economy. Even if the inflow of new foreign investments has stopped, those already established have not left the country. This can according to Al Mashat be regarded as a sign that Egypt must be doing something right.
Nevertheless, she pointed out that much needs to be done. In particular, much of the discussions focused on the importance of implementing reforms focusing on the large population of youths and
reforms addressing private sector development and job creation. Al Mashat said that many Egyptians are concerned with who will participate in the private sector and whether it will continue to be the few in close connection with the ruling elite as was the case under the old regime. It was therefore argued that it is crucial to accompany the economic reforms with political and institutional reforms that reduce the risk of state capture and which increase accountability and transparency.
The importance to avoid state capture was also emphasized by Anders Olofsgård, who referred to the theories developed based on the experience of transition in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS). He emphasized in particular the importance of implementing political institutions with checks and balances and judicial institutions that support market competition and commercial transparency. Since political resistance may come from both the losers of reforms, as well as the so-called ‘winners of partial reform’, it is crucial that checks and balances are institutionalized so that trust between politicians and their constituencies is created.
This was also stressed by Al Mashat who said that it is important that the new Egyptian government focuses on making economic reforms credible; promoting private sector development; and on making regulatory reforms that go deeper than they have currently done.
In terms of what donors can do, Desai stressed that since Western donors were supporters of the previous regime, they must first and foremost see to that their trust is reestablished. In line with this, Yousef called for domestic solutions emphasizing micro-level social innovation, and implementation of policies with a bottom-up approach so that especially the youth feel included in the process. These types of programs are essential to generate some immediate effects short of the more medium term effects of more large scale institutional and economic reforms. They can also, if correctly designed, serve the purpose of generating more popular support for private solutions, entrepreneurship and individual responsibility, while creating patience with the difficult task of transitioning these countries politically and economically. To generate the hoped for results, though, these micro level reforms need to be combined with some broad consensus as to the future path of the country, as the prospect of EU membership helped establish for Central and Eastern European countries. It was also stressed that donors should be careful not to impose an agenda that these countries do not feel that they themselves own. Most importantly, these governments were advised to focus on establishing credibility and public support for their reforms by carefully communicating what is being done, how it is done and why. Making the general public aware of the challenges lying ahead and make them feel included is crucial for continued support for reforms.
Experiences and Influences from the Outside
In the second session, Javier Albarracin (European Institute of the Mediterranean) argued that the Gulf Cooperation Council (GCC) countries played two roles in the transition process in the region. On the one hand, they have an important influence on the Mediterranean transition in terms of financial, political and military support. At the same time, the GCC countries are themselves subjects of pressure for transition. Albarracin said that how the GCC will react and try to shape the Mediterranean transition is therefore related to ongoing struggles between Sunni and Shia Muslims, as well as between Islamic/Islamist movements and more secular movements. Hence, there is a strong link between what happens in countries such as Iran, Iraq and Saudi Arabia, and the outcomes around the Mediterranean. Albarracin then went on to say that the Islamic movement in North Africa
is looking for a role model and that they have accepted that their legitimacy is dependent on the support from the GCC, in particular Saudi Arabia.
Turkey is another potential model that has received a lot of attention in the region. Sinan Ulgen (Center for Economics and Foreign Policy Studies) pointed out five areas which in combination make up the reason to why the Turkish model is attractive for the region. The first dimension refers to the way Turkey has been able to accommodate the rise of political Islam in a democratic and pluralistic setting. The second point regards how Turkey has dealt with the relationship between the market and the state. The third reason is related to the way Turkey has brought the military under civilian control, which Ulgen said is of particular interest in the Tunisian case. The fourth dimension regards how the Turkish public administration is perceived and how they have created a system that can deliver public goods and services. Lastly, Ulgen stressed the role of external anchors and referred to how the potential of EU membership has encouraged democratic reforms (as was emphasized also for the CEE countries after 1989).
Public Opinion and the Role of Religion
The third session focused on how policy will change based on the influence of religion in the political arena. In particular, how will policy change in response to the new set of political actors as well as in response to voter preferences being better entrenched.
Dalia Mogahed (Gallup Centre for Muslim Studies) opened this discussion by talking about where public opinion in the Arab world stands in terms of the role of religion in regulation and politics, focusing in particular on the views of gender. She also talked about whether Egyptian voters elected a majority of Islamic parties into the parliament because of ideology or pragmatism. For example, Mogahed said that roughly half of the population in Egypt wants Sharia to be the only source of legislation and the other half wants Sharia to be a, but not the only, source of legislation. Only 1-2 percent does not want Sharia to be a source of legislation at all. In Tunisia, this share is 7 percent, so there is clearly a universal view in these countries that legislation should have a religious reference.
Comparing these numbers to Turkey, where 50 percent of the population is of the view that Sharia should not be a source of legislation, shows that there are fundamental differences between the countries. This is important to keep in mind when talking about the transferability of the Turkish model to the region.
In terms of gender, surveys have shown that there are no correlation between men’s view of Sharia and their support of female employment. However, the higher the share of male employment and the higher the level of male education, the higher the male support for female employment. Also, the higher the support for female employment, the higher is the share of women working professionally. Mogahed saw this as evidence that in order to improve gender equality, it is crucial to increase human development, i.e. education, not just economic development.
In terms of whether public support for Islamists is based on ideology or pragmatism, Mogahed pointed to the sharp fall in support for the Muslim Brotherhood in the Egyptian presidential election.
Mogahed argued that this drop in support suggests that voters are not voting based on ideology but rather as a response to strong campaigning. This argument has also been supported by public opinion surveys which have shown no significant difference between Egyptian voters who support
the liberal parties and those who support the Muslim Brotherhood, on questions regarding for example women rights or the peace treaty with Israel.
What has nevertheless led to the success of Islamic parties in the region, was the topic of the presentation by Peter Mandaville (George Mason University and Ali Vural Ak Center for Global Islamic Studies). He began to point out that even though the upswing of Islamic parties has been regarded as something new, some of these parties have been regular participants in the political landscape of the Middle East for the last 20 years. In the Egyptian case, part of the success of the Muslim Brotherhood can suggestively be ascribed to them being the only Islamic movement that had a political structure in place and sufficient resources to run a national campaign. Mandaville also stressed that Islamic movements, such as the Muslim Brotherhood, have had a lot to gain from being regarded as the opposition to the old regime.
In terms of the agenda of the Islamic movement, Mandaville said that it is not entirely clear what the agenda is and that it tends to differ substantially between countries even if the movements share the same ideological basis. However, Mandaville was confident that there is a firm commitment in part of these movements to the procedural aspects of election. On the other hand, he was concerned that there is no clarity in where these movements stand in terms of other aspects of democracy such as whether they will embrace political pluralism and support full citizenship rights of all citizens including women and religious minorities. In relation to this, Mandaville mentioned that there is an ongoing debate within the Muslim Brotherhood as to how Sharia should be understood and how it should be put into practice, and he further claimed that this debate is not, as often claimed, a matter of the young versus the old, but rather about the reform-minded versus the conservatives.
Another concern that Mandaville raised is how the Islamic movement will respond to the increased fractionalization of the Islamic political space and how they will recreate themselves as governing entities in order to deploy the bureaucratic machinery towards the effective solving of problems. He referred to attempts within the academic literature to see what impact participation in politics has had on ideological orientation. The most common hypothesis in this literature, participation moderation, suggests that by virtue of coming into the political system, these movements have to become less ideologically distinct or rigid and learn how to compromise and cooperate with other groups of different orientation. Hence, this strand of literature suggests that participation in itself has a moderating effect, but whether this will be the case in the Middle East and North Africa region is too early to say.
The Role of the EU and Sweden
Robert Rydberg (Swedish Ministry for Foreign Affairs) referred to the positive impact the free trade agreement between the EU and Turkey have had on the economic development in Turkey when he discussed the EU’s renewed policy for the region. The new neighborhood policy focuses on three M:s – Market, Money and Mobility. It was also said that the EU has presented a new approach with a so- called ‘more for more’ policy, meaning that the EU promises to offer more support but at the same time require more in return, in the sense of political and economic reforms.
Andreu Bassols (European Institute of the Mediterranean) gave a short summary of how the EU’s neighborhood policy has developed over the last decade and said that when the EU in the beginning
of the 2000s tried to promote democracy and change in the region, it had a negative impact on the relationship with these countries. In particular, the promotion of regime change turned out to be problematic when parties such as the Hezbollah in Lebanon and Hamas in Gaza won grounds on the political arena. This had the effect that the policy of regime change rather became one of regime keeping. At the same time, the relationship between Turkey and EU has become cooler and there is no longer any reference to the EU in the public political discourse of Turkey. As the prospect of a Turkish EU membership has decreased, the Turkish democratic progress has slowed down. With the Turkish democracy on a back slide, it is questionable how the Turkish model can be exported to other countries. There are reasons to be concerned about where Turkish democracy will be in 5-10 years from now. However, as Ulgen pointed out, perhaps it is precisely because Turkish democracy is unaccomplished that it is relevant for the region. It shows what can be accomplished in a shorter time frame, and serves as a more realistic model of the immediate future that what it took western democracies several decades to accomplish.
Bassols and Rydberg agreed that there is a need for regional integration both in terms of South-to- South and in terms of North-to-South partnerships. Though everyone agreed that the prospect of EU membership cannot be used to promote progress, partnerships similar to the one between the EU and Turkey could be something to strive for. There is a great need for an economic catch-up and an increase of the competitiveness of small and medium sized enterprises in these countries. It was argued that an integration framework should be developed that support the countries domestic reform agendas, making sure that ownership stays squarely with domestic governments.
