Is There a Middle East?
Page 23
Four factors encouraged the broadening and deepening of the new civic order. The first was the heritage of defensive developmentalism and imperialism in the region. During the nineteenth century, the Ottoman Empire, the semi-autonomous Ottoman province of Egypt, and, to a lesser (but perhaps underappreciated) extent, Persia began experimenting with institutions and structures designed to expand the reach of the state and more effectively mobilize and harness the social power of their populations. Whatever the efficacy of individual programs initiated by Middle Eastern states, the overall result was a fundamental shift in attitudes about statecraft and social practice among both political elites and populations upon which later generations of statesmen and politicians might build.2
During the post-World War I period, independent states in the region based the institutions and structures they needed to construct on prevailing international and regional models, whereas territories that remained under colonial occupation or mandatory control found those institutions and structures imposed upon them. Thus, in the case of Turkey, ruling elites consciously drew their post-World War I developmental strategies and ruling bargains from Western models popular at the time of regime consolidation and, in the case of Iran, the example of Turkey was thrown into the mix as well. In the Levant and Egypt, France, Britain, and, during World War II, the United States imposed developmental strategies and ruling bargains directly, drawing on their own experiences with wartime mobilization and Depression-era statism. For example, during the 1930s, the French government attempted to maintain social peace in its increasingly restive mandatory territories by exporting Popular Front-style welfare policies to Syria and Lebanon. During World War II, Britain and the United States imposed New Deal-style regulatory and industrial development policies in Egypt and the Levant under the auspices of the Middle East Supply Center.3 Over time, the governments of other states—Jordan and Saudi Arabia, for example—initiated similar programs in response to challenges posed by their revolutionary neighbors, strictures imposed by international financial institutions, or the spirit of the times.4
The second factor that secured the new civic order in the region was the nurturing environment created by the postwar international economic system, the Bretton Woods system. Two aspects of the system are important here. First, the Bretton Woods system established a global economic structure marked by what political scientist John Gerard Ruggie has termed “embedded liberalism.”5 This is a system in which economic decision making on issues such as trade and tariffs were handled multilaterally whereas individual states were free to pursue Keynesian principles in their domestic economy. This enabled states to set economic policies and goals, such as full employment or industrial expansion, independently. As Fred L. Block puts it, “It is one of the stranger ironies of international monetary history that the men who actually dominated U.S. international monetary policy during World War II were far more sympathetic to national capitalism than to the idea of an open world economy. In fact, the International Monetary Fund, designed to be the central institution of the postwar monetary order, was shaped initially by national capitalist assumptions.”6
This brings us to the second aspect of the Bretton Woods system that is important for our argument: the two Bretton Woods institutions, the International Monetary Fund and the World Bank. The initial role of the IMF was to ensure the overall stability of the system. The initial role of the World Bank was to promote development by funding large-scale infrastructural projects. “Initial” is the key word here—the role of the IMF was enlarged during the 1980s; the role of the World Bank shifted during the late sixties. The World Bank was, of course, active in the Middle East, as it was in much of the developing world. For example, between 1957 and 1974, the bank lent Iran $1.2 billion.7 More important than the loans it made, however, was the fact that the bank’s very existence ensured that “development” would be enshrined as an international norm.
Initially, the new international economic dispensation was more a blueprint for a new international economic dispensation than the realization of one that was truly global in scope. Although forty-four nations attended the Bretton Woods Conference, most—lumped together by the American and British delegations under the rubric “the smaller powers”—had little input into the deliberations (at a follow-up meeting, American representative Harry Dexter White joked that the main function of the Cuban delegation was to bring cigars).8 And not only was the attention of the delegates and their immediate successors directed toward the recovery and stabilization of the Atlantic economy, but also the undercapitalized Bretton Woods institutions were initially bypassed by the Marshall Planners. The IMF remained dormant through the 1950s.9
Nevertheless, as Craig N. Murphy and Enrico Augelli argue, the effects of the new international economic dispensation would be felt worldwide because of its underlying logic, which linked decolonization, development, a liberal economic order, and peace and prosperity inextricably together.10 According to their argument, the chief guarantor and underwriter of the system, the United States, did everything in its power to replace the system of imperial trade preferences, the primary rationale for formal empire, with one that guaranteed an open door. Thus, although in practice the American commitment to free trade was spotty at best, the United States backed decolonization, as far as Cold War imperatives allowed.11 The promise of decolonization could only be realized if the postwar economic system abetted economic development for new nations. But the strategy to promote development had another function as well: development was to be the key to guaranteeing former colonies a stake in a peaceful community of nations and an expanding global trade system. “Peace through mutual prosperity,” inscribed as a guiding principle in the two foundational documents of the postwar period, the Atlantic Charter and the Charter of the United Nations, became watchwords of the postwar order.
American policy toward the Middle East is the third factor that was instrumental in promoting both development and the civic order development was intended to sustain. Consider, for example, the core problem of national economic planning—a problem that went to the heart of America’s first real foray into development assistance, Truman’s Point Four Program. Deploying the latest instruments of economic and social science theory, American experts, sometimes acting alone, sometimes acting with their similarly disposed colleagues associated with UN agencies or the World Bank, intervened throughout the Middle East to create “planning councils,” “councils for the development of national production,” “development boards,” and the like.12“The history of development in the post-World War II period,” Arturo Escobar asserts, “is, in many ways, the history of the institutionalization and ever more pervasive deployment of planning.... From the emphasis on growth and national planning in the 1950s, to the Green Revolution and sectoral and regional planning of the 1960s and ’70s ... the scope and vaulting ambitions of planning have not ceased to grow.”13
American intervention in national economic development in the Middle East did not end with national economic planning. American policy makers championed the empowerment of the developmentally oriented “new middle classes” and, to an extent that is still debated, at times encouraged the “vanguard” of those middle classes—“modernizing” military officers—to force the hand of history.14 American policy makers backed the construction of large-scale public works projects (the Unified Plan for the Development of the Jordan River Basin, the Litani River Valley electrification plan, the Aswan High Dam project before things got out of hand), which, they believed, would provide the foundation for national economic development.15 Finally, from the late 1940s through the White Revolution of the 1960s in Iran, American policy makers urged governments to undertake land reform. The crusade for land reform perfectly encapsulates the obsessions of American policy makers, who believed that land reform would eliminate the most vexing example of economic and social stratification in the developing world; solidify the bond between non-communist reformers and the bulk of the populat
ion, which lived in rural areas; take the wind out of the sails of communist-inspired revolutionary movements; destroy the economic and political base of “traditional” elites who blocked “modernization”; and stimulate national economies by creating a market for domestically produced goods among newly enriched peasant consumers.16
The final factor that secured the new civic order in the region was the fact that the gospel of development found receptive ears throughout the periphery of the world economy and inspired common imperatives and approaches to that end for nations located there. Throughout the developing world, governments took advantage of the system of embedded liberalism to introduce policies—state-led economic development, centralized economic planning, import substitution industrialization—designed to support the new civic order. The consistency of their choices is not surprising. Having adopted the same internationally recognized diagnosis for the causes of their underdevelopment17—lack of capital, infrastructure, a skilled and motivated workforce—governments throughout the region adopted many of the same, standard-issue solutions to confront that underdevelopment.18 Thus it was that Nasser’s first point man on land reform cited the influence of British development economist Doreen Warriner on his work. Nasser himself was not immune from thinking within the box, even during his foray into Arab Socialism: Having read a serialized version of W. W. Rostow’s The Stages of Economic Growth: A Non-Communist Manifesto in the journal al-Ahram al-Iqtisadi, Nasser invited the Kennedy/Johnson adviser and modernization guru to Cairo to discuss the problem of constructing an internal market in Egypt.19 When it came to core assumptions about how societies are constructed and how social evolution works, modernization theorists and Third Worldists drank from the same well.20 In the Middle East as elsewhere, the leadership of some states—post-1952 Egypt, post-independence Algeria, Iraq and Syria at various times—linked economic nationalism to the new civic order through a populist discourse that extolled anticolonialism and the virtues of the revolutionary masses.21 Other states—Jordan, Saudi Arabia—did not.22 Whether “revolutionary” or reactionary, however, Middle Eastern governments came to the same conclusion, albeit via different routes.
THE REVOLT FROM BELOW
If the immediate postwar period was one marked by optimistic visions of a civic order supported by economic nationalism in what became known as the “Third World,” by the end of the 1960s that optimism had soured. As early as 1960, the General Agreement on Tariffs and Trade (GATT) statistics indicated the Third World’s declining share of both world trade and world income. Although historically minded economists liked to point out that GNP in the Third World was rising faster than GNP had risen in the developed world during the first industrial revolution, over the course of the decade the economic gap between industrialized and industrializing states had become a chasm.23 Little wonder, then, that the notion that the developmental promise of decolonization could not be realized within a liberal economic order became an increasingly popular idea among political elites in the Third World
The fact that political elites defined this problem as a trade problem—specifically, a “terms of trade” problem—might be attributed to four factors. First, although the Korean War (1950–53) had driven commodity prices through the roof, throughout the 1950s and 1960s those prices steadily declined in real terms.24 Second, over the course of the decade, nations that had undertaken an import substitution industrialization path to development increasingly found themselves confronting shortfalls in foreign exchange—a natural pitfall when basic commodities are exchanged for technology. Third, Raul Prebisch and others of the dependency school proposed and disseminated through channels associated with international development agencies a coherent theoretical framework that supported the terms of trade argument. Whatever the validity of the framework, the argument proved popular among Third World development experts and their allies, in no small measure because it shifted the responsibility for developmental setbacks from a state to a systemic level.25
Finally, beginning in 1961 with the Belgrade Summit, the nonaligned movement increasingly came to view the world through the lens of a North-South polarization, rather than an East-West one, and representatives to the conferences held under the movement’s auspices shifted the movement’s focus from Cold War politics to the problem of global economic inequity. To address that inequity and the terms of trade problem, representatives put forward a number of interconnected proposals, including those dealing with commodity pricing arrangements, compensation mechanisms to make up for shortfalls in export income, foreign aid goals for donor nations, preferential tariffs for primary goods, and special aid for the least developed nations. By the time of the Algiers Non-Aligned Summit in 1973, the nonaligned movement had effectively become the Group of 77, the piecemeal approach to correcting what was widely perceived to be a systemic problem had been all but abandoned, and the call for an entirely New International Economic Order (NIEO) had come to replace the so-called reform agenda.26
Although the NIEO included a wide-ranging list of specific demands and grievances drawn from the reform agenda—from debt relief and the right to form commodity-producer cartels to increased aid to and investment in developing countries by industrialized nations—it differed from the reform agenda in terms of its scope and ambitions. The gist of the NIEO boiled down to two sets of demands.27 First, the Third World sought to supplant the liberal regime that was the foundation for international economic relations and overhaul global economic structures to make them more responsive to Third World needs. One principal strategy for achieving that aim concerned the weighted voting mechanisms that favored the core industrialized nations within international organizations such as the IMF. Instead of basing the allocation of votes on the relative financial power of the nations participating in those organizations, the Group of 77 pushed for a “one nation, one vote” system that would reflect the numerical primacy of Third World states. Second, the Third World sought to expand the legal norms associated with sovereign rights. Although this affected a vast array of subjects, from the right to define population policy to the establishment of a “new world information order,” that which concerns us here are those related to economic nationalism. They included greater authority over multinational corporations and greater control over the exploitation of a nation’s natural wealth.
The demands made by the Third World would have constituted little more than a minor irritant to industrialized nations in general and the United States in particular had they not been given salience by two events that took place in the early 1970s. On August 15,1971, the United States unilaterally severed the link between the dollar and gold. Because under the Bretton Woods system the dollar had been tacked to gold at a fixed price, and because the United States had run up a huge balance of payments deficit, this act was undertaken to prevent a run on American gold reserves. It also struck at the very foundation of the Bretton Woods regime and eventually led to the devaluation of the dollar and a system of floating exchange rates.28 The so-called Nixon shock and subsequent developments provided the advocates of a NIEO with both an opportunity and an incentive for action: an opportunity insofar as disagreements among industrialized nations about how to go about reordering the international system left a vacuum only partially filled by crisis-management-driven summitry; an incentive insofar as dollars paid in aid and for exported commodities did not go as far.29
The second event that bolstered the Third World’s bargaining position was the oil shock of 1973–74. Although the roots of the shock might be traced far back—from the oil nationalization movement in Iran in 1953, Iraq’s 1961 Public Law 80, the Tripoli and Tehran Agreements, and a host of other actions through which, over the years, oil producers had gained increasing control over the exploitation and marketing of their product—OPEC actions from October 1973 through January 1974 marked an unprecedented assertion on the part of a group of Third World countries of sovereign rights, market power, and unity of purpose. And although the proximate tri
gger for the nearly 400 percent rise in oil prices might have been the October War, it is no coincidence that the oil shock came on the immediate heels of the Algiers summit.30 After the onset of the shock, the United Nations General Assembly acted to establish a legal precedent endorsing OPEC’s action by approving the Algerian-sponsored Charter of Economic Rights and Duties of States. Article 5 of the charter asserted “the right [of states] to associate in organizations of primary commodity producers in order to develop their national economies.” The remaining articles affirmed the General Assembly’s support for the much of the rest of the NIEO program.31
The developed world—and in particular the United States—watched with both horror and panic at this betrayal of every assumption around which the postwar international order had been constructed. In a series of articles published during the early and mid-1970s, C. Fred Bergsten, who coordinated international economic affairs for Henry Kissinger’s National Security Council from 1969 to 1971, articulated the dominant position held by American policy elites toward the economic instability of the era and the ensuing Third World assertion.32 For Bergsten, the shift in the balance of power between the industrialized world and the Third World, embodied in the oil crisis and the proliferation of Third World demands, represented an existential threat to the United States. What was to prevent Third World nations, working alone, in groups, or en masse, from using their power to provoke competitive scrambles for raw materials and markets among industrialized nations, upset international capital markets, or act discriminatorily toward the United States? What was to prevent the exporters of copper, tin, rubber, bauxite, coffee, and even timber from taking their cue from OPEC and organizing producer cartels?33 For Bergsten, the choice for the United States was clear: