Month: July 2016
War, not oil prices, challenge the Gulf
Last Tuesday the Middle East Policy Council held their 85th Capitol Hill Conference on “Economic Reform and Political Risk in the Gulf Cooperation Council (GCC).” Speakers were Aasim M. Husain, IMF deputy director of the Middle East and Central Asia; Ford M. Fraker, president of the Middle East Policy Center and former US ambassador to Saudi Arabia; Edward Burton, CEO and president of the US-Saudi Arabian Business Council; and Karen E. Young, senior resident scholar at the Arab Gulf States Institute. Richard Schmierer moderated.
Husain presented data on how different countries of the GCC are adapting to cheaper oil. Prior to the dramatic decline in oil prices in mid-2014, Gulf governments had been raising their spending by expanding energy subsidies, increasing government payrolls, and raising wages. Non-oil sectors were growing at an average of 7 percent throughout the GCC. When oil prices suddenly dropped from $110/barrel to $40/barrel in mid-2014, a GCC average 10% budgetary surplus turned into a 9% deficit overnight. Spending, which had been increasing by an average of 8-10% since 2011, is expected to contract by over 10% in coming years.
Most Gulf states are cutting back their capital spending by starting fewer new projects and slowing and canceling current ones. Many are raising subsidized energy prices—ending the longstanding policy in some countries of providing essentially free energy to their citizens. Some GCC members are also considering a value added tax. Even with these reforms, in the next five years we can continue to expect deficits of 7-10% of GDP. It’s a grim picture, even before you consider how cuts in spending will impact economic growth.
Over the next five years, 2 million youth will enter the workforce across the GCC. Husain predicts that 2/3 of those will find jobs. That optimistic figure relies on the necessity of non-oil sector growth in next five years generating more jobs than in the past.
Fraker emphasized just how dramatic recent changes in Saudi policy have been. He identified the main goals of Vision 2030—diversifying the Saudi economy and eliminating government inefficiency—and added that the biggest change brought about in the months since Salman bin Abdulaziz Al Saud’s assumption of the throne has not been any particular economic policy, but rather an “unprecedented” opening of Saudi government.
Decision-making had always happened behind closed doors without transparency or outside input. The rise to prominence of the Deputy Crown Prince Mohammad bin Salman changed that. He has opened government, for example by putting all government ministers on stage for unprecedented public questioning. Fraker wants the US to welcome these changes. Washington has a strategic interest in a stable Saudi Arabia and should therefore support its allies politically and economically.
Burton elaborated on business opportunities for American investors. Saudi Arabia is the third biggest spender on military equipment in the world. Mohammed bin Salman’s goal to divert 50% of Saudi military spending to domestic contractors would create major opportunities for job-rich growth. Burton also foresees healthcare as a potential growth sector. Saudi Arabia suffers from high rates of obesity, diabetes, and other health challenges. The Kingdom is the Middle East’s largest information and communications technologies market, particularly with its growing youth population.
Young analyzed GCC strategies and policies to make ends meet. Across the region, there has been a dramatic rise in bond issues. In the short term, there is no problem. Gulf countries are not heavily indebted and currently have access to the capital they need. Continued reliance on credit for the next five years could get dicey. This oil crisis is different from the 1970s crises. Over the course of the 2003-2014 oil boom, the Gulf invested in building lasting institutions, which enabled Kuwait and the UAE to adapt to the drop in oil price. The GCC is also much more integrated into the MENA region than it was previously. Egypt and Lebanon are dependent on Gulf foreign direct investment. Jordan and Morocco rely on foreign aid from the GCC to balance their budgets.
All the panelists managed to neglect the economic and political ramifications of GCC involvement in two regional conflicts. Husain talked about massive cuts in capital and social spending to ease the sting of deficits, but ignored the continued climb in Saudi defense spending since 2011, starting with Saudi involvement in funding and training opposition fighters in Syria.
Saudi Arabia will be running up against its biggest planned budget deficit in 2016, despite the slight uptick in oil prices and domestic fiscal reforms. GCC members are heavily involved in proxy wars in Syria and Yemen, so military spending is continuing to rise at an alarming rate. In 2016, Saudi Arabia surpassed Russia as the third biggest military spender, spending $87.2 billion. Qatar and the UAE have also increased their military spending while drastically cutting other spending.
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Peace picks July 18-22
1) Zionism: The Birth and Transformation of an Ideal| Monday, July 18th | 5:30-6:30pm | The Middle East Institute | Click here to RSVP |The Middle East Institute (MEI) is pleased to host veteran journalist Milton Viorst for a discussion of his upcoming book, Zionism: The Birth and Transformation of an Ideal (Dunn, 2016). From Herzl to Netanyahu, Viorst follows the development of Zionism through the lives and ideas of its dominant leaders who all held one tenet in common: the Jewish people must determine their own destiny. He argues that while Israel has emerged as an economically prosperous and geopolitically powerful Jewish homeland, Zionism has increasingly been defined through military strength. Viorst asks how Zionism evolved from an ideal of Jewish refuge to a rationalization of occupation? Has this development altered the international community’s perception of Zionism as Israel’s founding doctrine? Matthew Duss (President, The Foundation for Middle East Peace) will moderate the event. Copies of the book will be available for purchase and signing. A wine and cheese reception and book-signing will follow the talk.
2) President Obama’s Role In African Security And Development| Tuesday, July 19th | 10:00-11:30am | Brookings | Click here to RSVP | Barack Obama’s presidency has witnessed widespread change throughout Africa. His four trips there, spanning seven countries, reflect his belief in the continent’s potential and importance. African countries face many challenges that span issues of trade, investment, and development, as well as security and stability. With President Obama’s second term coming to an end, it is important to begin to reflect on his legacy and how his administration has helped frame the future of Africa. Matthew Carotenuto, professor at St. Lawrence University and author of “Obama and Kenya: Contested Histories and the Politics of Belonging” will discuss his research in the region. He will be joined by Sarah Margon, the Washington director of Human Rights Watch. Brookings Senior Fellow Michael O’Hanlon will partake in and moderate the discussion.
3) Iraqi Foreign Minister On Aid, ISIS And Reconciliation| Tuesday, July 19th | 1:30-2:30pm | United States Institute of Peace | Click here to RSVP | Iraq’s Foreign Minister Dr. Ibrahim al-Jaafari will address his country’s role in the Middle East, its battle against ISIS/ISIL, relations with the U.S., and the need for international assistance, in an event at the U.S. Institute of Peace on July 19. It will be his only public appearance during a trip to Washington for meetings with the Global Coalition to Counter ISIL and an international pledging conference to raise funds for relief and reconstruction, as the Iraqi government works with allies to prepare for the massive undertaking of recapturing the country’s second-largest city, Mosul, from ISIS control.
4) Russia And Europe – Dangerous Times, Dangerous Continent?| Tuesday, July 19th | 3:00-4:30pm | Project for the Study of the 21st Century | Click here to RSVP | PS21 global fellow Ali Wyne talks to Fiona Hill, former US National Intelligence Officer for Russia and now head of the Europe program at the Brookings Institution. Where will Europe go in the aftermath of the UK referendum, what is motivating Vladimir Putin and how can the US influence events in a continent that has previously given the world some of the worst conflicts in human history
5) How to Defeat Terrorism in Iraq | Wednesday, July 20th | 10:30-12:00| The Institute for World Politics | Click here to RSVP | Sheikh Jamal al-Dhari will share his vision for his country: a political re-crafting of the existing government structure away from sectarianism and towards a new constitution based on Iraqi national citizenship and inclusive of participation from all sectarian communities.HE Sheikh Jamal al-Dhari is the Chairman of the Iraq National Project and President of Peace Ambassadors for Iraq (PAFI). One of the leaders of the al-Zoba tribe in Iraq, he is the nephew of the late Islamic scholar and religious leader.Sheikh Harith al-Dhari Jamal was born in the Abu Ghraib district of Iraq on July 16, 1965. He grew up within the al-Zoba tribe and in the 1970s he attended the Hafsa School. In the 1980s, Jamal was conscripted into the Iraqi Army to fight in the Iran- Iraq War. During his time on the frontline, he fought alongside both Sunni and Shia officers and friends, in the Iraqi Republican Guard. Following the 2003 invasion of Iraq by coalition forces, Jamal was a strong proponent of Iraqi nationalism and self-rule. In 2005, he and his family fought against al-Qaeda’s occupation of Iraqi territory and, as a consequence, Jamal lost 70 members of his family in the struggle. In 2014, Jamal helped to establish the nonprofit think tank Peace Ambassadors for Iraq, whose purpose is to advocate for a renewed system of government in Iraq, to determine the best policies to fully eliminate ISIS/Daesh and other terrorist forces from Iraq, and to build international support for an all-inclusive Iraq. Presently, Jamal is working for a renewal in Iraq by forging a non-sectarian and inclusive settlement for all Iraqis.
6) After ISIS: Politics, Deal-Making, and the Struggle for Iraq’s Future | Thursday, July 21st | 9:30-11:00 am | The Wilson Center | Click here to RSVP | As the Islamic State (ISIS) is rolled back and defeated in Iraq and Syria, the fight for Iraq’s political future will begin. On both a local and national level, a new political deal between the country’s parties and communities will be necessary to keep the country together. Liberated territories will need to be secured by forces acceptable to locals, populations will need to return, and towns must be rebuilt. In addition, intra-Kurdish politics and Baghdad-Erbil relations will need a new framework—whether the Kurds decide to stay or go. Underlying these dynamics is the poor state of the post-oil price decline economy of the Kurdish region. Akeel Abbas, Professor, American University of Iraq, Sulaimani; Mina al Oraibi, Senior Fellow, Institute of State Effectiveness; Christine van den Toorn, Director, Institute of Regional and International Studies, American University of Iraq, Sulaimani; and Bilal Wahab: Professor, International Studies, and Director, Center for Development and Natural Resources, American University of Iraq, Sulaimani will speak. Discussion will be moderated by Henri J. Barkey, the director of the Middle East Program at the Wilson Center.
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Liberal democracy at risk
The handwriting is on many walls. Liberal democracy and the world order it has built since World War II are at risk. Equal rights, political pluralism and rule of law are being challenged from several directions.
We see it in Brexit, which aims explicitly to restore borders, reject immigrants and implicitly to end the liberal democratic establishment’s monopoly on governing power. We see it in Trump, who aims at similar goals. We see it in Putin, Erdogan and Sisi, who are selling the idea that concentrated power and restrictions on freedom will deliver better and more goods and services. We see it in China, which likewise aims to maintain the Communist Party’s monopoly on national political power while allowing markets to drive growth. No need to mention Hungary’s Orbán, Macedonia’s Gruevski, Poland’s Szydło and other democratically elected leaders who turn their backs on liberal democratic values once in power, in favor of religion, nationalism or ethnic identity.
Among the first victims are likely to be two bold efforts at freeing up trade and investment and promoting growth by removing barriers and encouraging globalization: the Transatlantic Trade and Investment Partnership between the European Union and the US as well as the Trans Pacific Partnership (TPP), which was intended to do something similar in the Pacific Basin. Both Hillary Clinton and Donald Trump have said they are opposed to TPP. It is hard to picture TTIP proceeding while the EU is negotiating its divorce from the United Kingdom.
We have seen assaults on liberal democracy and its associated world order in the past. Arguably that is what World War II was about, at least in part. Nazi Germany, Imperial Japan and Mussolini’s Italy offered Fascist, autocratic responses to relatively liberal democracy in Britain, France, Germany and the United States. The Soviet Union, which fought with the Allies against Fascism, offered a Communist alternative that survived the war and engaged in the Cold War standoff with liberal democracies for almost 45 years thereafter, one that involved proxy wars, Communist and anti-Communist puppets, and the enormous risk of nuclear holocaust. The history of fights between liberal democracy and its antagonists is fraught with war, oppression, and prolonged authoritarianism.
It wasn’t that long ago, when the Berlin wall fell, that liberal democracy seemed overwhelmingly likely to win worldwide. The end of history didn’t last long. The two big challenges liberal democracy now faces are Islamist extremism and capitalist authoritarianism. These are both ideological and physical challenges. Putinism is an authoritarian style of governance that sends warplanes, naval ships and troops to harass and occupy its neighbors and adversaries. The same can be said of Xi Jinping’s China, which is making the South China Sea into its backyard and harassing its neighbors.
The Islamist extremist challenge comes above all from Al Qaeda and the Islamic State, which are competing with each other even as they destroy fragile states like Libya, Yemen and Syria. Iraq appears to be winning its fight, though it is likely to face a virulent insurgency even after it ends Islamic State control over parts of its territory. The outcome is unlikely to be liberal democratic. Many other states face that kind of insurgent Islamist threat: Afghanistan, Pakistan, Bangladesh, Egypt, Somalia, and Tunisia, to name but a few.
But the biggest threat to liberal democracy today comes from inside the liberal democracies themselves. Islamist terror has killed relatively few people, apart from 9/11. Popular overreaction to Islamist threats, immigration and globalization could bring to power people with little commitment to liberal democratic values in the United States, France, Sweden, the Netherlands, Denmark and elsewhere. They will seek to reestablish borders, slow or end immigration, impose draconian laws to root out terrorists, and restore trade barriers in the hope of regaining lost industries.
Another challenge, peculiar to the US, seems to be emerging: black insurgents with guns who think they are retaliating against police for abuse of black citizens. This is bound to elicit a law and order response the could even bring a real threat to liberal democracy in Washington: Donald Trump in the presidency. If the protests in Cleveland this week are not disciplined and peaceful, it could put real wind in his sails.
The menace to liberal democracy is real. If we want pluralism, human rights and the rule of law, we are going to have to take some risks. I find it an easy choice, but many of my compatriots seem inclined to lean in the other direction.
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Americans sorted
ISIS and the challenge of radical Islam have emerged as a major theme on the presidential campaign trail, particularly in the wake of the Orlando shooting, the deadliest terrorist attack to occur on US soil since 9/11. Last Monday, Brookings hosted an event launching the results of two new public opinion surveys that gauge the effect of the Orlando terror attack on American public attitudes about Islam and Muslims.
The first survey was conducted two weeks before the June 12 shooting at Orlando’s Pulse gay club, and the other two weeks after. Both were conducted by Shibley Telhami, Nonresident Senior Fellow at Brookings. After presenting the results, he was joined in discussion by William Galston, the Ezra K. Zilkha Chair in Governance Studies at Brookings, and Tamara Cofman Wittes, Senior Fellow and Director of the Brookings Center for Middle East Policy, who served as a moderator.
Contrary to what one might expect, American attitudes toward Muslims and Islam have not worsened, but have become more positive after the Orlando shooting. The two charts below — presented by Telhami — show the change in public perception pre- and post-Orlando.
In May 2015, 53 percent of Americans viewed Muslims favorably, a sentiment expressed by 58 percent of Americans in May 2016 and 62 percent in June, two weeks after the terror attack in Orlando. Americans distinguish between “Muslim people” and the “Muslim religion,” viewing Muslims more favorably than they view Islam. While 62 percent of the people surveyed expressed favorable attitudes toward Muslims, only 44 percent thought the same of Islam.
The point that Telhami and Galston emphasized is that attitudes about both Muslim people and Islam are largely divided along party lines. 79 percent of Democrats have favorable views of Muslims, compared to 42 percent of Republicans (37 percentage points difference). Similarly, 82 percent of Democrats deemed Islamic and Western religious and social traditions as compatible, compared to only 42 percent of Republicans (40 percentage points difference).
Attitudes about the Arab-Israeli conflict and the Iraq War are also split down party lines. When asked “Which one of the two factors do you believe is most important in the emergence and growth of ISIS?” 71 percent of Democrats answered “Going to war with Iraq in 2003,” in contrast to 61 percent of Republicans who think it was “Withdrawing most US troops from Iraq.” The panelists maintained that Americans are deeply polarized. According to Wittes, “if one had to come up with a single headline [to capture the survey results], it would be polarization.”
Someone who has read Morris Fiorina’s Culture War? The Myth of a Polarized America would know that what Wittes is talking about is rather party sorting, not polarization. In other words, what the Brookings survey depicts is the process of party purification, where party affiliation now reflects ideology to a greater extent than a generation ago. The opinion distributions in the survey show no evidence of increase in conservatives and liberals, or a decrease in those having more moderate views. Additionally, when presented with dichotomous choices like in the Iraq War question above, or in other questions related to the Arab-Israeli conflict, subjects are only able to choose between two extremes. Given a choice between two extremes, they can only choose an extreme, but polarization of people’s choices is not the same as polarization of their positions.
The fact remains that Republicans and Democrats are largely divided on questions concerning Islam and the Middle East. This divisiveness is even more pronounced in the 2016 presidential election. The election represents ideological sorting of an even greater level than the parties the candidates represent. Only 16 percent of Trump supporters view Islam favorably, compared to 66 percent of Clinton supporters (50 percentage points difference). The “clash of civilization” question, asking whether Islamic and Western religious and social traditions are compatible, tells a similar story. 64 percent of Trump supporters say they are incompatible, while 13 percent of Clinton supporters perceive such incompatibility (50 percentage points difference). With respect to the the Israeli-Palestinian conflict, 43 percent of Trump supporters believe the US should support either annexation without equal citizenship or maintaining the occupation; 13 percent of Clinton supporters take that view.
As Galston observed, “in the past political differences ended at the water’s edge. Now, those days are gone.” The surveys reveal that these cleavages are larger than those found in domestic politics on issues like abortion or same-sex marriage. In fact, gaps don’t get much bigger. Islam and the Middle East have sorted out America. Americans need to sort this out.
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28 pages, the Turkey coup and Nice
Those are the issues dominating the headlines this morning. The common thread: they all reflect in one way or another the secularist reaction to Islamist politics.
Islamism has become the main political event of our time, because we have made it so. The Nice attacker, like the Orlando one, seems to have been only loosely, if at all, affiliated with the Islamic State or any other extremist movement. Both were more loser than Islamist. Until fairly recently, we might have attributed their acts to mental illness rather than politics. Today, it would be hard for a Muslim in the West to commit mass murder without its being attributed to Islam.
Turkey’s coup attempt likely originated within the anti-Muslim Brotherhood currents of Turkish politics, including the Gulen movement. Its failure will enormously strengthen the hand of President Erdogan, whose Muslim Brotherhood-affiliated political party will continue to broaden the powers of the presidency as it reduces the opportunities for political dissent. There is nothing like an attempted coup to give an aspiring autocrat more opportunity to gain control over the levers of power.
The 28 newly published pages of preliminary investigative material on 9/11 shed little new light on possible connections between Saudi Arabia and the plotters of the attack. Despite the efforts of the Kingdom’s American public relations consultants, they will nevertheless stimulate the appetite of anti-Muslim forces in the US, who have already entertained us for several days with their approval of Newt Gingrich’s proposal for a Shariah litmus test for American Muslims. Like the attempted coup in Turkey, this Christian chauvinism is bound to strengthen those they attack.
We need to stop helping our adversaries. Islamic extremists are a real threat. But mistaking Erdogan, the Nice and Orlando attackers, and even the Saudis for the real thing is foolish and counter-productive. That lumps together apples and oranges and labels them extremists. It magnifies the problem and reduces our own capabilities to deal with it, by spreading them far too thin. We need to keep the focus where it belongs: on the weak states of the Middle East that are breeding social pathology, calling it Islam and killing mostly Muslims.
Iraq, Syria, Libya and Yemen are cases in point. These are the weak states whose collapse has made room for extremism to flourish. The Islamic State and Al Qaeda that exist there are not a bunch of crazed individuals, but rather well-organized insurgencies against the existing state system. They are doing far more damage in the Middle East than the occasional sympathizer or wannabe causes in France or Florida.
Erdogan should not be counted among the Islamist extremists. He an Islamist, but democratically elected. He proposes autocracy as the response to all threats, as does Egypt’s President Sisi. They are peas from different ideological pods, but peas nevertheless. As we have seen already in Egypt and will now see in Turkey, their answers to the Islamist threats will not be adequate. Autocracy may squelch secularism, but it is unlikely to stamp out Islamic extremism, as Sisi should by now have discovered. Islamic extremism has far deeper roots in the Middle East. It is there that it most needs to be fought, not only with military means.
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The difference Brexit makes in the Balkans
I enjoyed a meeting today with Kosovo’s foreign minister, Enver Hoxhaj, some of Kosovo’s ambassadors stationed in European capitals and foreign ministry staff. They were concerned mainly about the implications of Brexit for their country. Here are the notes I used in my presentation:
Brexit makes no difference to some important things
- The EU isn’t going away. The single market that allows the free flow of goods, services and capital will continue, even if constraints on movement of people increase.
- Brussels will continue to try to coordinate foreign and security policy and will remain an important interlocutor for the US. Brexit may even make it easier for France and Germany to unify EU policy prescriptions.
- The EU is moving to close the gap with NATO, which was a luxury no one can afford any longer.
- Brussels will try to have a common policy on immigration, albeit one without the UK and much less welcoming than in the past.
- The euro will survive Brexit, though it may still face serious challenges from bank weakness in Italy and elsewhere.
- Even enlargement will continue, as promised recently at the Paris summit, since the Balkans are not a heavy burden and their cheap labor will be welcome, especially if it stays at home.
But Brexit will change some other important things
- The UK, or more likely England, will continue its relative economic and political decline, in particular if Scotland and possibly Northern Ireland leave.
- EU investment and growth will slow.
- All EU countries, seeing the political risks, will treat illegal immigration much more harshly.
- Standards for EU accession will be enforced more strictly, especially those pertaining to rule of law.
- Europe’s global political weight will continue to decline and its engagement abroad will decrease.
- The Transatlantic Trade and Investment Partnership the EU and the US hoped to conclude is likely in suspense, if not moribund.
- Putin’s Russia will gain and feel encouraged to expand its anti-EU and anti-NATO efforts, in particular in the Balkans.
- The world will continue to look to the US for leadership, especially as financial flows looking for a safe haven boost the US dollar (and maybe its economy).
- The Balkans countries will be expected to handle more of their own issues: clamping down on foreign fighters and illegal immigration, resolving the remaining interstate conflicts, and building up regional physical, financial economic and cultural infrastructure.
What does this mean for Kosovo? If I were a Kosovar, I would want to use the next 5-10 years, when the EU will be preoccupied with itself, to complete my country’s sovereignty and enable viable candidacies for both NATO and EU membership. This entails domestic as well as diplomatic efforts. I would want:
- The Kosovo courts to become fully independent and capable of providing a fair trial with due process to all citizens, regardless of ethnicity, without the participation of international prosecutors or judges.
- The work of the Special Court to try crimes that occurred after the war to be created and complete its work as quickly and competently as possible.
- To ensure that radicalization in Kosovo is reduced to a minimum through effective preventive (not only law enforcement) measures.
- To grow the economy, and in particular jobs, more rapidly through improvement in the business environment and reducing corruption to levels at least comparable to the average within the EU.
- To create an army with representation from all of Kosovo’s citizens, compatible with NATO standards and capable of contributing to NATO missions, whose chief of staff should meet regularly with those of all of Kosovo’s neighbors, including Serbia.
- To settle all issues with Kosovo’s neighbors, including in particular the demarcation of the Montenegrin border (which should enable the EU to liberalize its visa requirements) and the Serbian border/boundary as well as full implementation of all agreements already reached with Belgrade.
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