Excerpts from Adam Hanieh’s Lineages of Revolt (Haymarket Books, 2013 (ebook version)
Even in radical accounts of the Middle East, analysis tends to remain overly focused on the surface appearances of poverty and relative measures of inequality rather than engaging with the nature of capitalism as a systemic totality that penetrates every aspect of social life.
The challenge of mapping the essence of this social system remains largely unfulfilled—tracing the patterns of capital accumulation in the Middle East, the structures of class and state that have arisen around it, and their interconnection with capitalism at the global scale. (Hanieh, p. 10)
A conspicuous feature of the Middle East, according to both Arabic- and English-language discussions on these issues, is the region’s apparent “resilience of authoritarianism”. p. 12
An entire academic industry has developed around attempting to explain the apparent persistence and durability of Middle East authoritarianism. Much of this has been heavily Eurocentric, seeking some kind of intrinsic “obedience to authority” inherent to the “Arab mind.” Some authors have focused on the impact of religion, tracing authoritarian rule to the heavy influence of Islam ... p. 13
This state/civil society dichotomy underlies another frequent (although not unchallenged) assertion made in the literature on the Middle East—that of a two-way, causal link between authoritarianism and the weakness of capitalism.
The history of the region is thus characteristically recounted as a long-standing struggle between the “authoritarian state” and “economic and political liberalization. p. 14
There was—as two well-known scholars of the Middle East put it—a “direct correlation between economic performance and the degree of democracy . . . the more open and liberal a polity, the more effective has been its economy in responding to globalization.”
Capitalism was, in short, best suited to—and a force for—democracy. p. 15
All international financial institutions were to employ the same basic argument linking “free markets” and “a vibrant civil society” with the weakening of the authoritarian state.
Instead of viewing the Arab uprisings as protests against the “free market” economic policies long championed by Western institutions in the region, they were framed as essentially political in nature. p. 16
Class ... is always a social relation, which is continually being made and remade in an ongoing process of accumulation and contestation.
Class formation is a process involving real human beings, and this means that the concrete conditions of class always carry specific characteristics—of gender, race, age, national origin, and so forth—that are given particular social meaning through their process of coming into being. pp. 18-19
Conventional accounts of the Middle East generally downplay questions of class, reducing it to just one of many different “interest groups,” such as “business elites” [and ‘social actors’].
The state/civil society dichotomy serves to “conceptualize away the problem of capitalism, by disaggregating society into fragments, with no overarching power structure, no totalizing unity, no systemic coercions—in other words, no capitalist system, with its expansionary drive and its capacity to penetrate every aspect of social life.” p. 20
The state is not an independent, separate feature of society, severed from the class structure that generates its character. The relationship the ruling class holds with the state is actually part of what constitutes it as a class; state and class need to be seen as mutually reinforcing and co-constituted, with the latter providing the conditions of existence for the former. p. 22
By treating the state as a disconnected, all-dominating “thing” rather than as a social relation formed “alongside the development of class, these perspectives treat the institutional forms of society as determinant rather than determined. pp. 22-3
Internationalising capital is faced with the challenge of generating the necessary conditions for accumulation in all spaces of the global economy. The traditional functions of the state within a given national territory—disciplining labor, protecting private property rights, ensuring adequate financial conditions, and maintaining contracts, laws, and so forth—are thus increasingly oriented toward the international scale. This does not mean that the state has lost its importance or has been superseded by the global; in fact, the internationalization of capital often means that processes of state formation are strengthened. p. 25
The internationalization of the state thus develops in tandem with the internationalization of capital.
It is necessary, in other words, to be wary of “methodological nationalism”—a privileging of “national” social relations without acknowledging the ways these relations are actually constituted through their relationships with other spatial scales. p. 26
In the Middle East because … the regional political economy has come to occupy a prime position in national economies over the last two decades. This means that it is necessary to reject the Linnean style of categorization typical of comparative politics, which divides the Middle East into “authoritarian republics” and “authoritarian monarchies” and delineates the differences and similarities of neatly ordered states whose social relations are bounded by national borders and externally related to one another.
The internationalization of GCC capital has transformed the political economy of the region, becoming internalized in the class structure of neighboring states. p. 28
Imperialism
There is thus a very close connection between the internationalization of capital and its concentration and centralization.
Imperialism thus consolidates the combined and uneven nature that characterizes the world market in contemporary capitalism—one in which varying temporalities of development are harnessed within the totality of the world market... this book highlights imperialism as an essential and ongoing theme in the shaping of the region’s political economy. p. 30
The dialectic of rivalry and unity of interests that characterizes the relationship between the major imperialist powers. On the one hand, the internationalization of capital has generated heightened levels of competition between the large corporations that dominate the global economy, and this is refracted through increased interstate competition. Consequently, inter-imperialist rivalry remains a salient feature of the world market. On the other hand, the very nature of internationalization demands greater coordination and cooperation between states in order to maintain the required conditions for accumulation as a whole.
p. 31
These dual tendencies of cooperation and rivalry are vital to understanding the ways that imperialism. “continues to interact and shape the political economy of the Middle East. pp. 31-2
Imperialism is primarily a question of exploitation—one that necessitates, and is principally bound up in, forms of economic domination... Capitalist class formation in the Middle East has become increasingly tied to the ebbs and flows of accumulation at the global scale. One of the effects of imperialism, in other words, has been to generate a domestic capitalist class internal to the Middle East that is to a great extent aligned with the interests of global (imperialist) capital. p. 32
Neoliberalism
Neoliberalism’s policy prescriptions are now familiar across the globe: privatization, cutbacks to social spending, the reduction of barriers to capital flows, and the imposition of market imperatives throughout all spheres of human activity.
Its essence lies, as David Harvey points out, in an attempt to reconstitute and strengthen class power in the favor of capital. p. 33
In regions such as the Middle East, this process was closely related to the economic crises of the 1980s and the pressure countries faced to earn foreign exchange revenues in order to service their debt obligations. A range of international institutions drove the technical implementation of neoliberal policies—notably the International Monetary Fund (IMF) and the World Bank—while governments from the United States and Europe pursued bilateral trade and financial agreements with the region.
This book’s focus goes beyond the policies themselves to examine the ways in which neoliberalism has underpinned the modalities of class and state formation. p. 34
Its vast supplies of hydrocarbons, coupled with the prodigious financial surpluses that accompany them, mean that control of the Middle East is a source of enormous strategic power and thus a long-standing flashpoint of global conflict. p. 40
How the trajectory of imperial domination since World War II has shaped the specificities of the neoliberal era, the means through which this domination has been extended and enhanced, and the ways this has been articulated with—and altered by—particular forms of resistance. p. 40
US strategy initially relied upon the cultivation of various regional allies, settling in the late 1960s on a strategic partnership with Israel, Iran, and Saudi Arabia as a means to confront the growing strength of Arab nationalist movements. As military defeat pushed back struggles in Egypt and elsewhere, the United States also employed food aid and other forms of assistance to lock development patterns into a dependency on Western imports and financial inflows. In the specific conjuncture of global crisis that racked the world economy in the 1970s, this relationship paved the way for mounting fiscal problems that culminated in the debt crises of the 1970s and 1980s, finally opening the path to the neoliberal reforms. p. 41
Central to the heightened control of Western powers has been the region’s unequal and uneven integration into global capitalism. p. 41
There was a shift—away from the centuries-old use of coal—toward oil, and later natural gas, as the principal sources of energy. p. 43
This brought with it profound geopolitical consequences, conferring on the region a potentially decisive role in determining the fortunes of capitalism at the global scale—“a stupendous source of strategic power,” as a US Department of State memo described Saudi Arabia in 1945.
Squeezed by mounting financial and political crises at home, the former colonial powers were faced with burgeoning movements demanding control over their natural resources and strategic transport routes, and the right to freely determine relations with other countries. p. 44
US president Harry Truman declared, in a famous speech to Congress, that the United States would actively intervene around the world in support of its interests and those of the “free world.” p. 45
The strategy initially pursued by the United States, in close alliance with Britain and France, was to negotiate the handover of power to leaders who were viewed as amenable to continued foreign domination, albeit in the framework of formal independence. p. 46
Decrying the threat of “international communism,” Eisenhower guaranteed US readiness “to employ the armed forces of the United States to assist to defend the territorial integrity and the political independence of any nation in the area.” p. 47
After [King] Hussein expressed tacit support of the Eisenhower Doctrine, the United States responded with financial and political aid, replacing Britain as the major Western supporter of Jordan. p. 48
By the mid-1960s, popular and underground movements claiming fidelity to Arab nationalism and left-wing ideologies were shaking all the pro-Western regimes in the region. A most important and often overlooked part of this history was the range of deep-rooted struggles taking place in the Gulf region, where strikes and worker movements threatened the stability of corrupt and decrepit monarchies. p. 49
It is important not to fetishize the confrontations with imperialism and ignore the configurations of class power that marked the rise of Arab nationalist ideology.
Arab nationalism rested on a contradictory ideology that, although focused on Arab unity, consciously downplayed the reality of class struggle.
In its dominant forms, this orientation actually ended up prioritizing the development of national capitalist classes, and was partly enabled by the presence of the Soviet Union. p. 51
Nasser captured this sentiment well in his Falsafat al-thawrah [Philisophy of the Revolution], in which he argued that the revolution was “a popular progressive struggle not class struggle” that brought together “peasants, workers, soldiers, intellectuals and national capital” as an alternative to “the alliance of exploitative capital and feudalism.” p. 52
Within this structure the military took a preeminent position as the only state institution with the internal cohesiveness and organizational discipline to direct this transformation.
The Arab states that emerged during the 1950s and 1960s were characterized by sharp confrontations with the Left, independent worker movements, and other struggles. p. 53
Despite their rhetoric, Arab nationalist regimes acted primarily to strengthen capitalism and an emerging, state-linked capitalist class—they had little to do with socialism, regardless of the nomenclature used to describe the various regimes of the time. p. 54
By the mid-1980s, most of the Arab states had reoriented from a confrontation with imperialism toward a protracted incorporation into US and European power structures in the region. Somewhat ironically … this incorporation actually helped strengthen the development of the national capitalist classes sought by Arab governments for decades. pp. 54-5
The Mechanisms of Counterrevolution
By magnifying the region’s uneven patterns of development while simultaneously tightening its interdependencies, foreign powers were able to lock certain social forces within the Middle East into a framework of shared interests opposed to those of the vast majority.
Western governments—led by the United States—initially pursued this strategy through strengthening alliances with three main regional pillars: Saudi Arabia, Iran, and Israel. Each of these countries was provided with large amounts of financial and military aid, and the specific socioeconomic and political characteristics of these three countries enabled them to emerge as the main articulation of US and European influence in the region. Their position within regional hierarchies was strengthened, and in return, they helped to confront the various radical movements that had developed during the 1950s and 1960s, whether nationalist or left-wing. pp. 55-6
In return for Western military and political support, the Saudi regime was all too willing to move to undercut Arab nationalism through the corrupting influence of petrodollars. p. 57
Iran was a critical feature of US power in the Gulf because it could “help achieve many of the goals we find desirable without the need to intervene in the region.” p. 58
Israel’s victory in 1967 signaled a decisive turning point in the evolution of Arab nationalism. p. 59
The economic front
The first of these was the increase in oil prices in the early 1970s, which produced a sharp rise in the cost of oil for oil-importing countries in the region (while simultaneously feeding the prodigious growth in petrodollars for the Gulf). The second impact of the world crisis was a drop in global demand, which hit export levels and created severe balance-of-payments problems for oil-importing countries. This was the context in which two interlinked elements emerged as central features of Western strategy in the region—aid and debt. Both mechanisms strongly reinforced the political and military defeats described above, compelling a reorientation and opening up of local economies to the world market—a move later consummated in the economic program of neoliberalism. p. 60
The United States had first begun to employ food aid as a major element of its foreign policy in the early 1960s, under the Kennedy-era Food for Peace program. This was an attractive tool of successive US administrations because not only did it help dispose of US agricultural surpluses, it also locked Arab governments into a dependency on imports in a context where the guarantee of cheap food (particularly bread) was an important element of regime legitimacy. pp. 60-1
From 1973 to 1979, Egypt received around one-fifth of all US food aid globally. p. 61
Food aid and cheap wheat sales deeply impacted the nature of agriculture and food production in the Middle East and laid the basis for the neoliberal transformation of agrarian relations. pp. 61-2
By the mid-1980s, Algeria, Egypt, Jordan, Morocco, and Tunisia were paying 30–65 percent of their entire export earnings just to service their debt. p. 63
Trapped in the cul-de-sac of debt and balance-of-payment crises, Arab countries attempted to renegotiate payment schedules with US and European banks through the 1980s. They quickly discovered, however, much like Egypt’s earlier experience with GODE loans, that further financial support would be made contingent upon consent from the IMF and World Bank. In order to receive this consent, countries had to agree to lift restrictions on trade, begin the privatization of state-owned enterprises, deregulate labor markets, and demonstrate that they would develop medium-term policy to drop barriers to capital flows. p. 64
It was in this context—tied to Western states through a dependency on foreign capital inflows, food imports, and military and economic aid—that Arab countries began to embrace a range of neoliberal restructuring programs in the late 1980s and early 1990s.
The integration of states such as Egypt into the sphere of Western influence represented not just a political realignment, involving a shift in foreign policy alliances, but was above all indicative of a process of class formation—one through which a state-fostered bourgeoisie, strong military elites, and domestic private capital came together as partners sharing a joint interest in the new neoliberal order. p. 65
Imperialism consolidated
By mid-1990, Iraq owed a debt of more than $42 billion, on which it was paying $3 billion annually. This was in the context of a major economic crisis—inflation was running at 40 percent annually, and the country’s cash reserves were equivalent to only three months’ worth of imports. In the face of this dire situation, Iraq’s president, Saddam Hussein, attempted to cajole the Gulf states into forgiving the debts Iraq had incurred during the war [with Iran]. Failing in this goal, he invaded Kuwait in August 1990. pp. 66-7
Despite the fact that Hussein had been a primary ally of the United States during the war with Iran, he was considered unreliable and his leadership rested partly on a claim to Arab nationalism.
The [1990] war was followed by a decade-long regime of sanctions that devastated Iraq’s industrial and social infrastructure, with the United States remaining focused on bringing to power a pliant government. At the end of the war, Egypt [which had endorsed the invasion] was rewarded for its efforts with a $15 billion write-off of its debt commitments, the largest cancellation in the history of the Middle East. p. 67
As Iraq faced invasion and a punishing sanctions regime, the United States developed a series of highly significant trade and financial initiatives that radically transformed the relationships between the wider region and the advanced capitalist core ... these initiatives—alongside similar ones from the European Union (EU)—have been a major force in structuring the context of national neoliberal reforms over the last two decades. But beyond the national scale, they have also acted to rework the nature of accumulation at the regional scale—shifting the pattern of financial and trade linkages with Western capital and consolidating a specific set of hierarchies within the region itself. p. 68
Israel’s economy had developed in a qualitatively different direction from those of its neighbors. Israel’s capitalist class had emerged with the support of the state apparatus around activities such as construction, agriculture, and finance. But through the 1990s, direct US financial support helped to enable the development of high value-added export industries connected to sectors such as information technology, pharmaceuticals, and security. p. 69
These reforms, which include privatisation, structural reform, and removing trade barriers, have provided for a more business-friendly economic climate throughout the region.
Perhaps the most revealing confirmation of these linkages was the establishment of the so-called Qualified Industrial Zones (QIZs) in Jordan and Egypt. The first of these zones came about as a result of economic agreements signed between the United States, Israel, and Jordan in 1997. Under the QIZ agreements, goods produced in the zones were given duty-free access to US markets, provided that a certain proportion of inputs were Israeli (8 percent in the case of Jordan, 11.7 percent in the case of Egypt)... These agreements were intended to weld together Israeli and Arab capital in the joint exploitation of cheap labor, with exports aimed at the US market. p. 71-2
The moves toward normalization appeared to stumble following the onset of a Palestinian uprising against Israeli rule in 2000 and a second US-led invasion of Iraq in 2003. But the link between normalization and neoliberal reform continued to drive US strategy in the region despite renewed military conflict. p. 72
The FTA [Free Trade Area] severely reduced Morocco’s ability to restrict US goods from entering the country by eliminating tariffs on 95 percent of all bilateral trade, with all tariffs to be eliminated within ten years.nPrior to the agreement, the average tariff on US exports to Morocco had been more than 28 percent. The tariff reduction was particularly beneficial to US agribusiness as the main provider of Moroccan grain imports. 75
Additional rules within the US-Bahrain FTA meant that government procurement of goods and services had to be opened to US companies on the same basis as a local company, and the state could not restrict the number, type, or residency conditions of US companies. Similar conditions declared virtually all goods from the United States duty-free, opening the route for US commodities to enter the Bahraini market.
Israel’s trade surplus with the United States ranged between $5 billion and $7 billion annually—a remarkable contrast to all other non-oil-producing states, which were running large deficits through the same period. p. 76
In the case of Morocco, Tunisia, and Egypt, for example, US agricultural products have constituted between 30 and 50 percent of all US exports through the 2000s. p 77
In the case of Israel, US companies were responsible for a remarkable 82 percent of all FDI in Israel from 2003 to 2008, equivalent to €23 billion. Reflecting the unique characteristics of the Israeli economy, most of this investment was aimed at sectors such as software, electronics, biotechnology, and advanced research and development. p. 78
The European Union
The EU’s orientation to the region demonstrated the dualities of rivalry and shared interests vis-à-vis the United States—both zones looked to extend their penetration of the region while participating in the further consolidation of the Middle East’s neoliberal trajectory through the common mechanisms of debt, aid, and the promise of increased market access. p. 78
The EU admitted its longer-term objectives frankly, noting that its overall purpose was “to create open economies by the opening-up of markets . . . [and] the elimination of trade barriers.”
The progressive elimination of obstacles to [EU] investment through the passage of new laws aimed at privatizing state-owned firms in industry, agriculture, and banking. p. 79
The EU noting that “national budgets of the Mediterranean partners receive a cash injection in return for the implementation of structural reforms.” p. 81
The EU was consistently the largest exporter to every Euro-Med partner country through the 2000s. p. 83
EU-produced goods were generally high value-added, technically advanced items—machinery and equipment, vehicles, and aircraft. Concurrently, the various regional agreements acted to tie the productive activities of EMP [Euro-Mediterranean Partnership] countries to European markets as exporters of low-wage manufactured goods, agricultural products, and natural resources.
The defining characteristic of this trade for many ENP [European Neighbourhood Policy] countries—the exchange of technologically advanced goods produced in the EU for labor-intensive clothing and agricultural goods manufactured in the Middle East—is indicative of one mechanism of the transfer of value from the Middle East to European capitalism. This has been reflected in persistent and widening trade deficits with Europe.
Moreover, this orientation of trade developed concurrently with policies of privatization and the opening up of ownership to foreign investment. From 2003 to 2008, French, Spanish, and Italian investors were particularly prominent in the region—buying up newly privatized assets in the utilities, real estate, banking, and industrial sectors. p. 84
Any growth in exports that might have accompanied increased access to European markets actually ended up flowing to firms that were linked to European conglomerates through joint ventures or, in some cases, direct ownership. p. 85
Rising powers?
The [2008] agreement signified that Syria had become Russia’s most important ally in the Middle East, a fact reflected in Russian arms exports to Syria, which accounted for about 10 percent of Russia’s total weapons sales during the 2000s. China is likewise tightly linked to Syria as the largest exporter to the country and its biggest source of FDI. p. 86
China’s dependence on Middle East oil presages a deepening rivalry with the United States—not only over oil supplies per se, but due to the fact that US hegemony in the Middle East provides it with an important source of leverage over China, a fact amply demonstrated in regards to the conflicts over Iran.
Precisely because of the highly internationalized structure of the world market, all major states—including China and Russia—are deeply enmeshed in mutual trade and capital flows, sharing a common interest in the stability of global capitalism. This means they have little interest in seeing a qualitative break with the patterns of uneven development in the Middle East, or with the region’s embrace of neoliberal reforms. p. 88
The protracted domination of the Middle East by Western states has developed through a variety of different means, but the underlying themes have been consistent: deepen the uneven and combined development of the region, widen the hierarchies of states and their interdependencies, and utilize the resulting differentials of power to consolidate control. p. 89
Conclusion
- A reorientation of North African economies toward the needs of European capital—fixing the Mediterranean as a subordinated and dependent adjunct of its larger neighbor through trade and foreign direct investment flows.
2. The integration of Mediterranean productive sectors with European capitalism has acted to deepen social differentiation both within individual nation-states as well as between the region as a whole and Europe. In other words, the relationship with the EU has helped to shape the trajectory of class formation (again, most notably in North Africa), by simultaneously enriching (and drawing closer to the European project) a tiny layer of the region’s elites. As subsequent chapters will confirm in detail, the intertwining of trade and investment through the EMP has played an important role in reinforcing the concentration and centralization of capital in the hands of large domestic and foreign capital through key sectors such as textiles/garments and agriculture.
3. They [Israel and the Gulf Cooperation Council] countries are both able to retain a greater share of the value generated in the region (Israel through its advanced industrial exports and the GCC through its control of hydrocarbon supplies). The United States reinforces these regional hierarchies through aid (military and financial) and political support to these two poles, while also being deeply enmeshed in their economies through flows of FDI and other financial relationships.
4. The United States has also attempted to use these two poles as the axis for its drawing together of the wider region under its hegemony.
5. The deepening of neoliberal reforms, which has been the necessary corollary of both the EU and US restructuring of the region, has also acted to widen the hierarchical relationships within the region as a whole.
6. These realignments also need to be placed in the context of potential challenges to US/ European hegemony at the global scale. While the EU and the United States continue to dominate the political economy of the region, rising powers—notably China and Russia—have increasingly built separate and competing alliances with states in the region.
7. Imperialism is primarily about ensuring the ongoing subordination of the region’s political economy to the forms of “accumulation in the core capitalist states of the world market. Seen in this light, neoliberalism is much more than simply a menu of “free market” economic policies; it represents a radical restructuring of class relations that acts to facilitate and reinforce the region’s domination by external powers. pp. 89-93
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