Oil seems to prevent the development of democracy and a free market economy. Oil-rich countries as diverse as Nigeria, Saudi-Arabia, Irak, Iran, Venezuela or Azerbaijan appear to be among the least democratic countries with highly closed economies and little signs of change in their course. This assumption can be confirmed by the empirical correlation between low indices in democratic rule and in the openness of the economy, and the endowment with natural resources. Intuitively everybody could explain that in each of these countries a narrow elite can keep up this state due to almost unlimited and unconditional cash inflows compensating for ineffective economic structures and buying off the population with populist policies in subsidizing consumption or low taxation.
In his book Economic Development and Political Reform – The Impact of External Capital on the Middle East Bradley Louis Glasser puts the development of Middle Eastern states with different degrees of resource endowment into a broader perspective. Economic liberalization and democratization are explained in the context of external capital contributing to both economic development theories and transitology.
Glasser focuses on the developments in four countries: Turkey, Morocco, Egypt and Kuwait with their different degrees of external revenues. The author tries to explain why countries lacking exogenous revenues decided to reform their economies and to introduce democratic parliamentarism and how these objectives were being pursued in contrast to revenue-rich countries and their strategies to keep the status quo. Moreover, he looks at the nature of external revenues, including foreign aid, in shaping domestic coalitions for or against reforms. In this respect Glasser extends the framework of the existing literature on the ‘rentier state’ in establishing testable hypotheses about the mechanisms and causal links between the quantity and quality of external revenues and domestic political and economic reforms. Moreover, he challenges the emphasis of most transitological theories on elite agency which neglects the role of macro-structural factors.
Glasser claims that the amount, the stability of flows and the degree of conditionality attached to external revenues influence the domestic strategies of ruling elites. Shrinking, volatile or conditional revenues make political leaders seek to build domestic coalitions with liberal or centre-right business elites to broaden their legitimacy to put through neo-liberal economic reforms, usually involving the establishment of (semi-)democratic parliaments. Moreover, politically privileging and strengthening these social groups, e.g. through favourable voting systems and reversing earlier discrimination, ensures better access to international capital. States profiting from unlimited and unconditional exogenous windfalls in turn attempt to keep the status quo, increase statism and populist tendencies, often also through mechanisms of manipulating electoral systems and preferential treatment of lower classes. Thus, Glasser claims, not only the vigor of reform policies but also the configuration of parliamentary coalitions in the respective countries is influenced by exogenous revenues following a regional pattern. Moreover, he turns attention to the impact of foreign aid as another important component of external revenue and its possibly negative impact on reform.
The book is structured as follows: In the first chapter Glasser outlines the existing literature on the topic, presenting his research questions, hypotheses and basic assumptions. The second chapter outlines the developments that lead to the implementation of reform programs in the rent-poor countries and prevented the rent-rich countries from doing so. In the third chapter the author examines the reflection of these different strategies of reform, pseudo-reform or non-reform in the electoral
systems of the four countries. The fourth chapter examines the role attributed to different political parties by the government in legitimizing upcoming reforms or keeping the status quo. Foreign aid and its impact on domestic reform in the cases of Jordan and Egypt is examined in the fifth chapter. In the sixth chapter the author summarizes his findings and tries to relate them to general developmental patterns in the Middle East.
Glasser starts his analysis with a classification of different types of rentier states. His first category is the ‘minimally rentier states’, e.g. Turkey or Morocco, whose state revenues contain less than 20% external revenues – for both countries mostly foreign aid, expatriate labour remittances plus income from oil pipelines or phosphate industry respectively. The ‘semi-rentier state’-type is represented by Egypt who disposes over exogenous revenues comprising approximately 45% of its overall revenues, both from raw material export and high foreign aid. Kuwait examplifies a ‘highly rentier state’ with 75-90% share of oil and gas export revenues in the overall state revenue. The author explains his choice of cases to demonstrate the relevance of his research for all types of Middle Eastern countries as diverse as the Moroccan kingdom and the Egyptian republic, secular Turkey and islamic Kuwait.
The second chapter turns to outline the course of economic development of these states showing how a lack of external rents led to economic crises and a change in policies in the 1980s in some countries whereas others could maintain their course due to their limited vulnerability. After the Arab-Israeli war of 1973 oil prices had dramatically increased while at the same time an ever growing flow in foreign aid contributed to high state revenues, also for oil-poor countries. State bureaucracies were massively extended in these years in both ‘Arab socialist’ and monarchist countries. The state’s role in the economy was increased, infrastructure, subsidies, public services and welfare expanded. Distributive policies helped to suppress political conflict and strengthened the authoritarian grip over society.
In the early 1980 rentier-poor Morocco and Turkey were hit by economic crisis, especially because of rising oil prices they were being charged by their oil-rich neighbours, in Morocco’s case also due to the burden of ongoing war efforts in Western Sahara. Being near to economic collapse and debt default both countries were forced to turn to international financial institutions for assistance. Egypt in turn, saw rapid growth rates profiting from rising oil prices, ongoing high rents from the Suez Canal and massive Western aid after the peace treaty with Israel. Kuwait could also prevent any negative impact of international economic shockwaves in adjusting its oil sales respectively. Thus, Turkey and Morocco became the first countries in the region to implement far-reaching neo-liberal reform programs.
 E.g. Alan Richards / John Waterbury (1990): A Political Economy of the Middle East: State, Class and Economic Development, Boulder: Westview Press.
 E.g. the celebrated study of Guillermo O’Donnell, Philippe Schmitter and Laurence Whitehead (1986), Transitions from Authoritarian Rule, Baltimore: John Hopkins University Press .
- Quote paper
- Maximilian Spinner (Author), 2003, Book review on B. L. Glasser's "Economic Development and Political Reform: The Impact of External Capital on the Middle East", Munich, GRIN Verlag, https://www.grin.com/document/13411