There was a short period, just after the collapse of the Soviet Union, when the shape of the emerging post-Cold war system seemed quite clear. The disintegration of the Eastern Bloc would be complemented by further economic and political integration of Western Europe according to the Maastricht Treaty timetable. Other new blocs, like the North American Free Trade Area, were in the making. The whole system was to be regulated by a US-dominated order based on such international institutions as the UN Security Council, the World Bank and a revised General Agreement on Tariffs and Trade (GATT).

Today, the main outlines of a new system seem much less clear. World recession has encouraged more inward-looking policies around the world. Under the Clinton administration, the previous US attachment to free trade has given way to measures designed to protect particular industries and interests in a manner more usually associated with Japan or France. At the same time, the institutional underpinning of the new world system has begun to look very much weaker, whether in terms of overstretched UN peacekeeping activities in Bosnia, Cambodia or Somalia, or the continued failure to make substantial progress in the endlessly extended Uruguay round of GATT negotiations. Progress towards European unity has been similarly called into question by growing popular opposition to the basic Maastricht principles, intensified by the problems of German unification and the Balkan civil wars.[1]

In these circumstances, instead of President George Bush’s version of an American-defined world order, there will be an uneasy alliance between the major industrial states, collected together as the Group of Seven (G-7) and representing the American, the European and the Japanese spheres of economic influence. And instead of the universalism of free trade, there is likely to be a move toward a two-tier GATT, in which the G-7 nations will first work out the principles for regulating cooperation between each other and only then turn their attention to the rules they wish to impose on the rest of the world. It follows, too, that the new emphasis on “democracy” and “human rights” is much more likely to reflect the domestic political considerations of the major actors rather than any concerted drive toward the systematic enforcement of supposedly universal values.

This, in brief, is the way in which the lessons of the Cold War and its demise will likely structure the conduct of international relations in the 1990s. On the one hand, the sudden collapse of the Soviet Union will be taken as powerful proof of the importance of maintaining strong national economies — or larger common markets — shaped by congruent forms of political management. On the other, previously sacrosanct international mechanisms like GATT will be increasingly seen as the creatures of a Cold War logic which stressed the importance of preventing damaging trade wars between the anti-communist allies and now need to be replaced by something more in keeping with the interests of competing capitalisms in this new age.

Greater Convergence

How has all this affected the states of the Middle East? Clearly, the states that first felt the impact of the collapse of the Soviet Union were those that had come to rely on it most closely for political, economic and military support. One was the former People’s Democratic Republic of (South) Yemen, whose demoralized leadership saw no alternative but a speedy union with the more resilient North. Another was Iraq, where Saddam Hussein would have been better able to sustain his occupation of Kuwait in a bipolar, Cold War world. Others experienced a more mixed impact. Syria, for instance, suffered from the loss of the Soviet market for its inefficient state sector industries but was more able to resist Russian attempts to force repayment of its large military debt following the 1991 abolition of its trade and payments agreement with the old Soviet Union.

The Gulf war exacerbated the huge gap between the Gulf states and their neighbors in Egypt and the Fertile Crescent, including the Palestinians. The Arab League appears more than usually impotent. There is a dearth of workable schemes for more than the most minimal acts of political or economic cooperation, and a growing tendency for regimes to make purely bilateral arrangements with outside partners.

More generally, the collapse of the Soviet Union made moot, for the time being at least, arguments and ideologies calling for statist economic policies based on the control and management of a highly protected domestic market. Such policies had already been very much undermined in the heavily indebted states of North Africa, but now the possibility of resisting creditor pressure for deregulation, privatization and open markets has been even further reduced. Witness the case of Algeria, where Prime Minister Belaid ‘Abd al-Salam’s attempt to find an alternative to World Bank-sponsored liberalization has attracted little support.

Only Turkey moved unambiguously to take advantage of the possibilities presented by a disintegrating Soviet Union by offering itself as an intermediary between the newly independent Turkic-speaking states of Central Asia and the European Community. Others, particularly those in former French North Africa, have decided that the only way ahead is to continue their drive toward associate membership of the European Community, despite the EC’s priority on finding forms of association for the states of the former Communist bloc states first.

For the rest, whether we talk of the Arabs, Israel or Iran, the second Gulf war, erupting just as the Cold War was coming to an end, served only to complicate matters. They could agree that they had better come to terms with a situation in which the US was now the region’s one hegemon. This led them to accept the necessity of participating in American-brokered Arab-Israeli peace talks. Some states found it expedient to base their security solely on a US defense umbrella. Others, like the Iranians, the Libyans, the Sudanese and, of course, the Iraqis, found themselves boycotted by Washington and, in some cases, subject to punitive international sanctions. With no Soviet Union available for support, they have been left to try to exploit any tensions between the economic interests of the US and its European and Japanese allies which might eventually arise.

In the longer term, the states of the Middle East must anticipate being subject to all kinds of influences pushing them in the direction of greater convergence with the political and economic norms of Europe, North America and Japan. These will include pressures to create legal systems guaranteeing a variety of individual rights as well as pressures to match European targets in terms of inflation, tariff levels and budgetary deficits. After this will come inducements to lessen the proportion of their budgets devoted to the armed forces or social spending or public sector employment — all areas in which the practice of most Middle Eastern states is hugely out of line with the present international average. Only then will they be allowed to participate fully in whatever arrangements are made to replace the GATT, or to obtain a privileged association with larger regional units like the EC.

Lessons of Integration

At previous times of crisis or change within the international system, a stock Arab reaction has been to call for a united response to the challenge they face. Now all the evidence (including polls and surveys) reveals that support for Arabism is at a particularly low ebb. The Gulf war exacerbated the huge gap between the Gulf states and their neighbors in Egypt and the Fertile Crescent, including the Palestinians. The Arab League appears more than usually impotent. There is a dearth of workable schemes for more than the most minimal acts of political or economic cooperation, and a growing tendency for regimes to make purely bilateral arrangements with outside partners.

These circumstances raise prominently the need to rethink the principles of Arab unity. Almost all such schemes, in the past, have been based simply on an appeal to the self-evident importance of Arabism. This is particularly true of schemes for economic cooperation or integration, which have been put forward on political grounds without any effort to convince people that they could be of material benefit to all. The attempt to create an Arab Trade Area in the 1950s, as well as the proposal for an Arab Common Market (comprising Egypt, Syria, Iraq, Jordan and Kuwait) a decade later, were largely political schemes and soon suffered political defeat at the hands of regimes unwilling to abandon control over their highly protected domestic economies.

Things changed a little in the 1970s when, as a result of the oil price rise and the pressures to develop the economies of Saudi Arabia and the Gulf, there were obvious intra-Arab complementarities to exploit. The regimes of the oil-rich states needed labor and legitimacy, for which they were prepared to pay large sums in terms of aid to states and wages to migrant workers. Nevertheless, all attempts to use these same complementarities as the basis for permanent, institutionalized systems of planned economic interaction, like that put forward at the 1980 Arab Economic Summit in Amman, came to naught. True, Arab banks, funds and development agencies mushroomed at an extraordinary rate, but the rulers of the Gulf states were unwilling to commit themselves to anything which tied their hands politically or economically. As Giacomo Luciani has argued, while poor states would clearly benefit from an institutionalized transfer of wealth, oil-rich states have an interest in maintaining their freedom to buy labor, goods and services from the cheapest possible markets wherever they can be found.[2]

In these circumstances, the establishment of sub-regional groupings between states with greater political and economic interests in common was an obvious alternative. The first was the Gulf Cooperation Council, founded while Iran and Iraq were at war in 1981. The Gulf states moved on from their security agenda to try to create a more ambitious form of integration based on the establishment of a common market (with a common external tariff, common currency and common economic practice) by a target date of 1999. In all this, a powerful incentive was provided by the EC’s unwillingness to negotiate entry for Gulf petrochemicals into the highly protected European market unless the Gulf states formed their own economic union first.

Clashes of both political and economic interests have combined to ensure slow progress. The conflicts which surfaced during the second Gulf war have made it impossible to develop a common defense policy, leading most regimes to make bilateral security arrangements directly with the US, Britain and France. Meanwhile, local rulers have become increasingly aware of the obstacles to establishing a common tariff, or a common set of administrative practices, when their economic structures vary so widely. For example, Oman, which has little oil, relies heavily on tariffs and is unwilling to open up its infant industries to competition from oil-rich neighbors who can afford much higher subsidies for their own industries. For all these reasons, it seems unlikely that the 1999 target will ever be achieved. A state with some bargaining power of its own, Saudi Arabia, could be tempted to break ranks to secure its own special deal with the EC for its petrochemical exports.

The Arab Maghrib Union (AMU), consisting of Algeria, Libya, Morocco, Tunisia and Mauritania, was founded in 1989 to take advantage of a temporary relaxation of the political tensions which had been endemic since independence. Discussions were set to try to increase commercial and financial links between member states, but it was always clear that the main economic rationale for the AMU was as a vehicle for negotiating a closer relationship with the European Community. (Italy had suggested the implementation of a Mediterranean version of the Helsinki Conference on Security and Cooperation.)

Initial prospects looked good. The combination of the Islamist revival in Tunisia and Algeria in the late 1980s, and the explosive popular emotions released in Morocco and elsewhere during the Gulf war, aroused European fears that major civil disturbances in North Africa would drive hundreds of thousands of refugees across the Mediterranean. There were a number of meetings of the heads of the AMU and those of the five southern European states (France, Spain, Italy, Portugal and Malta), and Brussels considered renegotiating the parallel treaties signed between the EC and Algeria, Morocco and Tunisia between 1974 and 1976.

All this was blown off course by two events. One was the turmoil in Algeria following the cancellation of the second stage of the general elections in January 1992. The second was the political isolation of Libya as a result of its failure to surrender two suspects in the Lockerbie aircraft explosion. European negotiations with the AMU came to a halt, encouraging Morocco and Tunisia to try to establish closer economic ties with the EC on their own.

King Hassan of Morocco was the first to break ranks, refusing to attend the AMU summit in 1992 as well as repeatedly asserting that his country had a special relationship with Europe. He also engaged in some skillful diplomacy, countering the human rights veto imposed on an initial bilateral agreement by members of the European Parliament by suspending negotiations over European access to the rich fishing waters off his Atlantic coast. Intensive negotiations over a form of association similar to that first offered to the states of central Europe — in terms of permanent political dialogue and economic and financial cooperation — are supposed to be brought to a successful conclusion by the end of 1993.

President Ben Ali of Tunisia has also sought to take advantage of the EC’s apparent reversal of its earlier insistence on negotiating with the AMU as a single unit. But Ben Ali still argues that bilateral negotiations should be conducted within the general framework of EC-AMU relations and with the eventual goal of establishing a Mediterranean free trade zone and development bank, as well as a treaty establishing a framework for the rights of Maghribi workers in Europe. Bilateral EC-Tunisian negotiations are due to start in 1994, with the aim of reaching agreement in 1996.

From a pan-Arab point of view, the lessons of these various exercises in regional and subregional integration are largely negative. Attempts at institutionalized cooperation have usually been initiated for short-term political reasons, and have faltered once the political climate has changed. They have also shown themselves to be particularly open to outside manipulation; hence the European Community seems to have had the freedom to demand integration as a prior condition to serious negotiations if and when it suits its own interests.

Limited Options

Perhaps the best way to try and think forward to the twenty-first century is to begin by dividing the Arab world up into its three major component parts: the Gulf, the Fertile Crescent plus Egypt, and the Maghrib. The Gulf clearly has the fewest problems in finding its place in the larger, post-Cold war world. For as long as can be foreseen, oil wealth will give the states there both a substantial bargaining power and an ability to pick and choose their trading and investment partners from among the US, the EC and Japan. What remains to be seen is whether this bargaining power is best deployed collectively through the GCC or individually by regimes like Saudi Arabia.

The states of the AMU have no alternative but to build their future in association with Europe. Nevertheless, they are not entirely without leverage, since they share so many pressing problems with their European neighbors, notably the management of the large Maghribi communities in France, Germany and elsewhere. They are also linked by a shared concern with the highly lucrative Mediterranean tourism industry and the rapidly multiplying number of pipelines and cables connecting their gas, oil and energy networks. The Maghrib states also have an opportunity to show the way to the rest of the Arab world in terms of their ability to create trade and investment regimes best suited to encouraging the maximum growth of economic exchange with their more wealthy neighbors.

This leaves the states of the Fertile Crescent to confront a much more uncertain future. At present their primary preoccupation has to be the future of the Arab-Israeli negotiations and its associated perils and opportunities. Here, too, the EC has a role to play but, for the moment, only as the junior partner whom the US allowed somewhat grudgingly to host the multilateral talks on Middle East regional economic development as well as, more generally, to help facilitate agreements by offers of aid to all sides. Even supposing a successful outcome to the negotiations, two major problems still remain. One is the continuing uncertainty surrounding the political future of the Baathist regimes in Damascus and Baghdad. The other is the question of whether Egypt will want to engage itself more closely to either its eastern or its western Arab neighbors, or to remain, as at present, detached from any potential or actual regional bloc.

The future of Egypt is also important in terms of its role as host to, and possible animator of, the Arab League. If any regime is going to be able to breathe life into this somewhat moribund institution, it can only be the Egyptians. Once again, President Mubarak’s intentions are unclear, something which stands in stark contrast to his apparent willingness to play an active, problem-solving role during his year as chair of the Organization for African Unity, which began in July 1993.

To end on a somewhat optimistic note: In spite of Paul Kennedy’s consignment of the Middle East to the margin of history during the twenty-first century, the reality is unlikely to be anything as bad. A combination of oil and gas and of proximity to Europe will ensure that the Arab states have a number of constructive options, provided, of course, they can find mechanisms for negotiating their economic relations with the rest of the world in a way that makes good use of their still quite substantial resources, not least of which is their huge and growing number of university graduates.



[1] See Stanley Hoffman, “Goodbye to a United Europe,” New York Review of Books, May 27, 1993.
[2] Giacomo Luciani, “Allocation Versus Production States: A Theoretical Framework,” in Giacomo Luciani, ed., The Arab State (London: Routledge, 1990), pp. 80-83.

How to cite this article:

Roger Owen "A New Post-Cold War System?," Middle East Report 184 (September/October 1993).

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