Mena: a region of backhanders
A new book identifies corruption as a major factor holding back Middle East and North Africa (Mena) development —not least in oil-exporting states
Slogans analogous to those heard on the streets of Cairo and other Arab cities during the popular uprisings that began in 2011 are ringing out today in Baghdad, Beirut, Algiers, Tehran and many other Mena population centres. There may be country-specific differences in protesters’ demands, but there are undeniably strong common themes. One is the call for a rooting out of corruption.
The scale of the region’s problem is clear. Anti-corruption advocate Transparency International lists six Mena states (Iraq, Libya, Sudan, Yemen, Southern Sudan and Syria) among the 12 least transparent in the world. Eight more occupy places firmly in the bottom half of the 183-nation table: Morocco, Tunisia, Kuwait, Turkey, Bahrain, Algeria, Egypt and Iran.
Corruption encompasses a range of activities, big and small. Egyptians in 2011 expressed an anger aroused by years of watching the Hosni Mubarak regime’s blatant nepotism—from awarding lucrative contracts to firms owned by the president’s family to selling off state assets at knock-down prices to businessmen close to the ruling elite. Yet corruption can also manifest itself in much humbler ways. In this author’s days as a correspondent for UK state-owned media firm the BBC, a drive from Beirut to Damascus always included a stop at Zahle, in the Beqaa Valley, to buy several bags of Lebanese bread. At the Syrian border, the customs officer would discreetly take the bread from the vehicle’s boot and wave us on. Nothing was said.
Backhanders, both big and small, matter. For, if corruption exists at one level in society, then it is probably to be found at all levels. Uprooting endemic corruption will be enormously difficult—to say the least—to achieve. Yet while it exists, there is little hope of the Mena countries emerging from a current morass of under-achievement.
For corruption cannot be isolated from the range of afflictions holding the region back, notably poor education standards, rising youth unemployment and rapid population growth. “Income inequality, economic corruption, and the lack of financial and legal institutions that are necessary for the consolidation of an economic system, are issues that have besieged most of the Middle East countries,” say Cyrus Rohani and Behrooz Sabet, editors of ‘Winds of Change: The Challenge of Modernity in the Middle East and North Aftrica’*. “Economic favouritism and unholy alliances between business people and government officials (sometimes known as ‘crony capitalism’), run rampant in these countries.”
Some of these unholy alliances were, publicy at least, the target of Saudi Arabia’s crown prince, Mohammed bin Salman (MbS) in November 2017, when he shocked the kingdom by ordering the arrest of some of the country’s most prominent figures, including princes, senior officials and businessmen. They were all accused of corruption, of stealing state funds. One by one they were questioned, while being detained at the five-star Ritz-Carlton Hotel in Riyadh, until they agreed how much money or property they would hand back to secure their freedom. The Saudi authorities later said that they had reclaimed $100bn in stolen funds.
While corruption exists, there is little hope of the Mena countries emerging from a current morass of under-achievement
MbS’ dramatic move aimed more than anything to serve as a warning to others. This single eye-catching gesture no more achieved the total elimination of corruption in Saudi Arabia than any similar action would be successful in other oil-producing states. Oil and corruption have acquired an unfortunate association.
Countries living off oil revenues alone have been shown to “dampen economic productivity and perpetuate the status quo”, write Rohani and Sabet. “It is commonly acknowledged that wealth created by a single commodity, such as crude oil, tends to result in political corruption,” impeding long-term growth and strategic innovation.
Endemic corruption negatively affects relatively fewer people in states with healthy financial reserves which can afford to be generous to their citizens in terms of minimal taxation and subsidised fuel and water. But what happens if you are trying to lessen the dependence on oil, as Saudi Arabia is doing?
There can be no doubt that MbS realises the need to tackle corruption. But it is hard to see how this will be achieved without a sweeping change of culture—including not just a better education system that produces graduates with qualifications suited to the workplace and inculcates a stronger work ethic, but also the elimination of nepotism. This applies not only to the distribution of top jobs, but also at a lowlier level—say, favouring a family member for a junior civil service position over other, better-qualified candidates.
In Mena countries with big populations, the impact of corruption is more pervasive because it affects more people and the governments concerned are in less of a position to alleviate the difficulties of the less well-off. In 2010, the IMF praised the then Egyptian regime for economic improvements, an expanding privatisation programme, and so on. Yet a drive through the stinking and overcrowded suburbs of Cairo, where abject poverty stared one in the face, showed that macro-economic success was shared out among only a very small elite: the rest of the population, to a greater or lesser extent, were missing out, as they had done for decades. Their anger was growing; the following year, the population erupted.
MbS realises the need to tackle corruption. But it is hard to see how this will be achieved without a sweeping change of culture
Mena countries’ circumstances are not the same as those in 2011—and in some cases they are worse. Unemployment is a problem in every state, from Morocco in the west through to Iran and Oman in the east. And nepotism and corruption persist.
The governing elites in Iraq and Lebanon, for example, cling desperately onto systems from which they benefit, despite increasingly loud demands—backed by violent protests—for root-and-branch reform. In Egypt, President Abdel Fattah el-Sisi has appointed his son as ambassador in Moscow. Turkey’s president Recip Tayyep Erdogan is grooming his son-in-law as his successor. And so on and so forth.
A key message of ‘Winds of Change’—a collection of interesting and thoughtful essays on a range of challenges facing the region—is that, in the absence of reform addressing the interests and rights of the population as a whole, Mena states will fall even further behind other regions of the world. “Despite sporadic efforts to implement reforms,” the two editors say, “the region has made only anaemic contributions to the global community in terms of scientific progress, technological innovation, cultural refinement and social theory”.
Nothing happening in the Mena region today, whether the protests in Beirut and Baghdad or Vision 2030 in Saudi Arabia, give one optimism that this state of affairs will change any time soon.
*Published by Saqi Books, London