Download PS 142A FINAL STUDY GUIDE - b

THEMES:
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In order to survive, states must collect taxes
Role of state in creating, maintaining, reforming and taxing wealth
Debt, dependency and economic backwardness
Oil…Islamism…Economy
o State control over the economy
Patterns of economic boom and bust
Informality, its relationship to time and Islam’s ability to help people manage that
time
TIMELINE:
1948- Palestine War
1950- British asked to leave Egypt, Suez Canal Zone and Sudan
1956- Nasser nationalized Suez Canal and three months later was attacked.
1958- creation of the United Arab Republic
1967- Nasserites come to power and nationalize industry and agriculture in order to
prepare for union with Egypt.
1973- Oil Boom for Arab/oil producing states…crisis for the West…Yom Kippur
War…embargo against non OPEC states
1979- Iranian Revolution…Saddam Hussein comes to power and begins the Iran//Iraq
War
1983- oil prices declined…Oil Bust after Saudi Arabia tried to flood the market
PARADIGMS OF DEVELOPMENT:
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Orientalists believed there was something inherently with the Arab culture.
o Said: imprisoned and enslaved by their mindset
o Subservient relationship with foreign powers
Modernization Theory: we are all the same…takes time to become equal…highly
specialized sectors but not diversified.
o linear progression of people through the history of democratization
o time is progressive and linear…need to industrialize to spark
modernization…outcome is democracy
Behavioralism: public opinion as a measure of behavior, attention to
socioeconomic indicators, political culture
Degree of development is more important than the form of government
Dependency theory- states have not been able to modernize due to import
dependency…global capitalist system dependent countries.
OTTOMAN EMPIRE:
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modern states are distinct because they have: borders…extract and distribute
resources…have market with unified currency
o 1648 Treaty of Westphalia and the creation of modern states in Europe
Ottoman emperors claimed to have divine authority and universal subjects
Empires are large, porous and sprawling entities…NOT bound like modern states
Ottoman Empire had nodes of control in Gulf in order to collect revenues from
trade.
o Conquered tributaries became tributaries
o Elite armies (janissaries)
 Conscripted/ elite soldiers…given land in return for service…not
allowed to marry in order to prevent land from being passed down
(practice ended after expansion of empire stopped)
The Empire did not have a common heritage, but formed a national unity//
identity through the use of slaves…took them from all over the empire and
brought them to the capital
o Reliance on slave labor
Millet System; communities that were autonomous from Ottoman Empire
1838 Anglo Ottoman Agreement: capitulations…free trade, port operating under
French law
Barat= privileges to trade that exempted locals from paying taxes…preferred a
certain Ottoman class began a secondary market of buying and selling barats
(informality)
o Economic weakness: unable to collect taxes
Debt Crisis: differential import goods (Ottoman goods taxes at 12% , while
British goods taxed at 3%)
TANZIMAT REFORMS: 1839…attempts to modernize the Ottoman Empire, secure
territorial integrity against nationalist movements…encouraged Ottomanism among
diverse ethnic groups. …attempted to integrate non-Muslims and non-Turks more
thoroughly into Ottoman society by enhancing their civil liberties and granting them
equality.
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o REORGANIZED THE FINANCIAL SYSTEM & ARMY
Tanzimat tried to recover the taxes lost by land passed down by Jannissaries to
their sons.
Attempted to reform the military in order to remain competitive
Fiscal Decline: 1840s began to debase currency in order to generate revenue
causes inflation and ultimately was unsuccessful.
o Printed money to generate revenue inflation couldn’t sell bonds 
had to borrow money from Europe
1878 the Ottomans stopped paying debt formation of the Debt
Administration, which essentially was British financial colonization.
o Started to make direct foreign investments
Currency linked to the gold standard
Colonialism:
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o Settler colonialism= Algeria colonized by the French. Replace indigenous
with foreign nationals… Israel as well
o Mandate system= Iraq, Palestine, Syria, Lebanon and Jordan…foreign
powers have control over internal affairs of the country. Especially in
regard to the economy.
Pattern of recruitment into the organs of the state by colonizing nations…would
privilege certain groups, like Sunnis in Iraq
Militaries in Syria and Iraq made up of minorities
Mandate system as an effort to prevent Islam from being the prevailing identity.
SYKES PICOT AGREEMENT (1920): establishing mandate system between
France and British- divided Ottoman lands
o local agricultural elites aligning with colonial powers specific religious
and cultural groups end up in certain professions
Balfour Declaration: British declaration confirming support of creation of Israeli
State in Palestinian mandate.
King Crane Commission: from the U.S….went to Syria and Palestine to
determine their wants and needs…found great resistance to mandate system and
Balfour Declaration
RISE AND FALL OF THE OTTOMAN EMPIRE:
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Debt story
Armies stopped expanding Janissaries became local elites in far reaches of the
empire decrease in tax revenue from Janissaries
Industrial Revolution in Europe led to dependency on foreign imports…Ottoman
Empire integrated into the global economy as a dependent power
Expansionist, decentralized model no longer worked- lost too much revenue
Tried to modernize the military and bureaucracy
Decentralization and loss of territory (millet system)
BANKRUPT BY 1876
PANARABISM:
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One Arab identity
Problem consolidating the state (PAN ARABISM)- supranational identities, based
on the idea that all Arabs are the same
Arab lands are indivisible- once held together by language, history and religion
Borders are arbitrary and illegitimate
Struggle to define Arab identity in reaction to corrupt Islam codified by Ottomans
In order to better understand the world around them and develop a unified
identity, Islam became an ideology
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o Islam became an ideology: a flexible framework to provide answers about
the world….AL AFGHANI
Argued that in order to return to the pure ways of Arab Islam must break away
from corrupt Turks
Trans Arab unity rested on several issues: Israel, Russia’s presence in Afghanistan
BA’THISM:
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Resurrection…renaissance
Michel Aflac- Syrian Christian
Preserve Islam as the most precious representation of the Arab soul…emphasis on
action, youth, state control of public and private life
Ba’thist regimes in Iraq were very self-consciously secular
In Syria and Iraq, Ba’th Party had control over the military
o 63-64% Syrian army was Alawite Christian
o people identified locally instead of nationally…regional loyalties,
politicization of Syrian youth before they could be integrated into national
society
 military became a catalyst for social involvement
Minority governments often have control of wealth, foreign powers’ support,
easier implementation of power.
SYRIA:
o Military as mobility for Alawites in Syria
o Ethnic and sectarian loyalties in Syria…brought these loyalties into the
military
o Ba’th Party was never popular in electoral terms….power through
alliances
o Once UAR was dissolved in 1962 Sunnis gained huge Parliamentary
majority…and the military split along sectarian lines
o B’athist Alawtie officers “fire” Nasserites in army
 Blamed Nasser for the fall of UAR- he nationalized army and
industry
IRAQ:
o British mandate…social mobility possible in military
 British mandate created landed elite in the South where there was a
Shi’a majority- gave lands to families who were allies
 Parliament controlled by wealthy merchants and landed Shi’as
o Progressive fragmentation of landholdings
o Level of poverty and landlessness increases over time
o 1958- coup to overthrow King populist, nationalist, Nasserite, Sunni
 opposition from Shi’a bourgeoisie because advocated
redistribution
 wanted the state to help cerate an industrialized Sunni class
Syria & Iraq were two of the largest//longest lasting Ba’th Regimes
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Fragmented politics…constitutional regimes that are powerless
Anticommunist but pursued economic policies that required a lot of state
intervention
ARAB LEAGUE/ARAB NATIONALISM:
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Nasser was a leader who sought to nationalize Egypt and abandon colonial power
structure
Unity movement, not a question of borders
Arab nationalism as an outgrowth of the collapse of empires and colonization
o Used key Arab issues as a source of “symbolic capital”
o State building
o Politically useful and placed ethnicity before religion
Arab nationalism sought to eliminate sectarian divide between religious
communities
Creation of Arab League political unification
NASSER AND NATIONALISM:
1956- nationalized the Suez Canal
economic policies were highly redistributive
Arab socialism
Nasser ideologically fights the elites and becomes a champion of the masses
Regional command dominated by class officers who had real, tangible power
Created the United Arab Republic in 1958
o Dictated that the Syrian Army had to withdraw itself from politics
o 1961- Nasser nationalizes Syrian industries
 army, ruling classes and B’ath Party members banded together to
dissolve UAR in 1962
minority groups take control and consolidate power
after Nasser was defeated in 1970s there was a complete realignment in the region
ECONOMICS:
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Import substitution: if you are a backwards country, the way to industrialize is to
apply high tariffs in order to incentivize purchase of domestic goods.
Labor remittances: when migrant workers send back wages to home country
o those without wealth migrate to find work
o no revenues go to the state…instead, profits flow back to the poorest
families
o Initially, Saudi Arabia did not tax, but one oil bust occurred tried to reform
the tax system
 Those who had come into power resisted
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Alternatively, Yemeni workers became wealthy and then the state
was able to tax the wealthy
Rentier state= money a state receives that is not domestically produced (SYRIA)
o Yemen had no oil, but a lot of labor, while Saudi Arabia had a great deal
of oil but no laborers
o Yemen received labor remittances…economic elites became wealthy and
autonomous of State, while in Saudi Arabia old economic elites ousted
and state became rich from oil revenue , thereby making new economic
elite dependent on the state
 1980s- price of oil fell states had to implement steep tax reform
o AUTONOMY OF THE STATE IS A FUNCTION OF THE TAX
REVENUE
 Saudi Arabia: repealed tax reforms
 Yemen: successful tax reforms
Remittances are received by communities- no government intervention (Yemen)
Autarky: drawing borders of state and protecting it from international economic
forces…protectionism…being self sufficient
Import Substitution Industrialization: (ISI) importing machinery, exporting
raw materials
o Protectionism from international prices by protecting infant industriesplace tariff barriers
o Used tariffs to promote industrialization
o Try to encourage consumption of domestic goods
o Inefficiencies built into statecraft to achieve political and economic goals
o Factories for industrialization in urban, labor rich areas (targeting
disenfranchised)
o Nationalistic, geared towards public goods/services
 60% of ISI state revenues come from customs duties
Bretton Woods: post WWII institutions to stabilize global economy
o IMF, World Bank
 Liberalized countries
o Stability create a context where industrialization could be achieved
o Funds generated from aid, foreign loans, military aid, and international
organizations
Dutch Disease: economy relies only on exports and other industries don’t receive
as much support or subsidies from the government…less incentive to
domestically produce because appreciation of currency.
o DISCRIMINATES AGAINST INDUSTRY AND AGRICULTURE
o if you rely on oil/ external source of rent, your tradable will decline….you
will have to import more and more
o Inflow of capital will appreciate domestic goods
o Products will be too expensive for others and imports are much cheaper
Neoclassical Model: everyone/ every country has assets
o If the price rises on the international market, they will want more
openness, while those whose goods depreciate would prefer austerity and
autarky
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o BUT, after oil boom, countries became more autarkic and bust
liberalization for Iraq and Algeria
Great Depression: high government spending… keynesian economics and NOT
supply side (where the wealthy invest money and stimulate the economy)
o FDR and government regulations to stabilize economy
Glass Stegell Act: banks could not go across state lines, deposit and investment
banks separate, minimum deposit (1933-1999)
Abrogation of gold standard: $35 for one ounce of gold
o Gold standard based on U.S. dollar standard
Sanctions are punitive with political coercion in mind
o Wipe out entire classes
o Create black markets
o Creations of transnational links
 Fueled by diasporas links
Current Account: deals with trade…numerical devaluation that can be very wrong
o “export X amount to India”…numerical value we understand
Capital Account: deals with entire banking system…unrelated to trade
o When you liberalize, money can flow in and out of borders without
control…interconnectivity and subsequent instability
Liberalization: export based industry controlled by state
OIL BOOM:
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1973 marks the beginning of globalization
influence of oil on the international community
Oil embargo initiated my OPEC, led by King Faysal
Saudi Arabia is the only swing producer of oil…they can single handedly change
the price of oil in the market
Gulf states used oil profits to make accounts in international banks…did not
industrialize
Pan-Islamism and global identity…takes politics to a global level
Oil revenues into the state treasury- fund infrastructure…should give the state
economic autonomy…do not have to tax
o Iraq and Saudi Arabia began to give power to specific tribes// families
Labor remittances go to the home country of the laborer
Oil boom transformed the entire international financial market
o Prior to the boom, the main source of funds for developing countries from
international aid or projects handled by international organizations
Began a large debt cycle for developing countries
Unofficially, remittances were 30%...in reality, 120% of GDP for countries like
Yemen
o Government had an interest in undervaluing it in order to continue
receiving foreign aid.
Oil revenues allowed exporting states to turn nationalism into Pan-Islamism
Rentier States: (Iraq and Algeria)
o Do not have enough internal revenue other than primary export
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o DUTCH DISEASE
o Iraq used ISI to protect domestic goods and encourage production
No political conflicts during Boom Years
OIL BUST & NEOLIBERAL REVOLUTION:
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The story of debt…oil prices declined in 1983
Oil boom united the MENA region better than Pan-Arabism
o Pan-Arab discourse ended…idea that national identity tied to constructed
borders has been problematic
During the Boom, the role of the state expanded but weakening of regulatory
capacity across the board
Rentier state- income from other external resources…no taxation because of the
informal economy
1982, massive debt crisis in Latin America and developing countries
o borrowing in the short term to cover taxes on loans
o international banks lent $ from Gulf states to developing countries
deregulation of financial sector states printed more money hyperinflation
shift in thinking about development….moved away from ISI idea that state is
the problem
o movement away from state regulate systems
ISI is based on protection and barriers...BUT if you are not trading on the
international market, your currency can be overvalued
Private property is necessary for growth, unfortunately many states in the MENA
region sold the most profitable industries
o Severe indebtedness in countries like Algeria (invested in hydrocarbons)
 Algeria focused on heavy industry and hydrocarbons…could not
implement privatization measures
GCC- Gulf Cooperative Council
o Declined membership to Yemen and Iraq
o At the end of the Iran//Iraq War, Saddam was refused membership- after
these states had lent him money…demanded repayment
o Saddam created the Arab Cooperative Council: comprised of Egypt,
Iraq, Yemen and Jordan
o Rich Gulf vs. poor labor rich states
Pan-Arabism with class basis….economic stratification  unrest
IRAN IRAQ WAR:
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Iraq’s market reform and the way they were carried out  invasion and Gulf War
Saddam takes power in 1979, same year as the Iranian Revolution
o Attacks Iran for religious reasons (the holiest Shi’a sites were in Iraq…lots
of cross border traffic)
During the war, Iraqi economy and market were completely controlled by the
state...NO private sector (except in construction sector)
o Ceilings on private investment lifted
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o **Prices being paid were based on international prices**
after the war one million Iraqi soldiers returned home and faced massive
unemployment
o level of unemployment and inflation that was unprecedented
creation of the ACC was Saddam’s bid for regional power and hegemony
had little money to rebuild Iraq…did not want to rely on IMF or World Bank
GULF WAR:
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Iraq had fought the war with Iran for all Sunni Arabs
o Iraqi debt to Saudi Arabia cancelled, border defined and signed a pact of
nonaggression
Kuwait demanded from Iraq:
o Rumalia oil field
o Bubyan Islands
 Kuwait had been laterally pumping oil from Rumalia
 Iraq wanted to redefine the border
 Negotiations break down, hours later Iraq invades Kuwait
 Unemployed veterans of Iran Iraq War are able to channel
their aggression into the invasion of Kuwait
At one point, Iraq was self contained…Saddam and his cronies not affected by
inflation because oil reserves and their money based off dollars
JUSTIFICATION FOR US INVOLVEMENT:
o Threat to Saudi Arabia
o Use of chemical weapons by Iraq
United States positioned troops in Saudi Arabia in order to fight
o PROBLEMS WITH U.S ARMY: female troops, holiest cities (Mecca and
Medina)
U.S. airstrikes against retreating Iraqi army and 46, 000 civilians dead
o Set up no fly zone in order to encourage Shiites to rise up against the
regime massive loss of life
First Gulf War was the true end to Pan Arabism
Saddam considered himself to be a hero…all of the wounds suffered by Muslims
and Arabs will be justified…saw himself as a victor (supported by Jordanians,
Yemenis and Palestinians)
Sanctions:
o 1991-2004
o internal infrastructure of “war economy” in Iraq, so sanctions did not have
a lot of impact…decline of the Middle Class
IRAQ:
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1968 Ba’th takes control with Ahmad al’Bakr
o Saddam was vice chairman of the Revolutionary Guard…becomes the
head of state army
Nationalized the Iraq Petroleum Company just before the boom
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Established a welfare state and had state controlled economy during the war with
Iran….but during the war the oil bust happened
ARAB COLD WAR
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East Asian NICS: Newly Industrialized Countries
o Before, belief was there was only one way to develop by eliminating
tariffs, cut down on state spending
Majority of state revenues came from customs duties
o Therefore, states that attempted to modernize through liberalization were
doomed to have a debt crisis.
Liberalization of capital account means money can flow across borders
Low interest rates in open economies, currency flight into other countries and
negative impact on domestic currency
EGYPT:
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Hidden economy in Egypt
1950s/1960s populist authoritarian, nationalization (ISI)
1970s/1980s controlled liberalization…Egyptian infitah (opening of trade)
1980s/1990s debt crisis…fiscal crisis…SAP…narrowing of political base to
privilege private capital
post 1973, Egypt had a hidden economy and unregulated economic interactions
o similar to Yemen
o remittances fueling hidden economy- done through informal institutions
post 1982, rural construction…increase in deposits…Islamic banking system
TURKEY:
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trends in post Ottoman Turkey
Kemalism vs. Pan Turkism vs. Islamism
PANISLAMISM IN 1970s:
o Coup by memorandum…rise of Erbakan and MNP (National Order
Party)
o Political Islam…Islamic agenda in international politics
o Broke up in 1971 and became the National Salvation Party (MSP)
 Turks were soldiers of Islam
 Turkish nation through education & Islam as a national identity
1950s: Pan-Turkism as a reaction to Russia’s Pan-Slavism
o Islamist appeal to religious sentiments
1960s: INONU…. Military coup & unification of Turkish people under
nationalism
o Islamism through Pan-Turkism
1970s: MHP espouses primordial Turkish ethnic superior values
o Turks as the foremost soldiers of Islam & advocates of Islamic
nationalism
1980s: military coup!...fragmentation of MHP MCP countries…hostility
toward foreign influence
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o OZAL governments
o Welfare party (RP) unification based on Islamic identity
Growth of informal economies
Privatization and liberalization undercuts material base of state control and the
nationalist discourse that supports it.
** neoliberalism and political devolution of taxation relocates authority to tax and
spend at sub state level
Islamism is linked into informalization of economy…mechanism for bridging gap
and creating a new order
War time economies and emergence of black markets
Labor exporters have built in informal systems (designed to escape scrutiny of the
state)…no regulatory redistributive mechanisms
Production of international market leads to informalization of labor
Turkey is the quintessential example of state led ISI labor informalization
Ataturk and reform:
o Secular reforms and move away from Islam
o Wanted to distance them from the “Arab” identity.
o Rapid reforms that exceeded the speed at which people could adapt
1950- first election and formation of democratic party…strict version of
Kemalism
o importance of private industry…bourgeoisie and industrial class
REFORMS AND RISE OF ISMALIST TURKEY (1960s-1990s)
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Grey Wolves= Turkish, pan-nationalists vs. “left”
Emergence and political power of industrial elites (eastern tigers)
Upper-class intelligencia vs. workers unions and organizations
o Disputes about land
Party X- Islamist conservative was no longer in power
Agrarian economy squeezed and people began to migrate into cities
Rise of urban violence and resentment towards U.S.// anti-American feelings
1979 oil shock: Turkey has no oil…spikes the price of oil and creates inflation
just as Turkey prepares to enter into phase 2 of its ISI plan  severity of terms as
dictated by IMF almost unbearable
1980 COUP
o dismantles ISI, ends subsidies, end to state spending on social services
o conscious project of creating export oriented industry
o modeled after the East Asian Tigers (S. Korea, Hong Kong, Singapore)
 manufactured industrial cities in certain Anatolian regions near the
Tigers in order to leech free electricity, sewage and export
subsidies.
 Government control over where industrializtion took place
State led industrialization…state engineered…NOT ISI (no import tariff)
UZAL- culture of consumerism…created new Anatolian bourgeoisie
New and Old Bourgeoisie
o TUSIAD: old, internationally connected elites
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o MUSIAD: new, profited off of imports…wants to trade more, and dislikes
TUSIAD because lent money to the government and crowded out their
access to capital
During this time, 60% of all foreign exchange the Tigers earn went to debt
services
1991: Turkey liberalizes capital…little control & enormous instability
Party X  MHP: began on a platform of welfare politics and providing public/
social services
Welfare party becomes wildly popular, but military dissolves the party in 1997
and MHP leader banned from politics
AKP (White Party) won election, led by Erdojan (MUSAID)
once the government was no longer borrowing heavily from private banks,
TUSAID began to export again and T& M merge
ALGERIA:
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three sectors of agricultural development in Algeria
state can allocate private industry and resources
o short term profit
o more stable investments will lead to creation of jobs….but wanted
immediate gratification
1954-1962: Algerian war of independence
o fought in response to French settler colonialism
o FLN: national liberation front
1962-65: Ben Bella, who was then deposed by Boumedienne, who was in power
until 1978
o narrow industrialization under Ben Bella
 colonialism serves as a market for industrialized country- captive
market
o under Boumedinne, there was rapid industrialization, construction and
innovation of private companies
1978-1992: Benjedid
Legal creation of the FIS (Islamic Salvation Front) in Algeria
1988- October Riots after ’86 oil bust
1989- new constitution and rise of political parties
1990- municipal elections (FIS won strong majority)
1991- parliamentary elections…COUP, which invalidated the parliamentary
election (led by FIS and army)
o FLN invalidated budget, for FIS had to rely on informal charity
organizations
 FLN supported by secular labor force and economic elite
Because of the oil bust the state was unable to provide services, so groups turned
to private sector
Violence that ensued was NOT RANDOM…politicized and served a purpose
o rational actor approach: individuals seek to maximize their
utility…methodological individualism
post 1962: created a centralized economy
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Algerian settler colonialism is unique- before, French land was collectively
held…creation of private property and proletariat (used as labor to harvest grapes)
After the civil war the output of the agricultural sector plummeted…capital flight
after the French left
Algerian government was victorious, but powerless
o Workers were not paid strikes
AUTOGESTATION: spontaneous takeover to states by workers
Coup in 1965, staged by Boumedienne, who ruled until 1978
o Planned to emphasize and support industry
o Focued on hydrocarbons instead of agriculture (they had a comparative
advantage)…BUT the hydrocarbon industry never employed more than
6% of the eligible workforce dependent on imports
o State invested in big industries by limiting domestic consumption
OIL BOOM: 1975-1977: Algerian state organized 18 conglomerates…controlled
the economy, which allowed for the government to set wages, prices, decide
where industry was located and to avoid taxation
o debt burden on state increased exponentially
Government control of economy also allows for them to decide how the
government should be run…new leader Ben Jadid
o Dictated that factories had to make 60% of basic components
o Placed emphasis back on agriculture
Algeria entering an ISI period…which was ultimately unsuccessful
1986: oil bust…investment in hydrocarbons does not pay off
o foreign debt doubles…austerity reforms
o Algeria breaks up all agricultural properties
o Small cooperatives
Throughout this time there was 0% growth…austerity measures
Huge scope of liberalization and artificial shortages
ISLAMISM AND INFORMALITY:
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Managing new relationships with international economy
Turkey and Tunisia created informality in labor by design
Informality not confined to Muslim countries (ex. Somalia) which leads to the
collapse of the state
Economic liberalization was a failure in Algeria, but a success in Turkey.
FIS builds base in municipalities
Market as a social construct
Informalization: deconstruction of the structure of business labor relations and
state services
Different models of Islamism- no such thing as a universal//all encompassing
Islamism
Discriminate vs. indiscriminate violence as a tool
o Might not deter defection
o Location of the Triangle of Death- not random violence