Issues of international development took center stage at the 2002 UN-sponsored Johannesburg Summit, but the Middle East was virtually ignored in favor of partnerships with Africa and Central Asia. Indeed, for the Middle East and North Africa, issues of development and modernization have acquired new urgency in the context of transnational terrorist networks rising in the region. The current war on terrorism, conducted by the United States in response to the terrorist attacks of September 11, 2001, does not address the underlying sense of alienation among the Middle East’s unemployed youths, who provide support for terrorist networks. Sustainable human development in the region thus represents the ultimate solution to regional instability and to swelling support for terrorism. Policies pursued by the United States under the administrations of US Presidents Bill Clinton and George Bush adversely impacted regional conditions; even if the countries in the region achieve self-sustainable human development, continued US confrontations with Iraq and support for Israel at the expense of the Palestinians will surely aggravate the underlying conditions for terrorism.

The situation in the Middle East can be characterized as a new clash of globalizations that frames the processes of development and modernization in much of what used to be called the Third World. Pressured to undergo extensive political and economic reforms, states in the region are caught between the imperialistic impulses of a neo-conservative Bush administration and other, apparently more benign, multilateral proponents of globalization, such as the World Bank, International Monetary Fund, and United Nations. Meanwhile, some of the more radical Islamist opposition parties stand pitted against any such reform-oriented forces.

In the 1960s, following the model of W.W. Rostow, developing countries were viewed as nascent economies about to “take off” under the protection of a relatively benign international environment. If so, then today they are caught by these international forces in a global pressure cooker. Arab countries are doubly pressured, with the regional forces of Arab nationalism and political Islam on one side and the challenges of globalization and reform on the other. As a result, they are less insulated than most other developing countries, both from one another and from the forces of globalization, making reforms and the achievement of human development far more difficult.

Regional Constraints

Political and military instability comprise the first major impediments to development in the Middle East. The long-standing Arab-Israeli conflict shows no sign of abating. Despite the diminished appeal of Arab nationalism after Gamal Abdel Nasser’s death in 1970, the fate of Palestinians during the second intifada has been a prime daily news broadcast throughout the Arab world and beyond. The sight of the humiliations inflicted on Palestinians steadily erodes the legitimacy of Arab governments, whose citizens see them as impotent onlookers if not outright accomplices of the aggressors. The Arab-Israeli conflict is obviously not the sole obstacle to Arab development, but it was used to justify the militarization of Arab politics in the 1950s and 1960s and heavy military expenditures in Egypt, Iraq, Jordan, and Syria—the legacy of which continues today.

Similarly, the intra-Arab disputes that Malcolm Kerr so vividly describes as the “Arab Cold War” probably contributed as much to the huge military expenditures of the Arab Gulf states as fears of Iran or Israel did. Although its share of international arms markets has declined in recent years relative to East Asia’s, the Middle East on average devotes a greater proportion of its gross domestic product to arms purchases than does any other region in the world. The military expenditures of the Arab states and Iran between 1980 and 1995 are estimated to have totaled US$420 billion, excluding the damage caused by the 1991 Gulf War. These expenditures not only divert funds from development but also contribute to military-industrial enclaves that defy efforts to liberalize economies in the region.

These expenditures have slightly diminished in recent years, but the major reason for their reduction introduces a second distinctively Middle Eastern blockage to development: oil rents. Of the 10 countries in the region that have a population of 10 million or more, only Morocco lacks oil reserves, and only Tunisia—the smallest of the 10 in population as well as in oil production—is sufficiently diversified to be relatively unaffected by the volatility of oil revenues. All other states in the region (particularly Algeria, Egypt, Iran, Iraq, Saudi Arabia, Syria, Yemen, and most recently Sudan) depend heavily on oil exports to sustain government revenues and balances of payments—or in the case of Jordan, Lebanon, and the poorer states, to buffet inflows of remittances.

When oil revenues plummeted in the mid-1980s, this dependence on oil wealth led to unproductive investments and unsustainable expenditures. The curse of oil hit Algeria’s economy the hardest and may have tempted Saddam Hussein to carry out his ill-fated 1980 invasion of Iran. In addition to their deleterious economic impacts, oil rents may also help explain what the Arab Human Development Report 2002 (AHDR) calls the region’s “freedom deficit.” Even after factoring in inflated military personnel and any expenditures induced by the Arab-Israeli conflict and by intra-Arab and Arab-Iranian rivalries, oil revenues still contribute to the prevalence of authoritarian regimes in the region. Most economists, however much they believe in free markets, now understand that good governance, which is closely associated with the practices of constitutional democracy, is vital to making those markets work for sustainable human development. By reinforcing authoritarian regimes, oil wealth ironically becomes a barrier to good governance and development even as it provides the material wealth capable of funding development projects.

In addition to wars and oil, a third major impediment to development is the region’s special colonial legacy, which also discourages democracy and political pluralism. Close to Europe and strategically located on the rim of Eurasia and Africa, the Middle East and North Africa were the principal battleground where the great powers competed for influence in the 19th century, even before the discovery of oil enhanced their geopolitical significance.

Political development suffered as a result. Direct French rule smothered civil society in Algeria and united civil society against French occupation in Tunisia, destroying pluralism as well. Indirect rule in Syria and Iraq promoted vulnerable, isolated elites who fell victim to military juntas. Egypt and Morocco were among the few to acquire legacies of political pluralism in opposition to more refined patterns of indirect colonial rule. Most of the other impositions of indirect rule generated monarchies that were either toppled by the military or that remain precarious and corrupt—hardly agencies for promoting self-sustaining human development.