Opinion Editorials, April 2011

Dictators Squandering the Arab Wealth

By Abbas J. Ali

Al-Jazeerah, CCUN, April 18, 2011

The ongoing Arab youth uprisings have underscored the depth of political oppression and economic hardship that the majority of the Arab people have experienced.  More importantly, the uprisings have brought to the surface the reality that resources and wealth in the Arab world are seldom utilized to serve the people. Unapologetically, Arab rulers consider their nations’ wealth as their own property; their personal bank accounts and those of the states are one and the same.

This fact, along with the governments’ willingness to engage in brutality against those who oppose them, has deepened dependency on superpowers. The latter has become the norm, and transparent and sound economic decisions have been forfeited.  Subsequently, national wealth is wasted and priorities are set irrespective of national needs and whether or not resources are directed toward productive growth.  

Fortune magazine (Feb. 28, 2011) reported that “American officials [have] acted as de facto pitchmen for U.S.-made weapons,” and Washington has increased its weapons export to Arab states.   The United Arab Emirates, in 2011, signed a $7bn deal to buy an advanced missile defense system from Lockheed, while Saudi Arabia signed one of the biggest weapons deals in recent history totaling $60bn in 2010. According to Fortune, the latter package is the “biggest overseas arms sale in recent memory.”

Further, the magazine reported that Arab oil-rich states have accounted for “50% of foreign military sales signed between 2006 and 2009. . . During that time, Saudi Arabia purchased about $13 billion worth of American weapons; the UAE spent $11 billion.” The Arab states have no actual use for the more sophisticated type of weapons and these weapons are, therefore, stored in warehouses to rust. Furthermore, national military officers have limited access to them. However, weapons which have domestic application are used by Arab rulers to repress their own citizens.

The Los Angeles Times (2011) reported that ‘“Arabs who have taken to the streets have experienced “Made in U.S.A.” tear gas used by repressive governments to kill and maim unarmed protesters.”’ Likewise, writing in the New York Times, Nicholas Kristof (2011) stated that it is “wrenching to watch America's ally, Bahrain, . . . use American tanks, guns and tear gas as well as foreign mercenaries to crush a pro-democracy movement -- as we stay mostly silent.” 

While buying sophisticated weapons helps in recycling oil money to the advantage of the superpower, Arab resources have been diverted to these unproductive sectors thereby threatening economic development and endangering the welfare of future generations. The UN’s Arab Human Development Report 2009 documented that the Arab countries were generally less industrialized in 2007 than in 1970.  The report, too, highlighted the fact that about 36 percent of the population is living in extreme poverty and the region as a whole suffers from a widespread absence of human security which has held back tangible progress. It has left the general population living in a vicious cycle where both freedom from fear and freedom from want are lacking. 

While buying weapons just for the sake of recycling oil money is a conspicuous form of squandering wealth, other forms, like corruption and talent destruction, also threaten economic and social development.  The Transparency International in its Corruption Perception Index 2010 has listed several Arab countries as among the most corrupt in the world (e.g., Iraq, Sudan, Libya, Syria, Lebanon, Egypt, etc.).  The widespread practice of bribery, fraud, and corruption not only destroys the social fabric of and obstruct development in these countries but it ultimately leads to deepening dependency on foreign markets and paralyzes any attempts to build sound legal and political institutions.

Talent destruction is a manifestation of freedom deficit and lack of sound educational and government policies to cultivate, maintain, and deploy resources.  In The Arab World Competitiveness Review 2010, the World Economic Forum reported that the Arab World has   failed to increase its global market share, and collectively the Arab countries are unable to generate sufficient jobs for their growing populations, therefore situating themselves among the highest in the world in terms of unemployment rates.

One of the useful indicators for nurturing and utilizing talent is the number of patents obtained each year.   The U.S. Patent and Trademark Office shows that, for 2009, Israel had 1525 registered patents while the whole Arab World had only 63. The latter is conspicuously low relative to a country with limited natural resources, South Korea, which had more than 9566 alone. The lack of creativity and innovation in the Arab World makes a frightening situation where human capital formation is ignored and oil revenue is wasted on activities unrelated to cultural and economic growth.

Unlocking human talent and creative involvement is impossible to achieve in the absence of political freedom, openness, and vital civic institutions.  These have become prerequisites for any positive change in the Arab World so it is no wonder that the youth uprisings have championed political change and openness as a mechanism to reverse the downfall of the Arab World.  Oppression and coercive domestic policies severely limit creativity and paralyze talent recognition and development. This has been the major factor in forcing Arab talent to migrate to the west.

For decades, Washington has maintained a strong tie with Arab autocratic and totalitarian regimes.  Partnerships with these regimes have been instrumental in keeping dictators in power and paralyzing Arab economic progress. Even with increasing public awareness of the brutality of Arab dictators, Washington continues its support of corrupt and brutal regimes. In fact, policymakers have either ignored or have encouraged Arab rulers in their wasteful behavior. The New York Times (March 24, 2011) reported that though American policymakers knew that shady dealings helped Qaddafi build his fortune,  Washington, nevertheless, signed new trade agreements with Libya which, according to  Gene Cretz, the American ambassador to Libya, was designed to “broaden and deepen our bilateral economic relations.”

The tragic human and economic situation in the Arab World demonstrates that the Arab tyrants have engaged in extensive destruction of precious resources and obstructed economic growth and sound investment programs.  Washington’s unconditional support to Arab tyrants deepens freedom deficit, obstructs talent cultivation and development, and accelerates the depletion of whatever is left of Arab wealth.  

Dr. Abbas J. Ali is Professor and Director, School of International Management, Eberly College of Business and IT, Indiana University of Pennsylvania.

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