http://www.atimes.com/atimes/Middle_East/MID-02-190413.html
IMF, World Bank spineless with Gulf's dictators
By Hossein Askari
It is difficult to understand how the International Monetary Fund and the World
Bank can continue to give their run-of-the-mill economic and financial
assessments to Persian Gulf oil dictatorships with a straight face.
They have been saying the same things - deregulate markets, cut red tape,
reduce corruption, reduce the size of the public sector, cut subsidies,
encourage the private sector, adopt rational policies, and so on - and yet no
good has come of it. Yes, some of the countries have been superficially
transformed with tall buildings and beautiful airports, and there has been some
progress in human conditions and development. Meanwhile, rulers, their families
and those well connected have become rich beyond belief.
At the same time, these oil exporters have had anemic average annual per capita
growth since their oil revenues surged in 1974. Their economies have not been
diversified away from oil and thus they export little besides oil, refined
products, natural gas and petrochemicals.
Good jobs are in short supply, and with high unemployment the government has
absorbed more and more labor that does little productive work. Human
development has been sub-par. Conflicts, both interstate and intrastate, have
been at an all-time high, with the region recently becoming classified as the
world's most conflict-ridden region. And all the while, the limited oil and
natural gas resources of the region are being depleted at the expense of all
future generations with little hope of a meaningful turnaround.
Under these circumstances, the average citizens of the region are increasingly
angry against their rulers and the foreign powers that back them.
The Fund's and the Bank's assessments of the region's problems and constraints
miss the central issue. Rulers in these countries have absolutely no incentive
to adopt the foundational reforms that are imperative for a turnaround as long
as they benefit as they do now and enjoy the support of foreign powers to hold
on to power.
If foreign powers, historically the West, continue to support these dictators,
conditions cannot change and reforms will not be adopted. Rulers, their
families and their cronies benefit from their oppressive rule beyond anyone's
dreams. They are taking directly from the sale of oil, from their treasuries
and through corrupt business activities.
They have no incentive to change. There is no price to pay for their actions
that rob their citizens and impede human, political, social and economic
development as long as they have the support of foreign powers who they reward,
their companies and their former senior officials, and hire influential foreign
lobbyists to secure the needed political support.
The historical practice of colonialists, exploitation, has been turned onto its
head, becoming one of collaborative colonialism. And even if regimes are
overthrown, those rising to power will do the same, garner foreign support and
do as did their predecessors. It is a veritable closed loop. Nothing can change
and all is locked in time.
These oil-exporting countries must establish an independent judiciary and the
rule of law (equal justice for all). They must establish economic institutions
that are effective and are not politically driven. They should declare that oil
and gas belongs equally to every citizen (not especially to rulers) of this and
future generations and will be managed accordingly. Political reforms, with a
clear roadmap and timetable that delineates a path towards political
participation and elected and answerable governments, must be set in motion.
Yes, the Fund and the Bank cannot interfere in international and domestic
politics, much less tell the important foreign powers that control the Fund and
the Bank to keep their hands off. But the Fund and the Bank can promote three
policies that might go along way to achieving the same and supporting the
peoples of the region:
a.. They could ask these countries to proclaim that oil and natural belongs
equally to every citizen of this and future generations. Rulers have no special
access. Rulers will claim that this is already in their constitution or in the
Koran (which some claim as their constitution). But it is not so explicitly and
in detail stated anywhere.
a.. They should tell them how best this could be done. It would be more or less
along the lines of what is done in Norway and Alaska. Governments would be
weaned from oil revenues in a span of say 10 years and they would begin to
finance their expenditures from taxes; the proceeds of oil revenues would be
invested in an internationally diversified portfolio of assets as in Norway; an
annual check of equal purchasing power would be issued to all citizens much as
is done in Alaska.
a.. They should recommend to IMF shareholders (that is, the IMF's membership)
to adopt a policy that would help all countries around the world. Namely, that
the offshore (not domestic) bank and investment accounts exceeding US$1 million
of all rulers (monarchs, presidents, prime ministers from all countries in the
world) should be disclosed. Surely no country that professes a clean
government, especially the West, can object to this. Why should rulers need an
offshore account anyway? And if they need it for legal transactions, they
should declare it. Threatening multilateral sanctions on any financial
institution that helps rulers evade this disclosure and with an agreement by
all IMF and Bank members to confiscate any undisclosed accounts could enforce
this.
These recommendations essentially take away the special incentives and benefits
of dictators and of their foreign supporters. They would initiate a process of
foundational reforms that are necessary for a turnaround. In turn, they would
reduce discrimination, afford hope to the general population and thereby
ameliorate conflicts within and between countries in the region.
Hossein Askari is Professor of Business and International Affairs at the George
Washington University and formerly served on the Executive Board of the
International Monetary Fund. His numerous publications include Conflicts and
Wars: Their Fallout and Prevention (Palgrave Macmillan, 2012). His most recent
book, Collaborative Colonialism: The Political Economy of Oil in the Persian
Gulf, is due to be published in September 2013.
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