Academic journal article The Middle East Journal

Globalization, International Finance, and Political Islam in the Arab World

Academic journal article The Middle East Journal

Globalization, International Finance, and Political Islam in the Arab World

Article excerpt

This article looks at one important aspect of globalization in the Arab World, namely the provision of international finance by the US, the International Monetary Fund (IMF), and the World Bank in support of economic liberalization programs. This flow of international finance has been partly determined by geopolitical factors and in some countries has resulted in a decline in state provision of social welfare, increased poverty, and increased inequality. Not only has this form of globalization been increasingly challenged by Islamist groups, but many such groups have moved in to provide social capital and fill the welfare gap created by the gradual withdrawal of the state from socio-economic affairs. Globalization has thus strengthened the hand of political Islam and undermined the political legitimacy of incumbent regimes.

Globalization has become a buzzword today, but it is one of the driving forces behind international economic relations. Although its reach so far has been uneven, it continues its "encroachment" across developing regions, including "the Arab World."1 While the globali/ation process, or al-awlamah as it is referred to in Arabic, has been much debated and analyzed, the analysis remains less global than it is thought to be, and limited in its focus to the wealthy sectors of the globe. As Mittelman puts it: "Globalization studies are not really global. Rather globalization research mainly centers on, and emanates from, the OECD countries... from Western intellectual traditions and practices."2 Only the Asian continent has recently received sufficient attention in this regard, thanks to the financial crisis that hit the region in 1997-1998 and attracted worldwide attention to the possible negative socio-economic impact of premature globalization.3 Globalization studies emanating from and centering on the Arab world remain limited, carried out mostly by officials from the International Monetary Fund (IMF), World Bank, or other "members of an elite - a minister of finance or the head of the central bank - with whom the Fund [World Bank or World Trade Organization] might have a meaningful dialogue."4 Therefore, these studies appeared blindly pro-globalization, a fact which led them to overstate the benefits and understate the costs, including the political costs, of globalization.5 As such, they are largely devoid of any political analysis, suffering from what Cook and Minogue describe as "politics-blindness."6

This article aims at addressing this gap in the literature by focusing on one channel through which globalization has been introduced into the Arab world, namely, the provision of international finance that is contingent upon economic reform conditions entailing liberalization and "opening" of the recipient economies. The authors are fully aware of the immense current debate over the controversial and contested concept of globalization. This paper does not concern itself with this debate, but refers interested readers to some of its main literature.7 Globalization is simply used here, to refer to increased economic "openness" and intensification of international integration of Arab economies over the past two decades. This process is usually associated with key reform policies such as privatization, trade liberalization, and capital market and financial deregulation promoted, in most cases, by international multilateral institutions, particularly the IMF, World Bank, and more recently the World Trade Organization (WTO). The former two institutions and their ideology, along with the US Treasury, are usually referred to in the literature as the "Washington Consensus," while the latter (WTO) is sometimes referred to as the "Geneva Consensus." The IMF, World Bank, and WTO are also viewed by most observers as the main ambassadors and "important vehicle" for globalization.8

It is also important to bear in mind here that we believe that globalization can, and indeed has, delivered large benefits in certain circumstances, particularly when implemented gradually and properly in terms of pace and sequence, as in China over the past two decades, for instance. …

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