Arab Upheavals: Causes, Prospects, Consequences [1]

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INTRODUCTION: ALLAH MA'A AL SABARIIN

The Arabic proverb, "God is with the patient," better translated as "be patient," seems highly relevant when considering the Arab upheavals of 2011. They could spread more virulently than they already have into countries heretofore largely unaffected, including Algeria, Lebanon, Iraq, Sudan, and any of the eight monarchies. Only tiny Qatar, whose citizens enjoy the world's highest GDP per capita and whose al Jazeera satellite TV station has been the messenger of the upheavals, seems immune to the political virus. If neighboring Gulf Cooperation Council (GCC) states were to succumb, however, even its political health would be jeopardized. As for Tunisia, Egypt, Libya, Yemen and Syria, the ultimate outcomes of their upheavals remain in doubt. In the first three, rulers have been removed, but institutional and individual legacies of their regimes remain active. Democratic transitions have yet to be secured as various forces vie for power in new and uncertain political circumstances devoid of effective constitutionalism. In Yemen and Syria rulers grimly cling to power (even if in absentia in the case of President Ali Abdullah Salih), ready and willing to lay further waste to their citizens and countries. So at this stage all that can be said with certainty is that the long established status quo of Arab authoritarianism, whether in the form of republics or monarchies, with only the partial exception of quasi-democratic Lebanon, was and remains extremely vulnerable to popular protest movements and possibly armed rebellions.

Widespread, similar manifestations of the political fragility of Arab authoritarian governments suggest common political and economic causes, which can be summed up as too little democracy and insufficient development. On most measures of the former, such as the World Bank's Voice and Accountability governance indicator, the Arab world typically ranks at the bottom of global tables. Corruption, the inevitable byproduct of authoritarianism is in the Arab world, as reflected in Transparency International's Corruption Perception Index, at the high end of world standings. Economic underperformance is reflected by the region's continuing failure to industrialize, with its total manufactured exports less than those of even small European countries, such as Finland. Absent industrialization, the Arab world's youth bulge, exceeded only by that of Sub-Saharan Africa, cannot be absorbed into gainful employment. Its youth unemployment rate of 25 per cent is the world's highest. Add in the comparatively deep penetration in Arab countries of satellite television, mobile phones, and internet access and utilization, to say nothing of geriatric political elites working to secure intra-family successions, and one wonders why this perfect storm of political and economic decay, accompanied by "wired" but unemployed youthful populations, did not sweep decaying regimes away earlier, or all of them now that the storm has finally hit.

So while all Arab countries are being buffeted by these common forces, some have weathered them better than others. One obvious explanatory factor is relative wealth. The GCC states are the richest in the Arab world. With the exception of Bahrain, they have been the least affected. Bahrain, moreover, has the lowest GDP per capita of the GCC countries. The protest movement there has drawn its greatest strength from the poorest and most marginal elements, although the fact of them also being Shi`a is highly relevant. But if Bahraini Shi`a were wealthy, or at least not less wealthy than Sunnis, would the protest movement have been so forceful? Similarly, the next "poorest" GCC country, Oman, witnessed the second most intense protests in the GCC in the spring of 2011. In North Africa, comparatively hydrocarbon rich Algeria has witnessed less protest than even the ostensibly much more stable Morocco, to say nothing of Tunisia and Egypt. GDP per capita in Libya is about twice that in Algeria, but the quixotic Colonel Qaddafi so manifestly squandered resources that Libyans could only wonder why they were relatively so poor. Had Qaddafi had the good political sense to throw large sums of money at the problem in the same lavish manner as the rulers of Kuwait, the United Arab Emirates, and Saudi Arabia, he might have hung on longer. The findings of public opinion polls also seem to support a materialist interpretation of upheavals and their outcomes. The overwhelming concern of Egyptians as polled by the International Republican Institute in the spring of 2011, or of citizens in six Arab states polled by the World Values Survey over the past several years, is with economic, not political issues. [2]

But money is not everything, as the susceptibility to upheaval of republics as compared to monarchies attests. While there have been demonstrations in Morocco, Jordan, Oman, Kuwait and Saudi Arabia and of course Bahrain, it is only in the republics of Tunisia, Egypt, and Libya that rulers have been overthrown, or in Yemen and Syria, where protests have shaken regimes to the core. The explanation of susceptibility to popular upheaval thus seems to lie in both relative per capita income and regime type, not to mention various other, less quantifiable or categoric variables, such as political leadership or perceived discrimination. But is it only that republics have presidents and monarchies have kings that accounts for the relative durability of the latter? After all, Arabs several years ago coined the term jumlukiya, a cross between jumhuriya (republic) and mamlakiya (monarchy) to describe the family based power systems common to both. Not surprisingly, a closer examination reveals that there are structural, not just titular differences between these regime types that may better account for their comparative durability in the face of the similar challenges of underperforming economies, sclerotic polities, and youthful, underemployed populations. After reviewing this typology of regime types we shall then proceed to consider their prospects for democratization.

REGIME TYPES

Development requires effective action by both state and society. Saddam's Iraq and Qaddafi's Libya are cases of overgrown states that pulverized their respective societies, rendering them incapable of contributing to economic or political development. By contrast, Lebanon's weak state has been unable to fashion and implement a development strategy in the face of the country's strong but fractured society. In a book published just prior to the Tunisian uprising in December 2010, Clement Henry and I sought to account for varying capacities of states and societies, to categorize Arab countries along those dimensions, and then to demonstrate that the ability of Arab countries to respond to the threats and opportunities presented by globalization could be predicted by their place within this typology. [3]

Of the Arab republics, we identified Tunisia and Egypt as "bully praetorian" and the remainder, other than quasi-democratic Lebanon, as "bunker praetorian" states, this title suggesting the residences of their presidents, whether metaphorically or in reality. [4]
Having much longer established, stronger states with autonomous administrative structures and extractive capacities that date back to the nineteenth century, Tunisia and Egypt also benefit from relatively homogenous societies. State and society are thus relatively more balanced than in the bunker republics, as reflected in the comparative abundance in Egypt and Tunisia of intermediary social, economic and political entities operating between individuals and the state. Tunisia and Egypt thus led the Arab republics in opening up their economies in the 1970s, as reflected most crucially in their vital financial sectors, which were partially privatized and which began to increase credit allocation to private sectors. By 2007 credit to the private sector as a percentage of GDP in Tunisia and Egypt was 64 per cent and 51 per cent, respectively. By contrast, in the bully republics, private sector credit as a percentage of GDP averaged around 10 per cent. Thus Tunisian and Egyptian private actors enjoyed some financial autonomy from their respective states, reflecting and reinforcing the more robust civil and political societies found there than in the bunker states. Similarly, contact intensive money ratios (CIM), which is the percentage of money supply (M2) held by domestic banks as opposed to individuals (whose unwillingness to deposit their funds in banks implies lack of trust in those financial institutions and presumably also the governments which control them), reflected the relative capacity of states and societies in Tunisia and Egypt. CIM ratios in those two countries were in 2007 85 and 87 per cent, respectively, as compared to an average of less than 70 per cent in Libya, Algeria, Yemen, Sudan, Syria and Iraq. [5] Having more institutionalized, capable states, which in turn contributed to the development of civil and political societies with autonomous resources and capacities, Tunisia and Egypt are better placed than the bunker republics to convert the political energy of their respective upheavals into forces for positive political change.

The bunker republics are legacies of more recently created and less institutionalized states, which enjoy little if any autonomy from underlying social forces, including tribes, clans, sects or personal networks. Brittle and under threat from the excluded elements of their societies, these states could not afford politically to allow intermediary bodies to emerge, so they engaged in political repression while tightly controlling their economies. Society thus remains organized within the primary groups of family, clan, tribe, and sect, so lacks autonomous organizations, whether political or economic. It is not surprising, therefore, that when upheavals hit Syria, Libya and Yemen, the states lashed out at their societies, relying upon means of coercion under direct control of ruling families and clans. By contrast, the much more highly institutionalized militaries of Tunisia and Egypt facilitated the removal of disgraced presidents in order to preserve their institutions and the state as a whole, rather than destroy everything in attempts to preserve the interests of some sectarian or tribal group, as has been done by armed forces in Syria and Libya.

As for the monarchies, they are also of two primary types. The progressive ones, led by the historically long established state of Morocco and including the more recent creations of Jordan and Kuwait, are akin to Tunisia and Egypt in that intermediary organizations exist between state and society which buffer that relationship and could, in the right circumstances, facilitate transitions to democracy. The societal divide between Sunni and Shi`a and the control of the state by the former, combined with the presence of Saudi Arabia, prevents Bahrain, also with a history of parliamentarianism and developed intermediary organizations, from falling into this category. As for the remaining monarchies, they are more akin to the bunker republics in that their relatively recently created and poorly institutionalized states are run by families and clans. Their societies lack intermediary organizations, such as political parties, independent from underlying social forces. These regimes have defended against the forces of upheaval not by the use of force, but by the allocation of funds. As Clement Henry has observed, "their bunkers, then, are more akin to bank vaults than to underground military fortresses." [6]

So while the forces driving Arab upheavals are similar, the manner in which those forces are dealt with differs by type of regime. The bunker republics deploy the currency of force, whereas the wealthy, conservative monarchies seek to buy off discontent with real currency. In both cases the prospects for transitions to democracy are poor because of the absence of both strong state institutions and societal intermediary organizations. Family, clan, tribe and sect predominate in both state and society, rendering neither truly capable of effecting changes required for the creation of more pluralistic, democratic orders. Better placed are the progressive monarchies and the bully republics, which have stronger state and societal institutions and organizations that do transcend allegiances based on primary loyalties and which can, therefore, assume roles and responsibilities required in democratic systems. But in all cases the prospects for rapid, effective transitions to democracy are impacted negatively by the legacies of authoritarian rule and by the shared geo-political context of the Middle East.

PROSPECTS FOR DEMOCRATIC TRANSITIONS

The prospects for transitions to democracy depend upon pre-existing structural conditions, the actions and capacities of relevant domestic political actors, and the reactions of external regional and global actors to potential transitions. The first factor, structural conditions, consists of the human impacts of the political economies associated with the regime types just discussed. Cross national empirical studies of democratic transitions, focused primarily on aspects of political economies, have identified economic demographic characteristics associated with the success or failure of potential democratic transitions. Of these characteristics, seven appear vital. [7] Because data on Egyptian economic demography is the most complete; because as a bully republic Egypt's theoretical prospects for democratization are better than those of the bunker republics or conservative monarchies, and relatively similar to those of the liberal monarchies; and because Egypt, whose population constitutes more than a quarter of all Arabs, is the Arab country with the greatest capacity to serve as role model for others, we shall review its seven "demographic democratic deficits" as an indication of the broader Arab situation.

Demographic Democratic Deficits

Too young: Democratic transitions are positively correlated with a national population's median age. [8] The threshold age for successful transitions appears to be thirty. The median age in Arab countries is the second lowest in the world, with only Sub-Saharan African countries being younger. The median age in Egypt is 24. [9] Tunisia, whose prospects for a successful transition appear to be among the brightest in the Arab world, is also the "oldest" Arab country, with a median age of 29.

Too rural: Urbanization and democratization appear to be positively correlated. [10] Rates and degrees of urbanization in the Arab world vary widely. What is particularly notable in some cases, including that of Egypt's, is that the population is de-urbanizing. The high water mark for urbanism in Egypt was 1986, when the ratio of those living in cities reached almost half. Since that time it has gradually declined to 43 per cent. This decline results largely from the country's failure to industrialize at a sufficiently rapid rate to absorb potential new entrants to the labor force. Unlike China, Egypt�fs factories, although located overwhelmingly in Cairo and Alexandria, are too small and too few to suck substantial numbers of workers into those cities. So young Egyptians increasingly stay at home in rural and semi-rural areas, eking out livings in the informal sector, into which more than two thirds of new entrants into the labor market are absorbed.

Too poor: The annual per capita income threshold for democracies to be sustained was determined some fifteen years ago to be $6,000 in 1995 dollars, a figure which in current dollars is now in excess of $11,000. [11] Democracies that achieve that level of personal income are unlikely to slide back into authoritarianism. Aggregate Arab per capita income is less than half the $12,000 figure, with only Libya exceeding the GDP per capita $11,000 threshold in current dollars. Egypt's per capita income, even if measured in the much more favorable form of purchasing power parity, is $4,500. Poverty is widespread and its incidence has not been reduced over the generation born at the outset of the Mubarak era. Some 40 per cent of Egyptians live on less than $2 per day and 18 million exist on less than $1 daily. A relatively poor and rural population does not provide a fertile basis for democracy.

Too small a middle class: The classic correlate of democratization is the rise of a middle class. [12] While the Arab middle class has been growing, it remains comparatively small and in some instances its rate of growth is stagnating. The case of Egypt is again illustrative. The primary route to the middle class traditionally has been through government employment. Although its share of total employment remains large, in absolute numbers government employment has plateaued at around 5.5 million over the past decade, over which time the total labor force has expanded from some 22 to 27 million. Moreover, a growing percentage of government employees now receive remuneration that does not provide them the economic security which is the sine qua non of middle class status. [13] The private sector has not grown rapidly enough to pick up the slack and, in any case, the private sector labor force has become increasingly bimodal, concentrated at the top and bottom of income and skill levels. A recent study, for example, shows that between 2000 and 2009 the share of middle level employment in the private sector declined by over 5 per cent in numbers and more than 9 per cent in share of wages. This is due to the declining importance of manufacturing as compared to services, construction, tourism and transport. Financial services have created well paying jobs, whereas the other economic sectors have generated a disproportionate number of low skilled, low paying ones. [14]

Too poorly educated and trained: Although the evidence is mixed, education and democratization appear to be correlated in some degree. [15] The correlation might be stronger were the education variable controlled for quality. If this was indeed the case, the prospects for education driving Arab democratizations would not be favorable. Rates of illiteracy remain high by the standards of emerging countries, remarkably so for women, whose labor force participation rate is the lowest of any region in the world. Abysmal scores on a range of performance measures by schools and universities in Egypt, including globally comparative test results for science and mathematics, such as TIMSS (Trends in International Mathematical and Science Study), hours in classrooms, relevance of curricula to labor markets, teacher-student ratios, relative expenditures on tertiary as opposed to primary and secondary education, publication rate of university faculty, expenditures on research and development, and global rankings of universities, all reflect the low quality of the country's educational achievements, despite the fact that its education is above the Arab average. [16] As regards training, according to a World Bank survey only the private sector companies of Guinea-Bissau commit fewer resources than does Egypt to employee skill upgrading. [17] Far too high a proportion of Egypt's population is lacking the necessary education and training to enhance the country's economic competitiveness, and maybe also for it to effectively practice democracy.

Too insecure: Connections between the middle class and democracy are thought to be numerous, but key among them is that the economic security middle class status guarantees is a precondition for a democratic citizenry-one with the time, interest and economic independence to support democratic political processes. Material security itself then is a correlate of democracy. Such security is notable in its absence in much of the Arab world, again as indicated by Egypt. According to the World Bank's categorization of "vulnerable employment," which is that of unpaid family work and own account workers, 21 per cent of all male and 44 per cent of all female Egyptian workers are vulnerable. As mentioned above, more than two thirds of new entrants to the Egyptian labor market are absorbed by the informal sector, which by definition are jobs without contracts, health insurance, or pensions. Firms of less than 5 employees accounted for 54 per cent of all employment in 1988, a ratio that grew to two thirds over the next two decades. In sum, security provided by employment is becoming ever more precarious in Egypt, as reflected by the relative decline of the formal sector coupled with the proliferation of micro enterprises and own account worker who eke out livelihoods on a daily basis.

Too dependent upon government: Whether rich, poor, or middling, Arabs depend very heavily upon their governments for material well being, as Egypt exemplifies. The share of food and energy subsidies in the government's budget is high and rising. Between 2003 and 2007 it rose from 21 per cent to 37 per cent and in the 2011-12 budget it exceeded 40 per cent. Public employment had slowly declined to about 30 per cent of the non-agricultural labor force until 2011, but one of the measures proposed by the desperate Mubarak government in its final days, subsequently adopted by the ruling Supreme Council of the Armed Forces (SCAF), was to create 450,000 "temporary" government jobs, an addition to public employment of some 8 percent of the already very large total. The remarkably widespread dependence on government as a labor sponge characterizes even rural Egypt, where the primary source of family income, as revealed in a survey conducted in 2005, is not agriculture, but government employment. 40 per cent of respondents reported it as their primary source of family income, compared to 37 per cent who responded that it was agriculture. [18] Government wages rose from 26 to 28 per cent of the budget in the decade ending in 2006, despite the fact that the share of public employment was dropping. Eighty per cent of the population is entitled to subsidized commodities. [19] Moreover, it is not just bureaucrats and the poor who depend on government. Between two thirds and three quarters of subsidies for hydrocarbons and electricity are consumed by industries that are owned for the most part by crony capitalists, whose profits are in essence guaranteed through this form of government provided rents. Finally, Egypt's rate of non-performing loans is among the highest in the world, the chief beneficiaries of this misallocated credit again being crony capitalists. So, whether urban or rural, rich or poor, employed by the government or in the private sector, Egyptians receive a substantial share of their incomes directly or indirectly from government.

Egypt's seven demographic democratic deficits are reflective of conditions in the broader Arab world, although the performance mix varies from country to country, depending primarily on regime type and oil wealth on a per capita basis. But even the richest of the oil exporters suffer from some of the deficits, especially from that of over dependence on government. Private sector led industrialization is the necessary if not sufficient condition to convert what are presently demographic democratic deficits into economic/demographic drivers of democracy. Only industrialization can create the volume and type of employment that in turn stimulates both demand for skills and remuneration for them that will enable the labor force and the broader economy to climb production ladders to more sophisticated goods, thus increasing per capita incomes, security, and independence from government handouts. Industrialization in Egypt and the Arab world has been held back by poor governance, which in turn has been retarded by the lack of democracy.

Domestic Political Actors

This in turn leads us to an analysis of the second determining factor of democratic transition, which is that of the actions and capacities of domestic political actors during the crucial period of potential systemic change. The key question to be asked is whether or not influential actors in what appears to be an incipient democracy begin to lay the groundwork to reverse the cycle such that the quality of governance is improved, thereby stimulating industrial growth, which in turn will provide stronger economic foundations for the expansion and sustainment of democracy. In other words, have the upheavals where victorious brought to power political actors who indicate an intent to convert this vicious into a virtuous cycle? Key to answering this question is to know what steps have been taken in transitional settings to impact the key components of governance that in turn affect investment, hence economic growth rates. The two most vital tasks of governance in this regard are assuring macroeconomic stability and security of person and of property rights. [20] Using Egypt again as an example, the present leading political actor's performance in these two vital areas is not encouraging for that country's or for the Arab world's prospects of substantially improving quality of governance.

The Supreme Council of the Armed Forces (SCAF) that took power in Egypt in the name of the military on 11 February 2011, apparently considers macroeconomic stability to be less important than gaining acceptance of its rule and ensuring a modicum of political stability in what it promises will be a transition to civilian rule. It may believe that Egyptians are preoccupied by economic concerns rather than democratization, as indeed the recent survey mentioned above seems to suggest, and thus conclude that patronage can displace demands for political participation. [21] It probably is also convinced, despite evidence to the contrary, that Egypt's "friends" ultimately will come to the country's economic rescue, bailing it out with substantial new infusions of public foreign assistance, lest it slide into chaos and/or the hands of radical Islamists. If so, these calculations are similar to those of the authoritarian Mubarak government that preceded the SCAF.

Whatever the explanation, the SCAF has played fast and loose with the nation's finances at a time when revolutionary upheaval has already exacerbated fiscal and current account imbalances. Capital flight has been manifested by a one third drop in the capitalization of the Cairo stock market resulting primarily from liquidation of holdings by western institutional investors, who pulled $5.5 billion out of the market in the second quarter of 2011; [22] and by a reversal in foreign direct investment from a small but positive balance of $1.8 billion in 2010, to a negative one of $200 million in the six months following the January 25 revolution. [23] Remittances have fallen substantially from $8 billion in 2010. Gas exports to Israel and Jordan have been interrupted as a result of the Sinai pipeline having been sabotaged on five occasions since February. Estimates of the GDP growth rate have been reduced by four fifths, down to around 1 per cent, the lowest rate since 1992. [24]

The SCAF's responses to these threats to the country's economic well being have been inadequate and inappropriate. It clearly ordered the Central Bank to prop up the currency at a level that cannot be sustained, which wasted reserves to defend a level that in any case discourages exports of tradable goods. It opted to add to the substantial stock of domestic debt rather than to accept an IMF loan of $3 billion offered with virtually no conditionality and at the highly concessionary interest rate of 1.5 per cent. Domestic debt, by contrast, is short term and attracts on average more than 9 per cent interest. To cover the projected fiscal deficit of 8.6 percent for 2011-12 (itself no doubt an underestimate), the finance minister announced the government will borrow some $20 billion locally, lifting the domestic debt to GDP ratio from some 70 to above 80 percent, hence about 100 per cent overall. [25] This decision clearly reflected the SCAF's willingness to subordinate sound economic management to the desire to project a nationalist image and thereby consolidate its control. [26] The SCAF also directed the minister of finance to include a variety of fiscally unsound measures in the 2011-2012 budget, including a 15 per cent wage increase for public sector workers that Mubarak had first announced, allocations to hire an additional 450,000 temporary civil servants which was another of Mubarak's last ditch desperate moves, further growth in the massive subsidy bill including support to rent extracting energy intensive industries and, on the revenue side, rejection of new capital gains and real estate taxes. [27] Not surprisingly the rating agencies have downgraded the country's outlook from stable to negative, which in turn has made it virtually impossible for Egyptians to obtain letters of credit, thereby exacerbating the downward trend of international trade. [28] The three major scourges of Egyptian public finances-civil servants' salaries, subsidies, and debt servicing-will thus all increase substantially, driving down already extremely low capital investment and savings rates while increasing long term debt servicing costs.

Presumably those in the SCAF who think about such matters believe that public foreign assistance will pull the country out of the deeper hole into which they are digging it, but that is wishful thinking if the US response is any indication. The Egyptian delegation that travelled to Washington in the spring to secure what they hoped would be $10 billion in assistance, went home empty handed. [29] The $2 billion the US has promised is in the form of loan guarantees and debt reduction, so in reality an amount for the coming year of some $200-250 million. The GCC states are claimed to have pledged truly prodigious amounts, with Qatar heading the list with $10 billion, but skepticism surrounds these reported pledges. [30] Ultimately Egypt may derive several billion dollars from the Saudis, Kuwaitis, Emiratis and Qataris, but the Saudi Government announced virtually simultaneously with its "gift" that expatriate workers would be limited to six years residence in the Kingdom, a step that would have a greater impact on Egypt than any other country. If remittances from Egyptians working there were to be halved it would about net out the Saudi government's promised assistance. The various promises from other donors, including the EU and various of its member states, are packaged as part of assistance programs to Arab states generally and are largely in the form of projectized assistance to be spread over several years, as well as some limited debt relief. [31] In sum, if there is a pot of gold at the end of Egypt's rainbow, it is unlikely to be large enough to compensate for the spendthrift approach the SCAF has taken to the country's public finances.

Economic management is beyond the military's competence and normal responsibilities, so its poor record thus far is understandable, if not justifiable. But provision of security for persons and property is its duty, broadly conceived, so the persisting lack of it is a strong and clear indictment of the SCAF. While the profound breakdown of security in the Sinai exceeds that for any other part of the country, nowhere in Egypt has security on the street returned to its pre-January level. The county suffers from a pervasive sense of insecurity, which the very ruling style of the SCAF at the least does nothing to ameliorate. Highly secretive, it rules through the issuing of communiqués in the same manner as the military did when it seized power in 1952, supplemented by occasional public appearances by its members and yet more infrequent meetings with political activists. The lack of transparency and accountability at the apex of the country's present government reinforces a pervasive sense of insecurity already exacerbated by the breakdown of normal policing and the insurrection sweeping through the Sinai. Police presence on the streets is intermittent, while the occasional appearance of thugs to intimidate demonstrators indicates that these much feared auxiliaries of the Ministry of Interior are still under its command. Calls by independent judges for the Supreme Council of the Judiciary to assume many of the administrative functions of the Minister of Justice have yet to be acted upon, so judges remain under direct executive control. In the meantime the military has extended its expansive, self-serving legal system yet further into the civilian domain, with as many as 20,000 Egyptians alleged to have been involved in protests having been processed through military courts. [32] Its behavior, in sum, suggests the SCAF either cares more about preserving its power and that of the military's than it does about restoring security, or that it is perpetuating the state of insecurity in order to achieve its objectives. Whichever the case, the absence of security has contributed substantially to preventing a recovery of economic activity, including industrial production, tourism, and export of gas, and has discouraged potential domestic and foreign investors.

In sum, upheavals came to the Arab world when its economies were unlikely to provide strong support for the development or institutionalization of democracy. But in some countries, most notably Tunisia and Egypt, changes that have occurred do offer the prospect of reversing the present vicious cycle, in which authoritarianism prevents good governance that in turn impedes industrialization, into a virtuous one in which at least the beginnings of democratization pave the way for substantial governance improvements, hence much more rapid, thoroughgoing industrialization.

Alas, what is systemically hypothetically possible has to be implemented by political actors. Causation is neither automatic nor impersonal, but relies on agency, that is to say, the choices and actions of those with political power. In the case of contemporary Egypt, which is a reasonable surrogate for the broader Arab world, the most important actor since the overthrow of Mubarak has been the SCAF. Thus far its actions have done nothing to break the vicious cycle of authoritarianism reinforcing itself through provision of inadequate governance, which in turn inhibits industrialization. The two most vital aspects of governance for global investment in manufacturing industry, hence the accompanying provision of multinational controlled technology, are provision of macroeconomic stability and protection of property rights. The SCAF's economic mismanagement has further exacerbated structural macroeconomic deficiencies and increased the immediate threats to the country's economic well-being resulting from the political upheaval itself. These generals demonstrate little awareness of the magnitude of the economic challenges they and the country are facing and seem to place what may be vain hope in bailouts from regional and global "friends." Even if such bailouts are forthcoming, they would not achieve the reforms necessary to start the economy down a self-sustaining path to development. Such reforms require a political base that is not dependent upon governmental largesse to retain day to day loyalty, a base that the SCAF does not and will never have. So as long as it or any political offspring it births unilaterally--as opposed to the emergence of a representative and accountable government through competitive, free and fair elections--macroeconomic management will be held hostage to the politically primordial need to generate and disseminate patronage. And a freely elected government only has the possibility, not the surety, of weaning the political system from patronage.

Similarly, the general lack of security combined with the profound insecurity of the Egyptian modern private sector, many of the leading members of which have been convicted in absentia in trials of dubious legal standards, are also products of the political needs and calculations of the SCAF. Security for the country as a whole and for its businessmen in particular would require reforms that it is unwilling to countenance, lest the power of the military be eroded. So as regards the provision of macroeconomic stability and of security of person and property, unless and until a much more profound political transition is secured, they shall remain in short supply. The much hoped for virtuous spiral that would lift Egypt and the broader Arab world out of economic stagnation, seems still to be in the distance.

External Political Actors

The third and final major factor influencing democratic transitions is the nature of interventions by external actors, regional and global. They may, for example, favor democratization, as was the case in Eastern Europe following the 1989 uprisings there, when offers of full EU and to some, NATO membership, were vital incentives for thoroughgoing reform. In the case of the Arab world, no external actors are currently offering equivalent inducements. Indeed, the West, led by the U.S., has responded cautiously to the upheavals. The US is already overextended in the region. The returns from previous US investments in the Middle East have been mixed, for the region continues to breed terrorism and political violence like no other, while its publics are markedly less pro-American than those in other emerging regions. [33] The Middle East already has an unenviable record of turmoil and violence, but there is nothing to prevent the situation from further deteriorating, including states dissolving into warring fragments.

These factors are just some of the many concerns that deter bold, innovative US action. Possibly at the top of the list of worries is that Islamism could ride to power on the back of protest movements. The effervescence of that movement in the wake of departures by Presidents Ben Ali and Mubarak is clearly of concern, despite signs of its increasing division into multiple organizations and political parties, particularly in Egypt. Of still greater concern is radical Islamism in Yemen, in some cases linked to al Qaida, which appears to have gained control in Abyan and other southern areas more or less abandoned by Salih's regime under siege in Sana. Suspicions that the Syrian Muslim Brotherhood provides much of the stiffening for ongoing protests in that country delayed embrace of that upheaval by the Obama Administration. Worries about Islamism shade into thoughts of Iranian fifth column activities, especially in Bahrain. In a region deemed to be polarized-rightly or wrongly-between Shi'a and Sunni, with US strategic weight exclusively on the latter, any gains by the former would be major setbacks. The primordial strategic interest in Israel also gives rise to apprehension about Arab upheavals. While Arab protesters have focused on domestic issues, the potential for them to begin to challenge existing accommodations with Israel brokered by the US and enforced by Arab authoritarian regimes, is worrisome. [34] Finally, the price of oil is seen as the single greatest impact on the pace and extent of US economic recovery, as witnessed by the Obama Administration's support in late June for tapping into the International Energy Agency's strategic petroleum reserve. Any disruptions to supply that would further aggravate the loss of most of Libya's normal exports of some 1.6 million barrels per day would be most unwelcome. If the upheavals were to spread to the Eastern Province of Saudi Arabia, the consequences could be globally catastrophic. Any one of these many threats is sufficient to give pause to a US Administration already inclined to a cautious posture toward the Middle East.

Intrusions from the Middle East into US domestic politics must also give pause to those in the Administration when considering the range of possible alternative responses to Arab upheavals. Israel's apprehensions about the consequences of the upheavals for its own security translate directly into political pressure in Washington. It does not want to see all vestiges of the security states in Egypt and, until the late summer of 2011, even in Syria, with which it has maintained peace for almost forty years, swept away and be replaced by unknown political actors, some or possibly many being Islamists. If Arab states and the Palestinian Authority were to become democratic, Israel presumably would be willing to take more risks for peace. In the meantime, the pro-Israel lobby in the US will continue to urge caution and preservation of the status quo of overwhelming Israeli supremacy, which thereby places limits on US reactions to the Arab Spring.

Saudi influence, less visible in the corridors of power in Washington, is nonetheless substantial and, like Israel's, pushing back against open embrace of the Arab Spring. Saudi displeasure with the turn of events in 2011 was evidenced by its acceptance in exile of Tunisia's Ben Ali, by its criticism of the US for "abandoning" Mubarak in his time of need, by its dispatching of troops to Bahrain, by its invitation to Jordan and Morocco to join the GCC, and by its own crackdown at home. Strain in the US-Saudi relationship, clearly manifest as Ben Ali and Mubarak were chased from power and President Obama spoke about the need for other Arab leaders to take note and be "on the right side of history," caused Washington then to become more solicitous of a Riyadh whose importance was steadily magnified by recession-aggravating high oil prices and the deteriorating US economy. By June the Administration had foresworn statements that could be deemed even indirectly critical of the Saudis and reassured them that American support for the Arab Spring had limits, which they and their monarchial allies lay beyond.

With the U.S. hesitating in the face of Arab upheavals, in part because its key allies in the region are extremely apprehensive about them, no other regional or global force has the capacity to propel them strongly forward. The EU lacks the coherence and clout to play such a role. Democracy is far from being consolidated in the leading Arab state of Egypt, or even in less vital Tunisia, so Arab state leadership for democratization is absent. Iran, like its opponent Saudi Arabia, is working assiduously to contain democracy's spread, although the focus of its efforts is on different countries, most notably Syria. So while turmoil continues in the Arab street, in no Arab state has leadership yet emerged that is championing Arab democracy. Virtually all important state actors, regional and global, are either working to contain upheavals or to ensure that the political change they do produce does not upset vital features of the regional status quo, thus implying a preference for governments that are less than fully responsive to popular opinion.

The prospects for Arab democratic transitions, in sum, are substantially more limited than was the case in Eastern Europe in 1989. While some types of Arab regimes have greater potential for democratization than others, they all suffer in some degree from dysfunctional political economies, which have produced demographics inhospitable to democratization. In the leading Arab country in which an authoritarian incumbent was displaced, Egypt, the successor regime is actively seeking to limit the institutionalization of democracy. That objective is driving it to take decisions that run counter to the development of good governance, so necessarily militate against long term economic development. No other Arab state has picked up the democratic baton and indeed, most regional governments are seeking to contain upheavals at home and in other Arab states. The U.S. administration is "leading from behind," which is to say limiting its support for democratization. No other major global actor has sought to champion full blown, pervasive Arab democratization and indeed some, such as Russia and China, are using their leverage in the UN and elsewhere to prevent it. Given this array of structural conditions and the proclivities of key political actors, democratization faces a long, bumpy, uncertain road in the Arab world. That is not to say, however, that important political change has not already occurred and will continue.

CONSEQUENCES

For the Individual Arab States

As the typology of bully and bunker republics and progressive and conservative monarchies implies, consequences of the wave of unrest sweeping the Arab world will vary from state to state. The Egyptian and Tunisia "bullies" presently have the best prospects for establishing democratic beachheads in the near future, with some hope for full blown democracy over the much longer term. The rulers of the progressive monarchies of Morocco, Jordan and Kuwait, have thus far vacillated between reform and repression, with those in the former two states emphasizing reform and the Kuwaitis repression. But for all three, the prospects for gradual transitions from ruling to reining monarchs have been enhanced by the upheavals, although that outcome is by no means assured. And for all of these countries at least the prospect of improved voice and accountability leading to improved governance, then subsequently to much higher rates of economic development, is now on the distant horizon, if still a long way from being realized. So on balance, upheavals have at least opened up possibilities for political and economic improvements in the medium and more likely, longer term in these countries. In each case, however, the path to democracy and development is strewn with obstacles of structure and agency, so outcomes are likely to be mixed and uncertain for years to come. In all cases except Kuwait, immediate economic challenges and difficulties, heightened particularly for Tunisia and Egypt by their upheavals, will render it yet more difficult to make clear progress down the path to democracy.

As for the "bunker" republics and conservative monarchies, regimes in two of the former, Libya and Syria, have been completely or almost swept away, respectively, while the latter regimes have contained potential upheaval by increasing material allocations. Both types of these brittle states face uncertain futures. In several of them, sectarian and tribal divisions have been intensified. The Libyan rebels' moment of triumph is clouded by manifestations of tribal and regional divisions, to say nothing of the newly energized Berberism challenging the national identify of Arabism. The longer Syria's political travails persist, the greater the possibility of Alawi-Sunni tensions reaching a breaking point, with something like ethnic cleansing resulting. Bahrain has already been partially ethnically cleansed, while Saudi Arabia's wariness toward its Shi`i has been yet further intensified. Shi`a control of the Iraqi government may be growing firmer and more complete, but so too is Sunni violence against it once again on the rise, while Kurdish alienation similarly has increased. In all of these settings, repression is the default mode of dealing with political challenges, so unless and until these regimes are swept away, they are likely to become yet more authoritarian. If Libya emerges from the wreckage of the Qaddafi regime with something approaching effective, participatory government, it will probably intensify tensions in the bunkers and conservative monarchies, rather than reducing it. Political succession, which contributed substantially to the downfall of the Mubarak regime and to instability in Yemen, is already posing challenges in vital Saudi Arabia, potentially unstable Oman, and fractured Algeria, while chronic royal family infighting is intensifying in Kuwait and Bahrain. In sum, upheaval has intensified the challenges these countries face and with the exception of Libya, provided no immediate hope for better political or economic futures.

For the Middle East Region

Upheaval has exacerbated existing regional political tensions and added some new ones. As the conservative monarchies dig in against change and bully republics seek to liberalize polities and economies, management of resulting conflicts will become more challenging. Attempts by Saudi Arabia to stiffen the resolve of progressive monarchs may or may not accomplish that, but they will stimulate counter-reactions by populations in Morocco, Jordan and Kuwait. Authoritarian Algeria, if sandwiched between liberalizing, quasi-democratic governments in Tunisia and Libya, and a Moroccan monarchy steadily granting more freedoms to its citizens, will become increasingly anomalous and fragile. Tensions between Arab states, a perennial problem but one managed reasonably well in recent times, will be further exacerbated by domestic political changes and in turn will contribute to those changes, rendering inter-state conflict management an ever more demanding task.

Pre-existing tensions based on primordial loyalties have already been significantly heightened within several Arab countries, as just noted. So, too then do those tensions take on regional over tones. The largest, most divisive and dangerous such tension is that currently plaguing Sunni-Shi'a relations, resulting in a fault line that divides the region between Iran, Syria and elements loyal to them, on the one hand, from Sunni regimes, if not all of their populations, on the other. Iran's support for Bashar al Assad has added to anti-Shia feelings throughout the Arab world, as has similar endorsement of the Syrian regime by Iranian fellow travelling Iraqi Prime Minister Nouri al Maliki. Kuwaiti-Iraqi tensions have a long, if not venerable history, and are once again on the rise as the al-Sabah regime detects Iraqi Shi`a meddling in a Kuwait ever more divided between the two sects. Kurdish and Berber identities and sensitivities, enhanced by virtue of upheavals, have direct political consequences regionally as well as within specific countries ranging across North Africa and all the way to Iran. A Tehran already nervous by virtue of perceived threats arising from the U.S., Israel, Saudi Arabia and other Arab quarters, now has to deal with the potential collapse of its ally in Damascus and the resulting vulnerability of Hizbullah and probable desertion of Hamas. Underpinned by primordial conflicts that are in turn intensified by upheavals, tensions between Muslim Middle East states are mounting and shall continue to do so for the foreseeable future. Turkey�fs valiant, if also self-serving efforts to mediate various such conflicts seem to have run up against that country's capacity limits. They have also begun to stimulate push back by those Arabs distrustful of Turkey's national and alleged Islamist objectives.

And that is not the limit to growing regional problems, for the Jewish state of Israel adds to the lethal brew. Made profoundly nervous by the overthrow of Mubarak and instability in Syria, to say nothing of continued Iranian bellicosity, Israel under Prime Minister Netanyahu is more inclined to immediately pre-empt against perceived threats than to patiently seek long term gains made possible by Arab upheavals. On the face of it more democratic Arab governments might render resolution of the Israeli-Palestinian conflict easier to attain, but that is not the instinctive reaction in Jerusalem to the upheavals, which is to see threat rather than opportunity. The killing of five Egyptian border guards on 18 August by Israeli Defense Forces reacting to attacks on Israelis just inside their border close to Eilat, is an example of the Israeli doctrine of overwhelming retaliation, unmodified and possibly intensified by the upheaval and nervousness resulting from it. The predictable impact on Egypt was to further stimulate anti-Israeli sentiments, causing the SCAF to bobble its response, thereby suggesting how difficult it will be for the two governments to manage interconnected domestic and inter-state tensions in the future. Syrian meddling, which may have accounted for the attack on the Israelis in the first place, can be expected to continue so long as the al Assad regime is under threat, possibly drawing Israeli forces back into Lebanon. So, whether among Arab, Muslim or all Middle Eastern states, tension has increased as a result of the upheavals.

For global actors

In a word, extra-regional actors, even if cheered or alarmed by Arab upheavals, are wary of them. As previously discussed, for a status quo power like the US with numerous interests at stake, ranging from access to hydrocarbons, through defense of Israel and other allies, to strategic access to adjoining areas and even continents, to say nothing of containment of radicalism and terrorism, any change that threatens the existing tenuous, precarious stability, despite holding out prospects for improvement, is bound to be met with caution. Having securitized its relations with this region after WWII and retained security as the central objective and modus operandi of its policy toward the region, the US will need further proof of fundamental change before it begins to seriously contemplate more nuanced approaches. And what is true for the U.S. about wariness is doubly so for Europe. Geographically closer to the region, even more dependent upon it for oil supplies, having larger Muslim populations more connected to their countries of origin, and under immediate threat of illegal migration from Arab shores, the EU, possessing less robust military capacities than the U.S., is necessarily even more wary than Washington. Division over the approach to Libya, with Germany and others essentially opting out of the U.S. encouraged and supported French/British initiative there, is a manifestation of broad European hesitancy to embrace upheaval as a positive force, however much Europeans may cheer on demonstrators. Even the extra-regional actors that have little invested in the status quo, including Russia and China, seem to be taking a cautious approach. Both are blocking a strong UN Security Council resolution against Syria, but both are also mindful of the costs of defending al Assad's regime and are signaling displeasure with it. Neither is indicating any adventuresome moves to try to capitalize on the upheavals. And both are trying to maintain favorable relations with as many states in the region as they can, as indicated by the visit to Israel of the chief of staff of China's military in late July.

Powerful world actors, in sum, are pretty much sitting back and watching the events unfold on al Jazeera, just as everyone else is. The intervention in Libya is the exception, but by the standards of other military operations in this region, it has been quite limited. So the Arab upheaval has been left to play itself out without serious external opposition, but also without strong support. This may not bode well for ultimate transitions to democracy if the experience of post-communist Eastern Europe is any guide. There, where civil and political societies were stronger and historical experiences of democracy more substantial, external support of various types was vital to democratizations. With little such support in the offing, it is reasonable to question whether Arab democracies can be built on a self help basis, especially during a period of global economic uncertainty when potential supporters are preoccupied with their own economic and political problems.

CONCLUSION

The Arab upheaval did not come at an ideal time. The Obama Administration is ill prepared to deal with it, as is Europe, so they are both reacting cautiously, tending to support the status quo except where the authoritarianism is particularly egregious and anti-western, as in Libya and Syria. Regional tensions between Sunni and Shi`a have also exacerbated challenges of building new domestic political orders in many states. And now the Arab world is pulling in different directions, with newly "liberated" polities, such as Libya, Tunisia and Egypt beginning to move away from authoritarianism, with some others, most notably Saudi Arabia, seeking to defend it, and still others caught in the middle. Arab upheavals, in sum, may presage political and economic liberalizations and ultimately even democratizations in some, but not all Arab states. Building new political and economic orders will be a lengthy process marked by numerous setbacks. In sum then Arab upheavals have given rise for the first time since the nationalist era of the 1950s and early 1960s to real hope for democracy and development. Hope, however, it is likely to remain for a considerable period of time. As suggested at the outset, the Arabic saying, allah ma`a al sabariin, "be patient," seems like good advice.