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Session 4 a ishac diwan
1. A framework to understand Arab
revolutions
Or is it too early to tell?
Ishac Diwan, Harvard University
2.
3. Many questions
• To offer economic advice, must understand
which political constraint released, or added..
• Why did revolutions start in late 2010 –
nothing special happened around that time..
• Why Tunisia and Egypt first? why contagion?
What system will replace autocrats?
4. Transitology
• 4 broad trends
– Modernization – role of autonomous bourgeoisie and middle classes (Korea?
Spain, Portugal)
– Economic shock requiring new forms of social organization (LA, Africa)
– Divisions within the ruling elite and peeling off (Indonesia, Philippines,
Mexico)
• MENA exeptionalism?
– Recent MENA literature: autocratic bargain with pressure from below,
resulting in evolving rules of the game (spaces of contestation, use of
cooptation and repression)
– Economic liberalization: democratic opening of 1980s stalled
– Democratic paradox: Islam the problem? who safeguards the democratic
process?
– But PI not a historical exception: Europe went over this transition in 1800 (but
with the Pope)
5. Autocratic bargain (AB)
• Citizens give up political rights for some measure of
economic security
• Models usually include a threat of insurrection, with
some probability of success.
• Autocrat provides economic and social policies in ways
to minimize probability of insurrection
• Models typically based on superior ability of autocrat
to manage economy – partly by ensuring some
cooperation by using accommodating social policies
• One implication is that when under threat, autocrat
makes political concessions
6. Autocrat
Economic security against
constrained political rights
citizens
7. Revolution as demise of AB?
• Economic rents sharply declined in mid-1980s
– No recent cuts in subsidies
– Youth bulge nothing new
– Unemployment high but not rising
• Should have seen political rights rising over past 2
decades
• Cannot explain regional contagion convincingly
• Revolutions a chance events?
• Current views on policy implication possibly too
optimistic on role economic reforms
12. Modifying the AB model: AB 2.0
• Autocrat core in alliance wt “soft belly” group, but repression of
rebellious opposition
• Main players:
– Autocrats (A) backed by armies, allied wt elite capital
• Alliance formed in early 1980s post socialism in most republics under the cover of neo-
liberal policies and leading to crony capitalism
– “Soft belly” group benefits somewhat from AB and fears take-over by
opposition
• Social liberals, minorities, merchants. In republics, Liberals central to autocrat’s
legitimacy
• Key social policy issue is civic rights
• As state decays, subsidies to this group rise
• Role of minorities, esp. in Iraq, Syria
• Alliance of A wt West strengthens after 911
– Opposition: mostly Political Islam (PI) (plus the old left in some countries)
• Repression, no political rights, lead to rebellions and attempts to takeover
• Cooptation sometimes, especially Islamization of the State
• Over-repression to radicalize PI when bridging with L
13. A reflection of a divided society
Repression
autocrat and rebellion
bargain
Soft belly
16. Dynamics – push and pull factors
• L has a choice between alliance wt A vs PI -- attractiveness of peeling off changes
with time
• Push/pull factors: A less attractive/ PI more attractive
• Economic and non-economic factors
• two cross cutting factors: rise of autonomous MC, and politital repression
Economic Non-economic
Push “Corruption” of economic • Foreign relations and dignity
liberalism (YA falls) • Policies to radicalize PI backfire
Pull Rise of business-MC (YD MC bastion of PI –> moderation
rises, bridges PI&L) of PI on civil rights )
20. Economic performance of Arab crony
capitalism poor
• High profits due to preferential treatment
• But low investment and job creation
• Wt large capital flight
• why?
– Political instability and high risk?
– Regimes’ inability to regulate?
22. But they did not deliver the jobs!
Source: Asaad 2007
23. “SB” has a choice …
Democratic
option wt peeling”
Core autocrat: 10%
army, elite capital, Autocratic
bargain
Soft belly: liberals,
minorities, MC Secular opposition:
political Islam, left
24. Revolutionary moment in T & E
• L shifts alliance from AB to a new pact wt PI -- to end
repression and foster democratic governance
• A falls when L leaves bargain – all it takes is a credible
demonstration (thus no need for L leadership)
• There was no forum to exchange information – street
movements as a process of discovery of individual
preferences (a foco: Tunisia Egypt fall when key
professional unions go to the street)
• Why Tunisia, Egypt first?
– Stronger autonomous MC wt bridges to PI. Is dignity a
normal or luxury good?
25. Regional developments
Contagion
• Not about information relating to position of foreign powers
• Most elements of the matrix regional so equation moves
regionally (to some extend)
• Information revealed is about shift in the equation
Countries
• Libya: AB 1.0?
• Yemen: where is the soft belly?
• Syria: started from the outskirt, soft belly still undecided
• A kingdom factor: less division along liberal/PI cleavage
26. Implications for policies
1. New settlement a “flight of the imagination” and thus fragile
– dialogue L/PI a historical premiere
– external influences can complicate this relation
– Ability of PI to commit and to restrain its radicals needs to be tested
Politics first:
– do not allow economics to create divisions during consolidation phase
– need to create democratic institutions, foster “recognition”
– need to strengthen the Liberal movements
2. Short tem: revolutions a negative shock – how to smooth the short
term without taxing the future unduly?
3. Medium term: Economics the main challenge for new republics over
next 4-5 years. Two main areas where changing political constraints open
opportunities
– Public services: reducing subsidies opens up fiscal space
– Jobs: improving competition, democratizing credit, supporting SMEs
