Iraq’s discontent has like for most countries of the MENA, been there for all to see. In effect, many of these depend on Russia and Ukraine, the two warring parties for their wheat supplies. How to fix that or how to begin fixing it is not exactly a downhill walk in the park. Here is Bamo Nouri‘s explanation.
Iraq food protests against spiralling prices echo early stages of the Arab Spring
Iraq has been seeing protesters take to the streets as food prices spiral upwards because of the Ukraine war. Around 500 people protested in Iraq’s southern city of Nasiriyah a few days ago as flour suddenly rose in price by nearly a third. With food-related protests subsequently taking place in Albania and Sri Lanka, the ripple effects of the war are spreading.
Iraq’s markets were largely unaffected by the surging inflation in months gone by. But Iraqi officials have confirmed that the Russian invasion has massively increased the cost of the region’s food and is also causing shortages. Flour prices are up from IQD35,000 (£18.29) for a 50kg sack to IQD45,000 (£23.52), rice by 10%, and cooking oil has doubled in price. Iraqi consumers have been stocking up fast because of fears of further shortages and price rises, and Iraqi traders have capitalised on the situation to increase their profits.
The Iraqi government has already put measures in place to tackle shortages, distributing food to those in most need, as well as rationing food during the upcoming month of Ramadan. Rapid government measures also include a monthly allowance of around US$70 (£53) for pensioners with incomes of less than one million Iraqi dinars (£522) per month to help them afford food, as well as for civil servants earning less than half a million Iraqi dinars.
Additionally, a temporary suspension of customs charges on consumer goods, construction materials and international food products has been introduced for a period of two months to help keep prices down. In Iraq’s Kurdish region, the Kurdistan regional government has introduced emergency measures including store closures in Erbil, the region’s capital, to stop rogue traders overcharging.
Turkey and Iran restrict exports
Imports from Russia and Ukraine, two of the world’s largest exporters of energy and agricultural products, have been massively reduced. The situation has also been exacerbated by neighbouring Iran and Turkey, which according to Iraqi sources have restricted food exports to Iraq to prioritise their own national stocks.
Despite Iraq being part of what is known as the fertile crescent, a region famed for its high-yielding farmland and access to water, a series of interventions in the last three decades have depleted the area’s water supply and crops. These range from Saddam Hussein formally drying out Iraq’s marshes, to water flow restrictions from Turkey and Iran causing severe drought. These events had already put pressure on Iraq’s agriculture sector and reduced internal production of food.
Distrust in the political system continues. In Iraq’s latest October 2021 Iraqi parliamentary elections, the lowest-ever voter turnout in post-2003 Iraq was recorded at 41% – creating a legitimacy crisis for Iraq’s yet-to-be-announced next government.
The key issue is that there is no clear progressive national government strategy, which in turn severely impedes development and weakens the Iraqi state, especially in the face of challenges such as global food price rises. However, what makes this particular protest noteworthy is that it comes at a time when all governments may be expected to do more to support their populations as prices spiral worldwide.
Protests start to spread
Given that two of the key drivers of the Arab Spring were the high cost of food and other goods, and restricted access to water, the latest protests may have worldwide significance. Iraqis may be the first in a global movement of protests over price rises as the Russia-Ukraine conflict continues.
Albania became the first country to follow in Iraq’s footsteps with protests, then Sri Lanka, amid warnings from the World Bank that Ukraine war-related inflation could drive other protests and riots.
While some other governments have already intervened with subsidies, there is also an argument that energy providers should act more responsibly in such times of crises. For example, Exxon, Chevron, BP and Shell recorded their highest profits in seven years in 2021, which they attributed to surging oil prices as post-pandemic demand increased but suppliers struggled to keep up.
The cost of food has provoked outrage throughout history. The 2007 and 2008 food crises triggered riots in Haiti, Bangladesh and Mozambique. Even in the French revolution, when Parisians stormed the Bastille on July 14 1789, they were not just looking for arms, they were looking for grain to make bread.
Highlighting these important lessons from history to drive more responsible government and corporate power may be pivotal in preventing political unrest and instability. There is little doubt that both governments and corporations need to do more to make sure that food is affordable for their citizens, or face the consequences.
The MENA countries where socio-political monopolization is fundamentally due to low levels of democracy and obscure political transparency have generated over the years Corruption. All attempts to strengthen business integrity and fight corruption were in vain. Chatham House‘s post on the subject of Tackling corruption is the focus for MENA in 2022 is worth going through. Here it is.
Integrity is central to the development of competitive and open economies in which growth and opportunities are sustainably and equitably distributed.
To tackle corruption in the MENA region, the international community must prioritize accountability over stability.
Tackling entrenched corruption will be a key focus of the political discourse in the Middle East and North Africa in 2022. International policymakers will look to anti-corruption as a framework that can be used to help stabilize conflict countries, support economic reform, or to pressure adversarial regimes. Pressure to deal with corruption also stems from popular anger in countries that suffer from poor governance as corruption can have very serious – even fatal – consequences, as the deadly hospital fires Iraq suffered last year illustrate.
Corruption can have very serious – even fatal – consequences, as the deadly hospital fires Iraq suffered last year illustrate
Across the region, anti-corruption processes are meant to signal accountability. However, they can also be weaponized by elites to consolidate power and target opponents, particularly in countries where the political system itself is built on politically sanctioned corruption. This makes anti-corruption efforts unlikely to succeed. These dynamics highlight the need for international policymakers to develop strategies that promote accountability and transparency over the long term instead of prioritizing political expediency.
Anti-corruption efforts not what they appear
At first glance, anti-corruption processes underway across the Middle East and North Africa appear to suggest that states in the region are serious about combatting graft. In Libya, a recent wave of arrests by the attorney general has seen two sitting ministers, a former deputy prime minister and a former head of a state-owned investment vehicle detained on charges of corruption. In Iraq, the commission of integrity and the prime minister’s special committee have arrested dozens of former and current officials on charges of corruption.
Across the GCC, governments are seeking to double down on their economic diversification plans. Against the rising tide of nationalism and populism, anti-corruption efforts will feature as part of a good governance agenda that serves a domestic audience by targeting elites and patronage networks. The UAE is the GCC’s most nimble economic player and leads the pack in efforts to stamp out corruption. In Lebanon, political competition and initiatives by members of the judiciary have resulted in investigations of alleged corrupt practices by the heads of major state institutions such as the central bank.
The case of Lebanon has clearly illustrated that appeasing elites does not deliver stability, and countries such as Iraq and Libya could potentially face a similar fate.
But appearances can be deceiving. In none of these countries have anti-corruption efforts led to meaningful change. In Libya, past efforts have petered out and officials have all too rarely faced trial, let alone been convicted. There is little to suggest this round will be any different as the government is unlikely to support the attorney general’s cause. In Iraq, this year’s top story will be the protracted government formation process following last year’s elections – a process rife with politically sanctioned corruption as the usual cast of characters come together to negotiate their share of power and money. Despite the 2019 October revolution that called for reform of Iraq’s ethno-sectarian political system (muhassasa), not much has changed.
Saudi Arabia, which is pushing ahead with its Vision 2030 targets, has an anti-corruption agenda but will face challenges in connecting its legal framework and process, led by the Oversight and Anti-Corruption Authority (Nazaha), with realities on the ground. Many sectors suffer from a lack of transparency when it comes to decision-making, yet the importance of personal and social connections (wasta) remains high in Saudi society.
Weaponizing anti-corruption processes
The darker side of the anti-corruption drive is the weaponization of such processes, whereby corruption allegations can be used to settle political scores, especially by those who are politically dominant. In Lebanon, this can be seen in the growing standoff between the governor of the central bank and Hezbollah and its allies, who see him as a political opponent.
The darker side of the anti-corruption drive is the weaponization of such processes, whereby corruption allegations can be used to settle political scores.
In Iran, under pressure from US-imposed sanctions, President Ebrahim Raisi will continue to promote anti-corruption measures to demonstrate good governance and accountability to help distract from the economic pain of sanctions. However, these efforts will by no means root out entrenched corruption. The Islamic Revolutionary Guard Corps (IRGC) and various parastatal entities have used predatory sanctions-busting strategies to ensure their economic survival, while crowding out the private sector. Without meaningful reform of the economic system, the government will likely see more protests and unrest.
The scale of the challenge facing the international community
There is no doubt that these problems will be difficult to tackle. Corruption stretches far beyond the upper levels of government. Where corruption has become politically sanctioned, such as in Iraq, the elite has shifted its focus away from formal government roles, such as cabinet ministers, who are now by design independent and technocratic, but weak. Instead, the key to state power has become the almost 1,000 senior civil servants under the special grades scheme, who do the elite’s bidding in government ministries and agencies without any transparency or accountability. They may not be the minister in charge, but these director generals and deputies make the decisions when it comes to government contracts and procurement, helping to generate huge sums of money for those whose interests they serve.
Any successful anti-corruption strategy must go beyond sanctions on individuals to address the core of the problem – the economic system of governance.
The international community have opportunities to address some of these entrenched problems this year. But its record to date is mixed. In Libya, the international community’s credibility on corruption has been greatly damaged by it prioritizing stability over accountability. A long-awaited audit of the Central Bank of Libya drew ‘no conclusion or determination’ over ‘any fraud or misappropriation’, while a UN report into allegations of vote-buying at the UN-created Libyan Political Dialogue Forum that selected the current government has not been made public. These developments have only strengthened the impression that Libyan officials enjoy impunity. As the Libyan political process is reshaped in 2022, measures to ensure accountability and transparency must take a much more prominent place in the architecture of international efforts.
Lebanon is perhaps the greatest test of the international community’s commitment to tackling widespread graft. In need of an economic rescue plan to reverse the severe depreciation of its currency and decline in GDP and foreign reserves, there is hope that a deal with the IMF and international assistance could materialize this year. The IMF and international bodies like the EU insist that any aid will come with conditionality regarding reforms, but there are fears they may soften their stance. They must hold firm. If their current position softens, this will damage both Lebanon and the credibility of the international community.
The international community must prioritize the legitimate grievances of MENA citizens, rather than pleas by entrenched elites to help maintain ‘stability’. The case of Lebanon has clearly illustrated that appeasing elites does not deliver stability, and countries such as Iraq and Libya could potentially face a similar fate.
Any successful anti-corruption strategy must go beyond sanctions on individuals to address the core of the problem – the economic system of governance.
The image above is of Image — A man checks electrical wires in Baghdad, 13 September 2017. For years Iraqis have denounced the bad management and financial negligence that have stifled the country and let its infrastructure fall apart. Photo: AHMAD AL-RUBAYE/AFP via Getty Images.
The following story is about how one country responded to disappointing Doing Business scores to reform its rules and regulations for its own benefit. Would discontinuation of this instrument mean its non-availability to others?
The above image is for illustration and is of iStock.
How one country responded to disappointing Doing Business scores
On September 16, 2021, the World Bank discontinued the Doing Business (DB) report, one of its flagship diagnostic products. This action follows what the World Bank called “a series of reviews and audits of the report and its methodology.”
The DB report, published each year since 2004, was one of the World Bank’s most influential reports in recent years. Every autumn, people around the world would wait eagerly and, in some cases, with some trepidation, for its release. Over time, the reports increasingly attracted the attention of heads of governments who wanted to see their countries do well in the rankings.
When the DB report came out in 2015, the Indian government was disappointed. Soon after taking office in 2014, Prime Minister Modi announced his government’s intention to bring India’s ranking into the top 50 within a few years. Several reforms were carried out in the following months, which the Indian government hoped would put India on a trajectory of rapid annual improvements in the ranking. The 2015 report (officially called “Doing Business in 2016”, since the World Bank always gave the report a forward-looking title) indicated only a modest improvement in India’s rank, from 142 to 130.
The World Bank explained to the Indian government that while several reforms may have been enacted on paper, Indian businesses did not report feeling an impact on the ground. Some responded, “What reforms?”, while others heard about the reforms but had not seen improvement on the ground. The reforms could not be officially recognized until the private sector reported real improvements. The World Bank suggested that the government put in place feedback loops to provide real-time information from businesses on whether the reforms were being well implemented. The government, instead of whining further about the scores, started working on such feedback loops. For several regulatory reforms covered by the DB indicators, it started surveying businesses on whether they felt any reform impact on the ground.
From February 2016 to May 2017, the government carried out a series of business-to-government (B2G) feedback exercises and focus group discussions (FGDs) on how much the businesses were aware of the enacted reforms and their views on the quality of reform implementation. Nine B2G feedback exercises were carried out. Topics covered construction permits (three surveys each in Delhi and Mumbai), starting a business (two surveys), and trading across borders.
The exercises revealed several implementation gaps, some major and some minor. An example is construction permitting. A business survey carried out in Delhi in March 2016 revealed the following implementation issues: a) significant lack of agency coordination—architects still need to obtain approvals from up to 10 different agencies; b) some facilities for online payment were not properly implemented and certain fees were still paid manually; c) very low awareness of the online system among users; d) no way to track the status of an application; e) information lacking on documentary and other requirements. In other words, the reforms had not gone far enough to have impact on the ground.
This feedback exercise helped generate several recommendations to address the deficiencies. These were provided to the Municipal Corporation of Delhi (MCD), and most were acted upon. Follow-up feedback exercises in October 2016 and February 2017 validated these actions while generating additional recommendations for further improvement. A similar effort was made in Mumbai.
The impact of these efforts can be seen in the trends in India’s performance on the “Dealing with Construction Permits” indicator. In the Doing Business in 2016 report, India’s ranked 183 on this indicator. Thirty-three procedures were involved taking 191 days according to the indicators. Two years later, the number of days had come down to 144 with a modest improvement in the rank to 180. The more substantial improvements came the following year when the DB report published in October 2018 indicated a reduction in the number of procedures and days required to 18 and 95 respectively. Still a long way to go but enough to propel India’s ranking on this indicator to 52. While all this improvement cannot be attributed to the feedback exercises alone, it is possible to trace a substantial part of this improvement to actions taken as a result of these exercises.
The Indian government also recognized that the DB indicators did not cover many regulatory interfaces that created problems for businesses and that the indicator measures were based on conditions in just two cities, i.e., New Delhi and Mumbai. Thus, in parallel to its efforts on the DB front, the Indian government embarked on an ambitious regulatory reform program at the state-level covering all states and union territories in the country. A long list of regulatory reforms was identified covering several regulatory areas, and state governments were instructed to carry out the reforms. Called the Business Reforms Action Plan, the program started in 2015.
Progress was monitored through annual indicators that ranked states according to their performance on implementing the reforms. The first such indicators, published in 2015, did not take into account business feedback. However, seeing the usefulness of the feedback exercises carried out as part of the DB program, the government changed the state-level reform indicators in 2018 by making a substantial part of the indicator scores dependent on business feedback.
The powerful demonstration effect of such feedback exercises had touched individual state governments too. In 2018, four state governments, Chhattisgarh, Jharkhand, Orissa, and Rajasthan, expressed an interest in knowing why there was poor uptake of self-certification and third-party certification options provided in business inspection reforms carried out by these states. At their request, the World Bank carried out an independent feedback exercise that could help design corrective actions to improve uptake.
The Indian experience from 2016 onward is a good example of what the DB indicators can lead to if governments use them well. First, the government refocused its attention from reforms on paper to reforms on the ground. Second, it recognized the importance of consulting with the private sector, which knows best where the shoe pinched, and designed corrective actions based on the feedback. This iterative process helped improve reform implementation quality. Third, the government recognized that while the DB indicators were useful, they were not adequate to diagnose the myriad of regulatory issues that businesses all over India faced. Thus, the government embarked on a more comprehensive, state-level, reform program, and, inspired by the power of indicators, underpinned this program by a set of performance indicators. Finally, once the pioneering DB-related feedback exercises proved useful, they created a demonstration effect, first within the central government, which replicated such exercises for the state-level reform program, and then on individual state governments.
Nobody running Lebanon, says central bank boss, as reported by Laila Bassam and Nafisa Eltahir, whilst hitting back at criticism over fuel subsidy removal. The above image is a general view of Beirut central district, Lebanon, August 22, 2019. REUTERS/Mohamed Azakir
BEIRUT, Aug 14 (Reuters) – Lebanon’s central bank governor said nobody was running the country as he defended his decision to halt fuel subsidies that have drained currency reserves, saying the government could resolve the problem quickly bypassing necessary legislation.
In an interview broadcast on Saturday, governor Riad Salameh pressed back against government accusations that he had acted alone in declaring an end to the subsidies on Wednesday, saying everyone knew the decision was coming. read more
Part of Lebanon’s wider financial meltdown, the steadily worsening fuel crisis has hit a crunch point, with hospitals, bakeries and many businesses scaling back operations or shutting down completely as fuel runs dry. read more
Deadly violence has flared in fuel lines, protesters have blocked roads, and fuel tankers have been hijacked this week.
The central bank’s move to end subsidies, which will mean a sharp increase in fuel prices, is the latest turn in the financial crisis that has sunk the Lebanese pound by 90% in less than two years and pushed more than half the population into poverty.
Salameh said Lebanon could recover but it was not possible to say how long that would take. “So far you have nobody running the country,” he told Radio Free Lebanon.
The central bank has effectively been subsidising fuel and other vital imports for the last two years by providing dollars at exchange rates below the real price of the Lebanese pound – most recently at 3,900 pounds to the dollar compared to parallel market rates above 20,000 – eating into a reserve which Salameh said now stood at $14 billion.
In order to continue providing such support, the central bank has said it needs legislation to allow use of the mandatory reserve, a portion of deposits that must be preserved by law.
“We are saying to everyone: You want to spend the mandatory reserve, we are ready, give us the law. It will take five minutes,” Salameh said.
The government has said fuel prices must not change, leaving fuel importers, who say they cannot import at market rates and sell at subsidised rates, demanding clarity.
“HUMILIATION OF THE LEBANESE”
Critics of the subsidy scheme say it has created huge incentives for smuggling and hoarding by selling petroleum products at a fraction of their real price.
Salameh said the bank had been obliged to finance traders who were not bringing product to market, and that more than $800 million spent on fuel imports in the last month should have lasted three months.
Despite an unprecedented wave of imports, Salameh noted there was no diesel, gasoline or electricity. “This is humiliation of the Lebanese,” he said.
Lebanon’s sectarian politicians have failed to agree on a new government since Prime Minister Hassan Diab quit last August after the catastrophic Beirut port blast. He has continued in a caretaker capacity since then.
Salameh said Lebanon could exit its crisis if a new government was formed that would embark on reforms. The Lebanese pound was “hostage to the formation of a new government and reforms”, he added.
The government has said steps to end subsidies must wait until prepaid cash cards for the poor are rolled out. Parliament approved these in June, but the financing has yet to be determined.
“When is the card? Let’s assume in the best case after two or three months … we will spend $3 billion while waiting,” Salameh said.Reporting by Nafisa Eltahir/Laila Bassam; Writing by Tom Perry; Editing by Kirsten Donovan
In a Khaleej Times‘ OPINION AND EDITORIAL, Michael Jennings of the University of London comes up with criticism of the now well-established labels of First World, Third World, suggesting that it is time for coining new binaries. Then First World, Third World? Let’s coin new binaries; but what about the MENA region’s stand, one would ask. The answer is below per the IMF’s Economic Overview.
First, the illiteracy and educational indicators are significantly more unfavorable for women than for men. Second, MENA countries compare poorly to other countries when account is taken of spending on the social sectors, highlighting the impact of distorted labor markets, an inefficient educational delivery system, and neglect of female education. Third, when various human development indicators are combined (e.g., as in the UNDP human development index) the region’s ranking among countries in the world is less favorable than that based on income criteria alone.
All too often, these terms have played into wider prejudices about places that reflect and are fed by the values ascribed to each.
For anyone living in ancient China’s Zhou empire in the first millennium BCE, the world was simple: they were in the “Zhongguo”, or Middle Kingdom, and everything outside was barbaric. Understanding the world at the height of European imperialism also was easy. On maps, vast swaths of territory were coloured in hues denoting each empire. Human nature strives for simplicity, and today we have come up with a multitude of descriptions for the world’s regions. But terms such as North/South and First World/Third World have flattened diversity and complexity through a simplistic binary gaze.
It isn’t just a problem of simplicity, though. All too often, these terms have played into wider prejudices about places that reflect and are fed by the values ascribed to each.
We can see this on social media, where the rise of intemperate comments and put downs against others can often be based on the implied superiority of where one lives or comes from. Social media weaponises and reinforces prejudices and racism that come from a facile understanding of the world. More than ever before, in an age of parity between the informed and the less-so, we must be careful of the words we use to describe each other.
Trying to analyse and explain the world has always required some generalisation. We lump together countries or regions that share some similarities and gloss over details and important differences. But describing the world is not just about looking for objective points of commonality or difference. It involves recognising different world views, assumptions and values. The problems come when one side of that binary division of the world gets to decide what is the norm, reflecting the realities of global power and ongoing colonial legacies.
Since the end of empires, two dominant ways of dividing up the world have emerged. The first reflected the Cold War, seeing the world through the prism of an existential conflict between the democratic-capitalist West and the communist East, comprised of the Soviet Union and China. The “rest” — which related closely to maps of former colonial territories — were the regions in Africa, Asia and Latin America that together comprised the arena for this battle of ideas and influence.
The second way took a more economic perspective, categorising regions through their GDP or level of “development,” and allocated various terms to describe those differences. Some — such as the terms “low-,” “middle-” (or “emerging-”) or “high-income countries” — are unapologetically economic in their focus, based on levels of GDP that still conceal great diversity within populations. These remain widely in use but at least have the virtue of being a label one can escape: Tanzania and Benin recently moved into middle-income status, while Mauritius has now joined the group of high-income countries. But other terms have attained wider reach within popular and analytical vernacular. The terms “North” and “South” were always less about geographical location than about distinguishing between the rich and globally powerful regions and the poorer, less powerful ones. “Developed” and “un-/under-developed” have similarly focused on poverty.
The term I grew up with, the “Third World”, was originally coined in the 1950s by the French demographer, Alfred Sauvy, to describe those nations that were part of neither the Western nor Eastern blocs. By the 1960s it had become firmly linked to poverty, under-development and poor governance. In a world that still contained third-class train carriages, in which “third” was inevitably less good than “first”, the term was applied to those parts of the world where the majority of citizens were people of colour — and which, coincidentally, had been under imperial rule. The racism and patronising undertones of the term were readily noted and understood by those on the receiving end.
What underpins all these ways of compartmentalising the world is the assumption that the European and North American models of development, with the same governance and other values, are the end-goal for all global regions. The closer you resemble these two, the more you can claim entry to the North, the First World and to “developed” status. These terms assume that emulating Europe and North America makes a country better, so it’s what every other nation should aspire to.
Yet rich Middle East states like the UAE or Asian nations like Singapore have no desire to replicate Western norms. In the 1990s, Malaysia’s then prime minister, Mahathir Mohamad, sought to articulate the “Asian Values” that marked a departure from a Western paradigm that twins development with liberalism.
Clearly, the binaries and indexes we are left with are not objective or scientifically indisputable. They are based on what counts most to a minority (albeit powerful) portion of the world. Is a nation’s GDP the sine qua non of being “developed”? What about Costa Rica and Cuba? Both are significantly poorer than the (very much “developed”) US, yet both enjoy better health and quality of life across a number of different indexes than their First World neighbour. As the past year has shown, rich countries contain enormous pockets of inequality and poverty — residents of a poor housing estate in Manchester might share more with those from a working-class area of Hong Kong than they care to admit.
Over the past couple of decades, the terms “Global North” and “Global South” have emerged in reference to global regions. While there is still some overlap with old terms, they do attempt to acknowledge how important discrepancies in power are in shaping relations and opportunities. They are at least an attempt to do away with disparaging terms for particular regions.
I use those terms myself, but with significant reservations. Do they really avoid the division of the world according to colonial legacies?
While that might make sense from the perspective of the Global North, would someone in India, for example, see themselves as more aligned with, say, Kenya, than with Thailand or even South Korea? It all depends, of course, on what you’re comparing with and on what the context is. It solves some problems, but not all — and it certainly does not distance you from a perspective and values that are far from universal. Perhaps it’s time for voices from outside Europe and North America to come up with new terms and for politicians, academics and journalists within Europe and North America to listen. There is much talk these days of decolonising education, development aid and global health, among other things. So how about decolonising our perspective on the world?
Michael Jennings is reader in international development at the School of Oriental and African Studies, or SOAS University of London, where he works on issues related to global health and the politics and history of global development.
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