Lineages of Revolt. Adam Hanieh
to only three months’ worth of imports.57 In the face of this dire situation, Iraq’s president, Saddam Hussein, attempted to cajole the Gulf states into forgiving the debts Iraq had incurred during the war. Failing in this goal, he invaded Kuwait in August 1990, justifying the invasion with the claim that Kuwait was drilling for oil beneath the Iraqi border and colluding with other Gulf states to keep the price of oil low in order to damage Iraq’s parlous finances.58
Despite the fact that Hussein had been a primary ally of the United States during the war with Iran, he was considered unreliable and his leadership rested partly on a claim to Arab nationalism.59 The United States, seizing the opportunity presented by the invasion of Kuwait, quickly mobilized to launch an attack against Iraq. In this endeavor, the political alliances that had developed during the 1980s played a chief role in garnering broader Arab support. Egypt organized an emergency Arab summit in 1990 that endorsed the invasion and also sent troops to take part in combat. Although the Iraqi government was not ousted by the US-led coalition, its military was severely weakened and the country was cut in three by the no-fly zones imposed by the United States and Britain after the war.60 US president George H. W. Bush utilized the occasion of the war to announce what he described as the “New World Order”—untrammeled US supremacy across the globe. The war was followed by a decade-long regime of sanctions that devastated Iraq’s industrial and social infrastructure, with the United States remaining focused on bringing to power a pliant government.61 At the end of the war, Egypt was rewarded for its efforts with a $15 billion write-off of its debt commitments, the largest cancellation in the history of the Middle East.62 Likewise, Morocco, which sent 1,200 troops to aid in the attack, received $5 billion in debt forgiveness from the United States and the Gulf states.63 In both cases, the relationships of debt bondage were undoubtedly a major factor in steering the foreign policy choices of the two Arab states.
Once again, however, the extension of US power through the 1990s and 2000s was not solely military in nature. As Iraq faced invasion and a punishing sanctions regime, the United States developed a series of highly significant trade and financial initiatives that radically transformed the relationships between the wider region and the advanced capitalist core. As subsequent chapters will show in detail, these initiatives—alongside similar ones from the European Union (EU)—have been a major force in structuring the context of national neoliberal reforms over the last two decades. But beyond the national scale, they have also acted to rework the nature of accumulation at the regional scale—shifting the pattern of financial and trade linkages with Western capital and consolidating a specific set of hierarchies within the region itself.
As had been the case since the 1970s, US power continued to be articulated through close military and political relationships with the Gulf, Israel, and client Arab states such as Jordan and Egypt. There was a shift, however, in the way these relationships were conceived. The basic approach was to draw these pillars of support together in a single economic zone under the domination of US capital. A critical pivot of this strategy was thus the normalization of economic and political relations between Israel and the Arab world. As a consequence of its long-privileged relationship with the United States—expressed most pointedly in the massive receipts of aid without the conditionalities characteristic of loans to other states—Israel’s economy had developed in a qualitatively different direction from those of its neighbors. Israel’s capitalist class had emerged with the support of the state apparatus around activities such as construction, agriculture, and finance. But through the 1990s, direct US financial support helped to enable the development of high value-added export industries connected to sectors such as information technology, pharmaceuticals, and security.64 Unlike its relationship with other states in the region, the United States had run a massive trade deficit with Israel since the signing of a US-Israel free trade agreement (FTA) in 1985. In this context, the push to normalization would inevitably strengthen the position of Israel (and thus the United States) within regional hierarchies.
The first step in this process was the 1993 Oslo Accords, signed between Israel and the Palestine Liberation Organization (PLO), which led to the establishment of the Palestinian Authority (PA), with limited self-rule over the Palestinian population in the West Bank and Gaza Strip. As chapter 5 will discuss in further detail, this agreement was a necessary prerequisite for other Arab states to embark on normalization with Israel. Throughout the 1990s, this self-rule evolved into a situation akin to the bantustans of apartheid-era South Africa: Israel retained full control of Palestinian movement, the entry and exit of goods, and economic development in isolated patchworks of territory, while a small layer of Palestinians mediated the occupation on behalf of the occupying power. At the same time, because this process occurred under the rubric of “peaceful negotiations” and the blessing of the United States and EU, Oslo and subsequent agreements helped to open the way for Israel’s normalization into the broader Middle East.
At a regional level, the trend toward normalization was confirmed in the MENA Economic Summits, a series of intergovernmental meetings held annually between 1994 and 1998. As the Jordanian Foreign Ministry noted, these summits were “intended to create economic interdependencies between Arab states and Israel, promote personal contacts between the two sides and foster trade, investment and development.”65 The first MENA summit was held in Casablanca, Morocco, in 1994 and, in addition to the Arab states, was attended by then Israeli prime minister Yitzhak Rabin, foreign minister Shimon Peres, and 130 Israeli businesspeople. The participants agreed to take measures to lift the regional economic boycott of Israel and also to establish a Middle East chamber of commerce—with then US secretary of state Warren Christopher effusing that “the Middle East is open for business . . . the conference could be the beginning of a beautiful friendship.”66 The second summit was held in Amman, Jordan, in October 1995, and aimed at facilitating “the expansion of private sector investment in the region, [and] to cement a public-private partnership which will ensure that end and to work to enhance regional cooperation and development.”67 As part of the Amman summit, it was decided to establish the Economic Summit Executive Secretariat, which would work to advance “the public-private partnership, promoting contacts, sharing data and fostering private sector investment in the region.”68 The neoliberal ethos guiding these gatherings was continued in the third MENA summit, held November 12–14, 1996, under the theme of “Building for the Future, Creating an Investor Friendly Environment” in Cairo. The final resolution of the Cairo conference noted, “The region’s economic, commercial and trade potential . . . is being greatly enhanced by important economic reform programs currently being undertaken by many states in the region. These reforms, which include privatisation, structural reform, and removing trade barriers, have provided for a more business-friendly economic climate throughout the region.”69
The MENA summits explicitly linked normalization to the consolidation of neoliberal reform, with the integration of Israel into the region predicated upon the dropping of barriers to trade and investment flows under the auspices of US power. Perhaps the most revealing confirmation of these linkages was the establishment of the so-called Qualified Industrial Zones (QIZs) in Jordan and Egypt. The first of these zones came about as a result of economic agreements signed between the United States, Israel, and Jordan in 1997. Under the QIZ agreements, goods produced in the zones were given duty-free access to US markets, provided that a certain proportion of inputs were Israeli (8 percent in the case of Jordan, 11.7 percent in the case of Egypt). Soon after the first agreement was signed, an additional twelve QIZ sites were established in Jordan. These agreements were intended to weld together Israeli and Arab capital in the joint exploitation of cheap labor, with exports aimed at the US market. They have since come to dominate bilateral trade between the United States and Jordan (and, to a lesser extent, Egypt). By 2007, the US government was reporting that exports from the thirteen QIZs established in Jordan accounted for a massive 70 percent of total Jordanian exports to the United States.70 In 2004, Egypt also launched its first QIZ in an agreement with Israel and the United States. Six more QIZs were approved in subsequent years, and from 2005 to 2008 exports from these zones grew at an annual average rate of 58 percent, ten times that of total exports from Egypt to the United States.71 By 2008, close to one-third of Egypt’s total exports to the United States would be coming from QIZs.72
The moves toward normalization appeared to stumble following the onset of a Palestinian uprising against Israeli rule in 2000 (see chapter 5) and a second US-led invasion of Iraq in 2003.73