Lineages of Revolt. Adam Hanieh
labor-intensive clothing and agricultural goods manufactured in the Middle East—is indicative of one mechanism of the transfer of value from the Middle East to European capitalism.105 This has been reflected in persistent and widening trade deficits with Europe.
Moreover, this orientation of trade developed concurrently with policies of privatization and the opening up of ownership to foreign investment. From 2003 to 2008, French, Spanish, and Italian investors were particularly prominent in the region—buying up newly privatized assets in the utilities, real estate, banking, and industrial sectors.106 North African countries—notably Morocco, Tunisia, and Egypt—were a major target of these investment flows. Through these investments, industrial and agricultural activities in EMP countries were frequently incorporated in early production stages of vertically integrated conglomerates that straddled the Mediterranean itself—again, particularly in textiles/garments and the food industry (see chapters 3 and 4). For this reason, any growth in exports that might have accompanied increased access to European markets actually ended up flowing to firms that were linked to European conglomerates through joint ventures or, in some cases, direct ownership.
Rising Powers?
While the European Union and the United States continue to dominate the political economy of the Middle East, rising powers have increasingly built separate and competing alliances with states in the region.107 This has been reflected in a partial reorientation of the region’s trade and financial flows. With the exceptions of Morocco and Bahrain, all countries in the Arab world have seen a declining share of their imports coming from the EU or United States over the last decade. For Egypt, Jordan, Syria, and the Gulf states, this proportion has fallen below 50 percent (see appendix 1). In place of these traditional exporters to the region, an increasing proportion of goods are coming from countries such as China, Russia, Turkey, South Korea, and India. In 2010, China was one of the top three sources of exports to the region for twelve out of seventeen countries (see appendix 1). In regards to exports from the Middle East, India, East Asia, Brazil, and Turkey rank as significant markets for goods produced in the region.
China and Russia have been the leading actors in this entry of emerging powers into the region. Not surprisingly, these two countries have looked at forming linkages in the region through those states that remained largely outside of the orbit of Western power over the last two decades—notably Iran and Syria. By the end of the 2000s, China had become Iran’s biggest trading partner and the largest purchaser of Iranian oil.108 Russia’s links with Iran were focused on the sale of military hardware, although these came under pressure due to sanctions imposed on Iran as of the mid-2000s. The closer links among Russia, China, and Iran were confirmed in 2005, when Iran was granted observer status at the Shanghai Cooperation Organization (SCO), a regional security grouping of Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan founded in 2001. Iran applied for full membership in the SCO in 2008, although this has not been granted due to the ongoing UN sanctions. Some observers have suggested that the potential consolidation of the SCO into a tighter military and political alliance could form a possible counterweight to NATO influence in the Middle East/Central Asia region.
Russia and China have also formed strong relationships with Syria. In 2008, Syria’s president, Bashar al-Assad, agreed to allow Russia to convert a naval port located at the Syrian town of Tartous into a permanent military base for Russian warships. It would be Russia’s only such base in the region. The agreement signified that Syria had become Russia’s most important ally in the Middle East, a fact reflected in Russian arms exports to Syria, which accounted for about 10 percent of Russia’s total weapons sales during the 2000s.109 China is likewise tightly linked to Syria as the largest exporter to the country and its biggest source of FDI. The latter investments have been concentrated in Syria’s Al Furat Petroleum Company—Syria’s main oil producer, which was partially privatized over the 2000s—as well as in construction and utility projects.
The close Chinese relationship with Syria reflects the importance of the Middle East to the balance of global power. Nearly half of China’s crude oil imports were coming from the Middle East by 2006, with Saudi Arabia the largest source of imports (around 16 percent) and Oman and the UAE also significant sources; this was despite the fact that China itself was the sixth-largest oil producer in the world that same year.110 These levels continued to increase, and in early 2010 a spokesperson for Saudi Arabia’s oil producing company, Aramco, revealed that Saudi oil exports to China had surpassed those to the United States—a profound shift that marked a new era in the patterns of Middle East oil trade.111 The eastward shift of Gulf trade was not restricted to crude oil and gas; it was also reflected in petrochemical exports that provide a critical feedstock for Asian factories. In 2004, China imported about 42 percent of globally traded polyethylene, 44 percent of polypropylene, 45 percent of polyvinyl chloride (PVC), and 48 percent of polystyrene.112 Much of these basic petrochemical products were sourced from the Gulf region; the Saudi Basic Industries Corporation (SABIC), the most important petrochemical firm in the Middle East, was sending half its exports to Asia by the end of 2009.
China’s dependence on Middle East oil presages a deepening rivalry with the United States—not only over oil supplies per se, but due to the fact that US hegemony in the Middle East provides it with an important source of leverage over China, a fact amply demonstrated in regards to the conflicts over Iran. Any long-term contestation of a US-centered world order presupposes a shift in the form of external domination of the Middle East, which, as the history of the last five decades decisively confirms, will necessarily be accompanied by a range of political, military, and economic initiatives that attempt to draw the region away from US domination. Nonetheless, while both China’s and Russia’s increasing involvements in the region undoubtedly present a challenge to US and broader Western hegemony, some care needs to be taken in interpreting the nature of these rivalries. Precisely because of the highly internationalized structure of the world market, all major states—including China and Russia—are deeply enmeshed in mutual trade and capital flows, sharing a common interest in the stability of global capitalism. This means they have little interest in seeing a qualitative break with the patterns of uneven development in the Middle East, or with the region’s embrace of neoliberal reforms. Indeed, the entry of China and Russia into Middle East markets—much as with Europe and the United States—has been predicated upon the intensification of neoliberalism in places such as Iran and Syria. For these reasons, it is mistaken to see these countries as any sort of progressive force for liberation (chapter 7 provides further discussion of this issue).
Conclusion
The protracted domination of the Middle East by Western states has developed through a variety of different means, but the underlying themes have been consistent: deepen the uneven and combined development of the region, widen the hierarchies of states and their interdependencies, and utilize the resulting differentials of power to consolidate control. The forms and patterns of these arrangements have shifted over the last five decades, but their result has been the same. This strategy has not only acted to realign the specific relationships between different zones in the region and the major capitalist powers, but—most significantly for the analysis throughout this book—has also generated a specific set of relationships internal to the region itself. There are six core characteristics to this realignment that can be initially sketched here and will be further developed in subsequent chapters:
1. The European Union has brought closer to itself the key Euro-Med countries, most notably those of North Africa. The productive and commercial activities of these countries have been tightly linked to the Eurozone as neoliberal reforms have proceeded apace. This has meant a reorientation of North African economies toward the needs of European capital—fixing the Mediterranean as a subordinated and dependent adjunct of its larger neighbor through trade and foreign direct investment flows.
2. The integration of Mediterranean productive sectors with European capitalism has acted to deepen social differentiation both within individual nation-states as well as between the region as a whole and Europe. In other words, the relationship with the EU has helped to shape the trajectory of class formation (again, most notably in North Africa), by simultaneously enriching (and drawing closer to the European project) a tiny layer of the region’s elites. As subsequent chapters will confirm in detail, the intertwining of trade and investment through the EMP has played an important