How to control the fast and furious train of globalization?

If institutions are the railway, which regulates the pace and direction of the fast and furious train of globalization; Social Capital shall be the driver of the train. How? Let me briefly clarify the importance of having institutions like the IMF and World Bank and other similar economic and political international institutions to regulate our globalized world.

The world, either we are pleased to know that or not, is heading towards complete political and economic globalization. The free capital market and neo-liberalism, either we ideologically believe in them or not, are the dominant rule of today’s world. I am entirely with free capital market. But, with all the positive consequences and economic and political openness brought by such economic-political theories, still there are some minor negative aspects that would primarily affect the developing and poor nations and then threaten the already developed countries.

Stiglitz mentioned clearly that after 9/11 attacks – and I would say even since 1990s – the world realized the importance of enhancing cooperation in reforming and developing emerging and under-developed economies. Hence comes the importance of the role of international institutions like the IMF, World Bank, etc in stabilizing the fast and furious free capital market in our today’s world, especially when trying to transform it to the emerging economies.

Thus, the primary role of those institutions should start before the time of the crisis. IMF is not a rescue squad. It is an international financial organizations meant to help world economy to flourish and regulate the pace and force of global capital market through enhancing cooperation and compatibility among developed and under-developed countries. However, those institutions should not be given absolute power to decide the fate of the world.

The domestic civil society of concerned developed and developing countries and the international community, including powerful states like the US, should compose a network or supervision group to, directly or indirectly, regulate their work, prevent early signs of corruption, and support their basic roles to enhance and stabilize world economies.

Accordingly, I would say that, yes IMF and similar institutions are important and should continue to exist. We, even, need more international political and economic institutions to act as the railway, which regulates the pace and direction of the train of globalization. The role of those institutions is much bigger than a rescue squad that makes up the faults of the inefficient-yet global free market.

Those institutions require an unusual type of supervision by an independent group to ensure its success in its mission in stabilizing world economy and empowering emerging capital markets. This unusual supervision group, which Putnam called the Social Capital, should be constructed as an independent variable (i.e., completely independent) that has no interest in the respective institutions, IMF or any other political or economic institutions. The goal of the Social Capital should be to ensure the quality and transparency of the work of the international institutions. So it must be independent.

Building institutions correctly is another issue. I believe we need more institutions than the very few international institutions working today. Those institutions, I think, should be the dependent variable. In other words they should be built according to the policies of Social Capital and be dependent on it, on the policy level. If institutions are the railway, which regulates the pace and direction of the train of globalization; Social Capital is the driver of the train.

Why advanced countries should help the least developed countries?

Advanced economies like US, Japan, EU, etc. have exerted a lot of efforts and taken a lot of risks while climbing the ladder of economic reform. They, accordingly, believe that they should not expose themselves to risk any more, especially if this risk is related to the least developed countries of the world. They support the values of free market and work hard in transforming the theories of free market and capitalism to the developing countries to help them develop. However, they are not taking any tangible steps towards helping those least developed countries practically, despite the fact that advanced industrialized countries’ success cannot be assured and secured without supporting the growth of the least developed countries.  

Now, what should countries like EU and US do to help least developed countries climb the ladder? First of all, they should stop sending funds to least developed countries in the form of international development aid to these countries. Instead, they should use those funds to encourage and increase the number of investment projects in least developed countries, either directly or indirectly by offering certain incentives to investing countries. This would be of a great benefit for both sides and will definitely encourage the least developed countries to improve its status to rise to competition level. They say give a man a fish feed him for a day; teach a man to fish, feed him for a lifetime!

Second, yet most important, is to remove the “iron curtain” of tariffs and taxes on international trade, particularly exports, coming from the least developed countries. I once read a very interesting study by Thomas Hertel and Will Martin, arguing that global economy revenues will increase by 70 billion dollars per year – 75% of which will go to developing countries – if the international trade tariffs were lowered by 40%. The advanced countries should work on lowering the tariffs barrier, if not removing it completely, on the exports or other international trade activities from least developed countries.

Now the question is why the advanced industrialized countries should help the least developed countries to climb the ladder. There are claims that this would increase the number of competitors and threaten the advanced countries’ dominance over the global market. That is because the least developed countries will be able to offer low prices for certain products that were for so long controlled by the advanced countries, because in developing countries, operation expenses and labor salaries are much lower.

The answer is, simply, that helping the developing countries to have better access to international market would save the advanced countries from this claimed risk. The least developed countries have less operation expenses because they work with dilapidated equipments and they pay low salaries because the workers there are less educated and less interested in improving their skills. They are not motivated to do.

Thus, when the advanced countries open more space for the least developed countries to compete at the international market by applying the main two steps, mentioned above, among other steps of course; the least developed countries will spontaneously encourage workers to improve their skills use advanced equipments. Accordingly, they will incur higher operation expenses, which will force them to provide competitive prices on their products within the range, which would not threaten the advanced countries or destabilize the global free market.

On Arabs, Democracy, and Iraq War!

Who said Arabs does not want democracy? First, what do we mean by democracy? Is it the rule of people? Is it citizens’ right to informed choice that would lead to political and economic reform? Well, if this is how US understands democracy, this is how Arabs understand it too. Democracy, liberty, and human rights, are common human values shared by the members of the huge human family, no matter what we call them: Arabs, Americans, Chinese, whatever.

The Arab people all over the region, even in the most conservative societies and strong dictatorships are fighting for democracy, or more specifically liberal democracy (take Egypt, Syria, Tunisia, and Saudi Arabia as clear examples). The civil society and pro-democracy movements there are growing strong and the pressure they are imposing on dictators is increasing. Although there are no tangible results that I can use as evidence, I can confidently claim, as an on-ground observer, that they are on their way.

Arabs, especially the young generations, who form more than 60% of the region’s population, are not coping with the lack of democracy. I disagree. Arabs suffer from the lack of democracy, true! But they do not look forward to the bloody democracy that comes through war and violence. What happened in Iraq was a nightmare to the whole region. Innocent civilians killed, sectarian tensions expanding and increasing, natural wealth stolen. No one, including the pro-democracy activists, wishes to see their country in the horrible status of Iraq. It is true Iraq now is enjoying some initial signs of democracy, but this won’t remove the past misery and the expected consequences. As soon as the American troops completely leave Iraq, things will turn worse. Why? Because, while imposing democracy by warfare, the people lost their most-needed opportunity to absorb democracy and transform their mentalities and life-styles from the very closed tunnel under Saddam to the wide-open horizon after Saddam. They were pre-occupied by saving their lives.

That is, of course, if we assumed that US intentions in invading Iraq were sincerely for promoting democracy, not for hunting down Saddam Hussein (as a person not as a dictator), or for the revival of Bush’s “holly crusade.” Now, thanks to the information leaked through some reputable websites like Wikileaks and some reputable writers like McCelellan (of “what happened” book), and other international reports, we realized that the war on Iraq was not for saving the world by finding the hidden nuclear bombs or promoting democracy in a country that was governed by a hard-liner dictator like Saddam.

So, obviously, the neighbor Arab countries won’t get jealous of Iraq’s democracy. They are scared! And, the people there cannot and will not accept to be another Iraq, even if Iraq became the most democratic country in the world.

I can also claim that dictators in the region became stronger after the fall of Saddam. They – the dictators – are using the Iraq example to frighten their people and enhance their dominance over their seats. I can go further and say that by waging war on Iraq, US harmed democracy and enhanced dictatorship in the region. If America really wants to help, it should care more for promoting democracy in the Middle East through disseminating knowledge about civil rights, enhancing civil society, and supporting nonviolent resistance and struggle by the people in the region against their dictators. This support can take many forms starting from financial and moral support to the pro-democracy initiatives, up to imposing diplomatic pressures on the dictators to apply liberal democracy principles. But war is not and can never be a reasonable or working option!

Nevertheless, I would like to put something really clear about Arabs in general and Muslims in particular. The Middle East is the region where the three divine religions: Judaism, Christianity and Islam - which form the majority of the religions in the world – emerged. People there are religious by nature, regardless what religion they embrace. They can hardly understand any thing in the world or embrace any ideal or principle if it is not introduced and justified through religion. Actually, as I mentioned in an earlier post, democracy (Shura) is an obvious and non-negotiable rule in Islamic Shaira (law). Democracy is not a strange concept for Muslims or Arabs. Accordingly, Arabs/ Muslims would never hate to have democracy, but they will absolutely prefer eternal dictatorship to democracy promoted through war.

Democracy is compatible with Islam but not with Arab-Islamists!

Building on my previous post on the necessity of spreading democracy in the Middle East, I thought it would be wise to explain why I believe that democracy is compatible with Islam but not with Arab political Islamists. It is absolutely appropriate to place considerable emphasis on the compatibility/incompatibility of democracy and Islam. Islam is not only a spiritual religion that cares for nothing but believers’ spiritual relation to their God (Allah). However, it could be viewed as a political religion that regulates the relationship between people in the Muslim society (the umma) and the relationship between Muslims and non-Muslims all over the world. Islam’s holly texts (Qura’an and Hadith) and moderate (non-salfi, non-extremist) interpretations embedded in moderate Shari’a dictate the various forms of governance and political systems under which Muslims and non-Muslims living in Muslim countries (known as Ahlul Kitab or the people of the book) should live.

One of the most known Islamic governance system in Islam is called “Shura” and it is very similar to the secular concept of democracy. In other words, Shura gives the people the right to elect their leaders, participate effectively in the decision making process, and hold their leaders accountable if they failed in their mission. Shura system is not an option for Muslims to take or to leave. However, it is a divine order that they should obey and follow as is.

Now, the question: if Shura (democracy) is an integral part of Islam, why the Middle East is an all-dictators area – except for Israel/Palestine and maybe Lebanon? The answer is simply because the version of Islam applied in the Middle East is a distorted version that inhibits the ill interpretations of Salafis and the Bedouin culture of the nations that lived long in deserts under arbitrary leaders of tribes or groups, whose their only license to power were their muscles and wealth!

The lack of democracy in the Middle East is not an Islamic problem but a dilemma created by Arab Islamists! Muslim Brotherhood in Egypt and Wahabbis in Saudi Arabia are clear examples on what I am saying. They are politically motivated groups who use/abuse the religion of Islam to control the vast majority of devoted Muslims.a   

Why Democracy... and why democracy in the Middle East?

I disagree with those who claim that democracy and Islam are not compatible or that democracy is not necessarily the appropriate form of government in the Muslim World. From my point of view, democracy is the only good form of government for any country in the world, including the Middle East. Centralization and the absolute powers given to autocrats and theocrats have incurred dire consequences not only to the Middle East but also to the whole world. Spreading democracy in the Middle East would improve the future of the people in the region and the world. However, for democracy to succeed it should be paired with liberalism.

Democracy, as I understand, is mainly about the rule of law and giving people the free will to decide their present and future based on informed choice. It is much more than merely running and participating in free and fair parliamentary or presidential elections. It has nothing to do with the type of the ruling regime of a given country, either a monarchy or a republic. Some monarchies like UK are successfully applying democracy, while some republics like Egypt are failing dramatically in achieving the minimum requirements for viable democracy. Thus, democracy is not about the elite or the regime. However, democracy is about the people and whether they enjoy their basic rights to freedom, equality, and economic prosperity under the rule of law. And, this is the core principal of liberalism.

The Middle East problem with democracy has nothing to do with Islam. The Middle East is perhaps the only region in our world that incorporates this large number of dictatorships (e.g. Islamist theocrats and secular autocrats). The lack of democracy in the region has resulted into angry but mostly apathetic group (large group) of people, especially young people, who tasted the bitterness of injustice and accordingly became an easy prey for the Islamists who programmed them into terrorists and fanatics. As religious by nature, the Middle Easterners found in the Islamists’ mostly wrong interpretations of holly texts a space to breathe out their anger and probably winning the eternal welfare at Heaven by sacrificing their soul for the “sinful” causes of fanatics. The ears of average Middle Easterners are deafened by dictators from one side and Islamists from the other side. The voice of pro-democracy or liberal Muslims and intellectuals is hardly heard under such strong pressures.

Applying democracy would act as a de-programmer for those escaping the bitter injustice under dictatorships by surrendering their “unfree will” to the Islamists in exchange of a fake promise of welfare in the afterlife. Democracy would empower the average people in the Middle East by allowing them to have the final say in their own lives and decide their own future. Accordingly, democracy, or better to emphasize “liberal democracy,” in the Middle East is the best and probably the only good from of government that would serve the interests of the people in the region and beyond.