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What is so Inherently Wrong with the US Economic – Political Model Towards the Middle East?

By : Ziad K. Abdelnour| 25 February 2011
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Machiavelli once wrote that princes should see to it that they are either respected or feared; what they must avoid at all cost is to be despised. To have made itself despised as irrelevant: That is the legacy of US faithlessness and willful blindness in the Middle East.

It is obvious to any idiot out there today that America has long supported dictators, instead of democracies in the Middle East ….. simply because our “economic model” in the region always supported strong men who will ensure that their country always acts as a “client state” and by the same token moves to crush countries which refuse to act as satellites to us.

I strongly believe this “godlike” attitude has got to change if we are ever to dream having any presence in the Middle East one day.


Let’s face the facts:

1. We are today a nation of more than 310 million people and our national debt is quickly closing in on $14 TRILLION dollars. That’s about $45,000 for every citizen. When distributed among the taxpayers, the amount equals more than $126,000!. Current unemployment is officially about 9%; unofficially, it is almost twice that. Forty-five million Americans now receive government assistance to purchase food, nearly two million have filed bankruptcy and more than a million have lost their homes in foreclosure proceedings. As of September 2010, 23% of U.S. homes are worth less than the mortgage loan. Homeowners across the country have lost an average of 39% of the value of their properties over the last three years. Commercial real estate values have fallen 40 percent since their peak in 2007, according to a recent Reuters article. Bottom Line: We are a bankrupt nation and so is the majority of our citizens. Most importantly, we are certainly in no position to impose to a Middle East bloc of 300 million people controlling over $2 trillion in capital and growing how to manage their house, elect their leaders or otherwise….as frankly we are clearly no role model to follow neither on the fiscal nor foreign policy side.

2. The US’s entire frame of reference in the region is hopelessly outdated, and no longer has any meaning. It is a fact that the street protesters in Tunis, Cairo or Libya could possibly care less today of what the US thinks or what the US State Department says; as if the political and economic reform which President Obama stubbornly urges on those countries leaders while they were burning could possibly satisfy those risking their lives to overcome decades of repression and American support to dictatorships throughout the region…wake up folks.

3. US spokesmen stress the protesters’ desire for jobs and for economic opportunity, as though that were the full extent of their aspirations. They entreat the wobbling, repressive governments in the region to “respect civil society”, and the right of the people to protest peacefully, as though these thoroughly discredited autocrats are actually capable of reform. Sometimes I wonder if our spokesmen have ever lived in the Middle East or have any clue of what they are talking about.

And this is only the tip of the iceberg …..

Time to wake up folks. Our “folie de grandeur” has got to stop no matter what. At this point, it is not a matter of choice anymore but a matter of our survival and access to The Middle East’s resources in the years to come.

What led to this mess and hatred for America? In my humble opinion, it is simply a very “flawed” US economic model used to justify our historic support for dictators.

First off, if you look at development assistance from the United States and other international financial institutions, you find that there is no democracy advantage. Democratic countries, in fact, receive less development assistance than do non-democratic countries; basically democracy is not their business. They increasingly talk about good governance as one aspect of development, but not about democracy. The people who run USAID believe that their job is to promote development, and not democracy. That permits them to consider good-governance issues, but not to ask the fundamental question: Is this a democratic society that we want to support?

Second, there is a widely held view that poor countries need to delay democracy until they develop. The argument goes that if a poor country became democratic, because of the pressures in a democracy to respond to the interests of the people, they would borrow too much, they would spend the money in ways that did not advance development. These poor decisions would mean that development would not occur; and because people would then be disappointed, they would return to a dictatorship. Therefore, the prescription is, get yourself a dictator under our little thumb—it is never quite explained how you would make sure you had a dictator that spent the money to develop the country rather than ship it off to a Swiss bank account—wait until that produces development, which produces a middle class, and then, inevitably, the middle class will demand freedom, and you will have a democratic government. How wrong and stupid can that be….go figure.

Last, we in the US tend to assume that once autocratic countries reach a middle-income range, they will make the transition to democracy. Given the limited growth that we have seen under authoritarian systems, relatively few authoritarian countries actually reach this middle-income range. In fact, since 1960, only sixteen autocratic countries have reached a per capita base above $2,000 a year….that is over a 50 year period.

The reality is :

Democracies do a far better job at avoiding catastrophes of all types. If we look at financial catastrophes for each of the last four decades and look at the twenty worst performers over each of those decades, we find that of eighty cases, only five are democracies. Similarly, if you look at a 10 percent contraction in GDP per capita on an annual basis, you find that poor democracies are half as likely to experience this sort of acute recession as are autocracies.

Democracies and openness contribute to higher levels of transparency and lower levels of corruption. Various data show that corruption cuts heavily into GDP growth on an annual basis.

Democracies not only have a self-correcting mechanism, but also mechanisms for a systematic means of changing ineffective leadership. This allows for a stable transition to a new policy framework that might allow for a more effective process of addressing the problems that a country is facing, one that is appropriate for its particular circumstances. Because of this process of succession, you don’t have the same instability in democracies that heavily cuts into growth in other systems, either because of the political uncertainty or the civil conflict that results.

Democracies don’t fall off the edge of the cliff and hit bottom in the way autocracies do.

Though it is clearly politically incorrect today to extol publicly the virtues of autocracies, the view that these governments do a better job of promoting economic growth and stability among poor countries remains firmly entrenched in the minds of many world leaders, economists, national security advisors, business executives, political scientists, and international civil servants starting with US policy makers.

How naïve and potentially dangerous can that be?….you tell me.

It is high time to wake up and drastically change our posture towards the new Middle East shaping up.

Having long opted in favor of political stability over the risks and uncertainties of democracy, having told ourselves that the people of the region are not ready to shoulder the burdens of freedom, having convinced ourselves that Muslim culture or religion stands in the way of democracy, suddenly the US has nothing it can credibly say as people take to the streets to try to seize control of their collective destiny.

Democracy can be a victim in lots of silent ways. No wonder why events in the Middle East have today slipped away from us; whether we like it or not.

Time to stop fooling the American public by stating that our goal there is to stop terrorism when it is nothing more than being a superpower (i.e. an empire) looking for “client states” to suck off their natural, financial and human capital resources.

As George Bernard Shaw once said: “Capitalism has destroyed our belief in any effective power but that of self interest backed by force.”

Well, I am afraid the party is over folks.

Time for new leadership in the US who truly understand the geopolitical and geoeconomic nuances of the “New Middle East” in the making.

Your feedback as always is greatly appreciated.

Thanks much for your consideration.


By :� Ziad K Abdelnour

Ziad is also the author of the best selling book� Economic Warfare: Secrets of Wealth Creation in the Age of Welfare Politics (Wiley, 2011),

Mr. Ziad Abdelnour continues to be featured in hundreds of media channels and publications every year and is widely seen as one of the top business leaders by millions around the world.

He was also featured as one of the� 500 Most Influential CEOs in the World.