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Section 3. Regional economy
Alhanaqtah Omar Jraid Mustafa, Tafila Technical University, Jordan, Assistant Professor, College of Business E-mail: [email protected]
POLITICAL ECONOMY OF STATE FAILURE: CASE STUDY FOR THE MIDDLE EAST ARABIC COUNTRIES
Abstract: The main objective of the research is to configure Arabic countries of the Middle East from the standpoint of state sustainability with a focus on the concept of state failure that is eventually a policy concern. We are interested in differences between countries of the region, as well as where the sample fits in the world spectrum. Conclusions are based on analysis of a composite index - Fragile States Index. We discuss this approach to measuring state failure and provide conclusions for the targeted region.
Keywords: diversity, failed state, Fragile States Index, Middle East.
1. Introduction • challenge to the neighbors that might be caught
This paper is a part of a series of papers, an objec- up in any spillover effects, not least from the refugees; tive of which is to configure the region of Western • challenge to the international communities in
Asia in different political economy categories such as population, capital income, human development [6], economic globalization, trade, foreign direct investment [2], trust [5], rule of law, control of corruption [4], ethnicity, language, religion [3], democracy (upcoming publication) and other categories. At this research stage we analyze the diversity of the Arabic Middle East countries in terms of state fragility. For this purpose we use the Fragile States Index (FSI). With the help of a comparative analysis technique we analyze the diversity within the target region and show where it fits in the world spectrum.
We are interested in the concept of state failure because unsustainable, fragile, states are considered as a threat to the world security and sustainability. It was argued that a failed state posed three major challenges: • challenge for its own citizens, deprived of the public goods that they expect from the state;
still fate of the lawless space where crime and terrorism could flourish.
Reasonably interesting that after September 2001 (bombing of twin towers in New York) the Unites States government labeled failed states as the most powerful threats to American security. And the World Bank was right there to help establishing low income countries under stress programs. Thus, in order to tackle problems related to fragile states, there is the need to assess states' vulnerability to conflict or collapse, to identify pressures that are pushing the state towards the brink of failure. For this purpose different political economy categories are evaluated and included into special composite indices, such as the FSI.
Units of analysis. The Western Asian region significantly overlaps with the Middle East. The Middle East is a transcontinental region centered in Western
Asia and Egypt. We sampled Arabic Middle East countries out of the Western Asian region (13): Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestinian Territories, Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates and Yemen. Thus, five countries of Western Asia were excluded from the sample (Armenia, Azerbaijan, Georgia, Israel and Turkey) and one Middle East country (Egypt) was added.
Variables. For the purpose of analysis we use a composite index - the Fragile States Index - compiled jointly by the Fund for Peace (United States) and the influential Foreign Policy magazine.
Methodology of the research. Comparative analysis technique as a methodology of the research has been used. We begin with ranking the data of all the world economies in ascending order. This way we may see how countries are located in the world on a chosen criterion. Then we place our target region - Arabic Middle East countries - along the world spectrum. Then we describe whether the countries of the target region are at the top, middle, bottom or scattered randomly; whether they are similar or clustered, or diverge radically. Finally, we comment on findings.
Current research contributes to the literature by conducting the study on diversity of the Arabic part of Western Asian region plus Egypt in terms of state fragility using a composite index that comprise economic, social, political and military indicators. We report first results and encourage further investigation of the region from the standpoint of other political economy categories.
2. The concept of the state failure 2.1 In the search of consensus The current fixation with state failure dates from the end of the Cold War and the disintegration of the Soviet Union, and problems at the same time in Haiti, Somalia, Sudan, Liberia and Cambodia.
There is no real consensus on the definition of a "failed state" because the nature of indicators used to measure state failure is subjective, so this leads to an ambiguous understanding of the term [21]. Dif-
ferent authors focus on different political economy categories. Such, for instance, focus on the effectiveness of the government to determine if a state is failed or not [23], focus on the legitimacy of the state [15], on the nature of the state [14], on the growth of criminal violence in a state [25], on the economic extractive institutions [1] or on the states' capacity to control its territory [26]. As part of the debate about the state failure definition, Rotberg defines failed states "when they are consumed by internal violence and cease delivering positive political goods to their inhabitants" [25]. The primary public good is the provision of security within a territory. Once this good is provided, a number of other goods can evolve, such as, for example, dispute settlement, the rule of law, political participation, education and health care. Consequently, violence is idiosyncratic for "failed states". Other indicators would be a predatory government, loss of control over territory, criminal violence, lack of medical and educational services, declining GDP per capita, etc. [20]. Thus, the state is generally measured on the basis of three core functions: representation, security and a concern for welfare of its population [19].
One of the main contributions to the theoriza-tion of the "failed state" is the "gap framework" suggested by Call [7]. This framework unpacks the concept of "state failure" focusing on three gaps that the state is not able to provide when it is in the process of failure:
• capacity, when state institutions lack the ability to effectively deliver basic goods and services to its population;
• security, when the state is unable to provide security to its population under the threat of armed groups;
• legitimacy, when a "significant portion of its political elites and society reject the rules regulating power and the accumulation and distribution of wealth" [8].
In the "gap framework", instead of attempting to quantify the degree of failure of a state, the author
provides a three-dimensional scope, useful to analyze the interaction between the government and the society in a more analytical way. Call doesn't necessarily suggest that states that suffer from the challenges of the three gaps should be identified as failed states. Instead, he presents the gap idea as an alternative to the state failure concept as a whole [8].
Regarding to the subject of our analysis, the Fund for Peace's Fragile States Index underlines the democratic character of state institutions in order to determine its level of failure.
2.2 Fragile States Index: methodology and criticism
The Fragile States Index (FSI) aims to measure states' vulnerability in pre-conflict, active conflict and post-conflict situations and to access the vulnerability of states to collapse. The FSI is an annual ranking of 178 countries that was first published in 2005. It is a composite index comprised of 12 indica-
Table 1. - 10-least and 10-most
tors, with on average 14 separate elements in each. Indicators are grouped in categories [11]:
(1) cohesion indicators: security apparatus, fac-tionalized elites, group grievance;
(2) economic indicators: economic decline, uneven economic development, human flight and brain drain;
(3) political indicator: state legitimacy, public services, human rights and rule of law;
(4) social and cross-cutting indicators: demographic pressures, refugees and internally displaced persons, external intervention.
Each indicator is scored on a scale of 0 to 10, with 0 being the lowest intensity (most stable) and 10 being the highest intensity (least stable), creating a scale spanning 0-120. There is information about 10-least- and 10-most failed states in the world in Table 1. As a result of assessment, the states are ranked on a spectrum of categories labeled sustainable, stable, warning and alert.
failed states in the world, 2017
Rank Most fragile states Score Least fragile states Score
1. South Sudan 113.9 Finland 18.7
2. Somalia 113.4 Norway 20.5
3. Central African Republic 112.6 Switzerland 21.1
4. Yemen 111.1 Denmark 21.5
5. Sudan 110.6 Sweden 22.1
6. Syria 110.6 Australia 22.3
7. Congo Democratic Republic 110.0 Ireland 22.3
8. Chad 109.4 Iceland 22.5
9. Afghanistan 107.3 Canada 22.6
10. Iraq 105.4 New Zealand 22.6
Source: constructed based on the Fund for Peace Data [10]
The FSI is based on the Fund for Peace's proprietary Conflict Assessment System Tool (CAST) developed in the 1990s as a framework for policymakers and field practitioners to be able to better understand and measure conflict drivers and dynamics in complex environments [12]. The compilers of the index inform us that it is constructed by data
mining, searching millions of documents using sophisticated computers to quote the results.
There are several critical remarks that we can make about the FSI.
The first remark is based upon the source of the millions of documents (the BBC, CIA, CNN, New York Times, World Bank, World Health
Organization, National Public Radio, etc. ). They are all English language, British or American sources. Analyzing millions of documents might remove the danger of systematic bias, but not when the selection of sources is itself biased.
The second remark concerns to data mining used in the Fund for Peace assessment methodology. Data mining is a useful technique involving the searching and analysis of vast quantities of data, to detect rather unexpected relationships and "hot spots" for further research. Nevertheless, the use of data mining is controversial in compiling indexes, where everything is reduced to a single point (one number).
The third remark regards the absence of consensus, what a failed state is. Indeed, is it measured in terms of sovereignty (the state is failed when it can't control the presence of troops or insurgents)? Or is it measured by the ability of the state to fulfill its functions in the provision of public goods?
The Failed States Index solves this problem by incorporating the variety of all dimensions. However, solving this problem, it creates another. Thereupon, there is the forth remark - the FSI is immensely cluttered. Some of the elements of the index could be seen as consequences of failure. For example, refugees, out migration, external intervention that reduce state legitimacy. So, what are the reasons of state failure and what are the consequences? Causal relationships are not taken into account while compiling the index. In the view of Griffiths [13], at least 3 and possibly 5 of the 12 components are actually derivatives of poverty. But being poor doesn't automatically lead to state failure. This problem limits the ability of the index to assess, predict and prevent state failure.
Table 2. - Fragile States Indexes for
Quite important that the association with terrorism and other transnational threats is inherent to the concept of the state failure, so failed states are sometimes described as incubators for international terrorism [17; 18; 22]. Besides, some authors criticize the concept of state failure for reflecting a Western bias of what constitutes a sustainable, successful state [7].
We should admit that criticism is always applicable for the methodology of composite indices. All of them have weaknesses by its subjective nature and objective impossibility to take into account highly complex socio-economic and political processes, and to compress them down to a single number. Nevertheless, it is quite interesting from the academic standpoint to analyze practical application of the concept of state failure making comparisons between countries and regions, because pressures on a fragile state may have serious consequences not only for the country itself but also for its neighbors and other countries of the world. We hypothesize that the Fragile States Index allows conducting comparative analysis at least in the first approximation.
3 Configuring Arabic countries of the Middle East in terms of state fragility 3.1 Data and visualization In this section we examine the diversity of Arabic countries of the Middle East in terms of state sustainability/fragility. For this purpose we use data on the Fragility State Index provided by the Fund for Peace (countries with index values are in Table 2). We would remind that the higher the score, the more failed is the state. The states are ranked on a spectrum: sustainable, stable, warning or alert, with subdivisions.
the Arabic countries of the Middle East
Country FSIscore World rank Regional rank Category Overall trend, 2006-2017
1 2 3 4 5 6
Yemen 111.1 4 1 very high alert worsening
Syria 110.6 5 2 very high alert worsening
Iraq 105.4 10 3 high alert improvement
1 2 3 4 5 6
Egypt 89.8 36 4 high warning worsening
Lebanon 88.2 43 5 high warning worsening
Jordan 78.7 71 6 warning improvement
Saudi Arabia 71.2 101 7 warning improvement
Bahrain 64.9 118 8 low warning worsening
Kuwait 58.5 126 9 less stable improvement
Oman 52.5 133 10 less stable improvement
Qatar 44 146 11 stable improvement
UAE 43.7 147 12 stable improvement
Palestine - - - - -
(Israel and WB) 78.9 69 - warning worsening
Note: There is no data on Palestine. On our observations, from year to year the data on Palestine is becoming more and more scarce. In different data bases the Palestine is not mentioned as a state, in others it is mentioned as "Palestinian territories" or "West Bank and Gaza", or "West Bank". The first time we can observe in the data set of the Fund for Peace the total absence of Palestinian territories and its attribution to Israel. It is mentioned as "Israel and West Bank". For this reason, unfortunately, we can't find possible to decouple data for the Palestine. This is one more critical remark to the index compilers.
Source: constructed based on the Fund for Peace Data & Country Dashboard [9; 10]
We observe that the majority of countries of region is Yemen, and relatively the most stable is the Arabic Middle East belong in the "warning' United Arab Emirates (Figure 1). and "alert" categories. The most fragile state in the
Il I I
Figure 1. Distribution of countries of the Arabic Middle East by the FSI, 2017
Source: constructed based on data of the Fund for Peace [10]
3.2 Regional analysis
In the regional context our countries diverge radically which is approved by the computations in R-Studio and graphical analysis (Figure 2).
The box plot and the normal distribution curve in (Figure 2) as well as computations in R-Studio show that the distribution of countries has an insignificant positive skew (minus 0.1 Skewness less than 0.25 is considered insignificant). The median value (74.95) is a slightly lower than the mean value (76.55). The Gauss function indicates that the distribution of countries in the region is close to symmetric. Varia-
tion coefficient is close to 33% and means that the sample data is heterogeneous (diverse). Kurtosis is large and negative (platycurtic) with the value minus 1.6, which indicates that the distribution of countries doesn't correspond to normal distribution (the probability mass is concentrated in the tails of the distribution and there is not a core of values in the data sample). It approves of the fact that our countries diverge radically within the region. The leader in the region by fragility criteria is UAE, while Yemen has the worst index value. The FSI value for Jordan is the closest to the regional average.
Boxplot
Gauss function
Figure 2. Regional distribution of the countries of Arabic Middle East by the FSI
Source: constructed by the author in R-Studio (R-script is in Appendix)
3.3 Analysis of the targeted region in the world
spectrum
The index is expressed in a range of 0 to 120, the best performances being minimum value, the worst maximum. Data is available for 178 countries, so the deciles have 18 each, except for the tenth, which has 16 countries. The outcomes are in (Table 3).
In the world context Arabic Middle East countries scatter randomly along the world spectrum by the FSI (Table 3). In the top (best) we observe UAE and Qatar in the 2nd decile, followed by Oman and Kuwait in the 3rd decile, Bahrain in the 4th decile, Saudi Arabia in the 5th decile, Jordan in the 6th decile, Lebanon and Egypt in the 8th and, finally, Iraq, Syria and Yemen in the bottom of the world spectrum.
We observe a cluster of oil-rich countries in the top deciles. To the point, these four countries - UAE, Qatar, Kuwait and Oman - belong to the 20 richest countries in the world in per capita GDP. Governments of these countries have financial resources for provision public goods and services; there are no armed conflicts. Undoubtedly, these factors serve countries' sustainability and explain high (good) position in the world spectrum of states fragility. Though, currently there is a warning situation for Qatar economic and political relations in the region. It is connected with the fact that Qatar has collaborative projects with Iran. This collaboration is not supported by UAE, Bahrain, Saudi Arabia and Egypt, and these countries had an intention to interfere into Qatar for the purpose of the political upheaval. But
timely intervention of Turkey helped to avoid the military conflict. The economic and political blockade of Qatar by neighboring countries might worsen the sustainability of the state anytime soon.
Table 3. - Distribution of targeted countries in the world spectrum in terms of the state fragility
Decile Index values Countries
1. (0; 32.5]
2. (32.5-44.7] UAE, Qatar
3. (44.7-59.4] Oman, Kuwait
4. (59.4-70.0] Bahrain
5. (70.0-74.2] Saudi Arabia
6. (74.2-78.7 Jordan
7. (78.7-84.8"
8. (84.8-90.5] Lebanon, Egypt
9. (90.5-98.9]
10. (98.9-113.9] Iraq, Syria, Yemen
Source: author's computations based on the Fund for Peace Data [10]
Oil-rich Kuwait and Oman have no internal and external conflicts; there is one religion confession (Sunnis). Even though these countries are categorized as "less stable" we expect improvement of states' sustainability. Bahrain is richer with oil and has better level of life in comparison with Oman. However, the position of Bahrain in the world spectrum worsened. The country is on the verge of the civil war. The Shiite religion confession is in opposition to the central government, and they are supported by Iran, while central government is supported by Saudi Arabia. The growing tension in the society leads the country to instability.
Noteworthy, Saudi Arabia belongs to the 20 richest countries in the world in per capita GDP. Nevertheless, currently the country is in the "warning" category" because its economic performance worsened, and the country is involved in several military conflicts. As we mentioned above, limitation of economic relations with Qatar had its negative impact on Saudi Arabia's economy too. Also Saudi Arabia is the leading member of the military alliance against Shiite military rebellion Houthi (Sa'dah War) in Ye-
men, and the alliance supports Yemeni government with financial resources and armament. Additionally, Saudi Arabia supports financially the opposition in Syria. What is more, recently the President of the USA D. Trump visited Saudi Arabia, and they negotiated trade-economic and engineering contracts worth more than $400 billion. The mechanism of the transfer of "petrodollars" from Saudi Arabia to the USA via economic and engineering projects is clearly described by Perkins [24]. All these factors dramatically worsen the sustainability of Saudi Arabia as a state and bring it to the category of "warning" countries in terms of fragility.
The position ofJordan belongs in the "warning" category mostly because of the great refugee problem, which is the old problem in time. This small deserted country has already adopted refugees from Palestine, Iraq, Syria and other countries convulsed with wars and civil conflicts. We find this situation extremely dangerous for the sustainability ofJordan as a state. It is worth mentioning that Jordan is in the top of the list of the most water scarce world countries. The country is dependent on food and agricultural products import, the quality of which is also not satisfactory (It is possible to observe that the market is filled with genetically modified products and products containing high levels of chemicals; institutions for certification and quality control of products have not received proper development. This is a warning negative factor that adversely affects the genetic fund of the nation. With unaided eye one may see the food products on the market forbidden in the markets of countries with stronger government institutions). Moreover, the population of Jordan is mostly young and growing. The projections show that the population ofJordan will increase by 2023 [6]. Certainly, it will lead to the greater problem of unemployment which is already high in the country. Refugees settle down, demand for job places as well as they already consume public goods and services which decreases the welfare of indigenous Jordanian people. What is more, as history lessons teach us,
many refugees, like for example, from Palestine, they don't associate themselves with Jordan. The vast majority of them emphasizes their belonging to another state but at the same time consume natural and economic resources and social benefits of Jordan. The situation with refugees in Jordan is not even warning, it is alerting (!). Government bodies and decisionmakers of all levels must react properly in order to protect the stability of the country, not to admit migration flows into the country so as in the nearest future not to get tense social situations or even a civil war and to save the sovereignty of the state.
Lebanon and Egypt are at the bottom of the world spectrum of states fragility. In the previous research of the author [3] it was discovered that Lebanon is the most diversified in the region in terms of religion. There are several creeds of Muslim religion and several creeds of Christianity. This religious diversity has been recently used as an instrument to enkindle civil war in the country and destabilize it. The country was nearly destroyed in the war with Israel in 2006 and is still unstable. In highly populated and poor with natural resources Egypt there is a puppet government which does not represent the interests of the citizens and serves the interest of foreign actors as well as Israel. Undeniably, these facts push the country to instability, and we may classify it as a fragile state of a "high warning" category.
Iraq as a country was dramatically destroyed in the war after the foreign military intervention and the murder of its political leader Saddam Hussein. Interestingly, in 2014 the International Energy Agency reported that Iraq's oil output jumped extremely, and that the country hadn't pumped that much oil since 1979, when Saddam Hussein rose to power [16]. Unsurprisingly, while the oil is being pumped by foreign corporations and agencies, the Iraqi population suffers from problems of all kinds: water, sanitation, housing, infrastructure, food and agriculture, etc.
Syria and Yemen are obvious candidates of the most fragile countries for the decade. These countries are in the "very high alert" category since they
experience cycles of conflicts and violence, leading to weak governance, external intervention and dramatic worsening of the people's lives.
4. Conclusions
Since the world stopped being bipolar, after the collapse of the USSR in 1991, a number of states have erupted into mass violence stemming from internal conflict. Nowadays failed states are considered as a threat to the world security and sustainability.
Although state failure has been studied for decades by numerous scholars, it remains a contested concept vulnerable to political, ideological and economical agendas. Some authors attempt to abandon the concept of state failure altogether; as, they argue, it promotes an unclear understanding of what state failure means [8]. Anyway, this concept exists and is used by supranational bodies to compile indices allowing determination fragile states.
In order to determine a state's fragility it is generally measured on the basis of three core functions: representation, security and a concern for welfare of its population.
The Fragile States Index aims to measure the vulnerability of states to collapse. As a result of assessment the states are ranked on a spectrum of categories labeled sustainable, stable, warning and alert.
There are several critical remarks about the FSI: the absence of consensus what a failed state is; the selection of sources is biased; data mining is controversial in compiling indexes where everything is reduced to a single number; the index is immensely cluttered; the concept of state failure reflects a Western bias of what constitutes a sustainable state.
We should admit that criticism is always applicable for the methodology of composite indices. All of them have weaknesses by its subjective nature and objective impossibility to take into account highly complex socio-economic and political processes, and to compress them down to a single number.
In this research article we were interested in practical application of the concept of state failure from the academic standpoint. We hypothesized that the
Fragile States Index allowed conducting comparative analysis at least in the first approximation. We found out that if the definition of a state failure is mostly grounded on the fact of civil conflicts and wars, then, as a consequence, a country will have all kinds of other social, economic, political and military problems. Logically, it will lead to the fragility of the state. Thus, the FSI allows getting the results in the first approximation. Though the FSI doesn't predict turmoil, it does provide early warning of the conditions that can likely give rise to instability.
We conducted comparative analysis of the Arabic countries of the Middle East by the fragility criteria. We analyzed how countries are located in the world on a chosen criterion as well as conducted regional analysis.
In the regional context our countries diverge radically. The leader in the region by fragility criteria is UAE, while Yemen has the worst index value. The FSI value for Jordan is the closest to the regional average.
In the world context Arabic Middle East countries scatter randomly along the world spectrum by the FSI. In the top (best) we observe UAE and Qatar in the 2nd decile, followed by Oman and Kuwait in the 3rd decile, Bahrain in the 4th decile, Saudi Arabia in the 5th decile, Jordan in the 6th decile, Lebanon and Egypt in the 8th and, finally, Iraq, Syria and Yemen in the bottom of the world spectrum. We found out that obvious candidates to the fragile countries are countries that experience cycles of conflicts and violence for decades, leading to weak governance, external intervention and dramatic worsening of the people's lives.
Also worthy of attention is the existence of a causal link between homogeneity of a society (especially in terms of religion, language and ethnicity) and the level of trust that, in its turn, is linked to a state's sustainability or fragility. Which way?
There is a track leading from homogeneity in a society to levels of trust, from levels of trust to the quality of governance, and from the quality of gover-
nance to economic growth and prosperity. There is a hypothesis that the more homogeneous a country in terms of ethno-linguistic and religion fragmentation as well as income equality, the higher is likely to be the level of trust in a society (for example, high income Kuwait and unstable Iraq are in the same top trust decile [5]). Furthermore, in a high trust society non-group members may act in the belief that they will act in the interest of a society as a whole, which is a factor of the good governance. The good governance leads to better economic performance and better provision of public good and services that are the determinants of a sustainable state.
In the article we described current trends, mentioned problems of heterogeneous societies and refugee problem in the region. We suggest that policy makers and practitioners should be mindful of the current trends in the region so that prevent further instability and to recognize that if a shock of some variety is to occur (for instance, natural disaster, economic recession, local violence, etc.) it may have ominous consequences given the pre-existing conditions of fragility.
APPENDIX: R-SCRIPT
# R-script for Figure 2 install.packages ("psych") library ("psych")
# Fragility States Index
fsi<-c (111.1,110.6,105.4,89.8,88.2,78.7,71.2,64 .9,58.5,52.5,44,43.7)
boxplot (fsi, horizontal=TRUE, col="grey") summary (fsi) describe (fsi)
# R-script for Figure 3 mu<-mean (fsi)
mu
median (fsi) sd<-sd (fsi) sd
mu+3*sd mu-3*sd
x<-seq (2.463693,150.6363, by=0.5)
y<-dnorm (x, mean=mu, sd=sd) plot (x, y, type="l", col="dark blue")
variation<-sd/mu variation # End of R-script
# Variation coefficient
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