Corruption is not the root cause of the Arab world’s problems

To start with, Middle East and North Africa countries have problems in producing economic value for distribution.

Protesters chant slogans in downtown Beirut, Lebanon | Hasan Shaaban | Bloomberg

There is little doubt that corruption is a principal motive behind the wave of protests sweeping through the Middle East and North Africa. In diverse national contexts ranging from Lebanon and Iraq to Algeria and beyond, angry demonstrators have blamed rampant and systemic corruption for the many ills of the political-economic orders governing their societies.

Western commentators and experts at international financial and development organizations have contributed to the anti-corruption discourse, claiming that corruption, cronyism and other practices of state capture have been the most powerful factors behind the MENA region’s dismal and exclusionary development record. By the same token, corruption — and more generally, bad governance — have has often been emphasized as the main reason behind the inability of MENA countries to engage competitively and efficiently in the global economic order.

I am skeptical of this discourse. Even though the anti-corruption language has proved to be a powerful instrument in popular mobilizations against politically-bankrupt and venal elites, it has also veiled many of the structural aspects of the crises of MENA societies and political economies. Certainly, corruption is a big problem, but it is not the root of all problem as it is portrayed by activists and echoed by foreign commentators and experts. This reductionist view obscures more it than clarifies, and gets in the way of tackling the causes of the lack of inclusive growth.

Corruption is about distribution of national wealth in a way that serves the immediate lucrative interests of those in power — and their cronies and relatives — at the expense of the general public. But MENA countries have problems in producing economic value for distribution to start with. Most have rentier economic structures, with little ability to develop productive sectors that can compete globally while creating high-quality jobs and hence achieve inclusive growth.

This rentierism is by no means confined to those rich in natural resources, often oil and gas, like Iraq, Libya, Algeria and the Gulf monarchies. It extends well into secondary-rentier economies that have historically received recycled rents through workers’ remittances, intra-government aid and credit from oil-rich countries or beyond, as with Lebanon’s diaspora in the West.

The bottom line is that almost all MENA countries are integrated into the global division of labor as recipients of rent, either emanating from outside their borders or from very narrow sectors like extractives, in which few participate in the creation of value.

This rentierism is one of the causes rather than effects of corruption and patronage in natural resource-rich countries like Iraq and Algeria and secondary rentier economies such as Lebanon. Given the heavy dependence of these economies and states on rents, incumbents enjoy considerable autonomy from their citizens. They also have the resources to establish narrow coalitions of cronies and clients in order to keep them in office, either through some facade of ethno-sectarian democracy, as in Lebanon and Iraq, or on much more explicitly authoritarian terms, as with the rest of MENA.

Another dimension that is almost completely forgotten with the corruption-explains-all approach is the problematic trajectories of state formation in many MENA countries. Iraq and Lebanon, for instance, face big problems in nation-building that have historically led to weak states devoured by ethno-sectarian groups — often with armed militias attached to them — that colonized the state and captured public funds. Once again, corruption and clientelism are the effects rather than the cause of weak nation-states that lack even the monopoly of force within their own territories.

Beyond the domestic and regional dynamics, overemphasizing corruption as the cause behind MENA’s miseries also ignores how the implementation of rounds of austerity under the auspices of the International Monetary Fund and the World Bank have cut public investment without replacing it with private one. In fact, much of the deplored corruption was the result of World Bank-sponsored privatization of state-owned assets.

Blaming corruption has served to show the Washington consensus as a good program that was implemented poorly. This allowed for implicit — and sometimes explicit — blaming of the victims as being too corrupt to develop, despite the close ties that have bound many the MENA elites with Western powers.

These systematic factors might tell us why Asian economies could generate inclusive growth despite rampant corruption and poor governance indicators while MENA could not. In general, fighting corruption is a great slogan that has mobilized people across MENA against incumbent elites that have failed to guide their societies to better lives. But fighting corruption should not be confused with a development strategy in its own right, or taken as the diagnosis for the many and much deeper troubles facing that part of the world.-Bloomberg