October 22, 2004

Arab world seeks past glory

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Among all the many splendours of Andalucia, the finest has to be the Alhambra in Granada. Sultan Muhammad V built the palace in 1350, when the Islamic state in southern Spain was at its height.
The intricate carvings demonstrate superb craftsmanship. The gardens, with their extraordinary variety of plants, added to the use of light and space in the palace itself, point to an advanced understanding of botany and architecture.

In the 14th century, this was the most advanced civilisation on the European continent, and by far the most prominent intellectual centre of learning.

The Caliphate of Cordoba presided over the third most powerful area in the Arab world, after Baghdad and Istanbul. Al-Andalus, as the Arabs called the region, boasted an amazing array of economic, technological, astrological and scientific achievements.

Its cartographers devised the maps that allowed Columbus to cross the Atlantic, while its astronomers were the pioneers whose understanding of tides, winds and navigation, made the Portuguese discoveries of the early 15th century possible.

Yet by 1500, this civilisation, which had flourished for six hundred years, had disappeared, its intellectuals tortured on the racks of Torquemada’s inquisition and its armies pushed back to north Africa.

However, its legacy remains in our language. In mathematics, algebra comes from the Arabic al-Jahr and algorithm from al-Khawarizmi.

Modern alchemy stems from the Islamic al-kimiya and alcohol from the original al-kohl. Many astronomical terms and star names are directly derived from Arabic, while the modern concept of risk and hazard comes from the original Arabic name for dice: al-zahr.

Along with many foods that were introduced to our culture by the Arabs – such as sugar, rice and coffee – many engineering terms, such as cable (from the Arabic, habl) have their origins in the great infrastructure projects undertaken by the Arabs at a time when most Europeans were still living in hovels or dank, dark castles.

During the Dark Ages, Islam was Europe’s teacher.

So what happened to the Arabs?

From being Europe’s most advanced and commercially rich civilisation, the Arab world appears to have gone into sharp reverse, both financially and otherwise. In recent years, things have got substantially worse. For example, in the 1990s, the Arab region grew at only half the rate of other developing countries.

Its share of global trade shrank from3 per cent in 1990 to 1 per cent in 2000.Today, 37 per cent of all Arabs are illiterate, and, despite having the world’s second-fastest population growth per year (the fastest growth is in sub-Saharan Africa),most Arab states give cash incentives and awards for women to have many children.

In Saudi Arabia, women are not even allowed to drive, and can only leave the country with the expressed permission of their closest male relative. Female unemployment in that country is running at 95 per cent. Such economic suppression of women is an extraordinary waste of economic resources.

This is having a clear negative impact on economic growth. Without growth, unemployment rises across the board and today young male unemployment is running above 30 per cent. This decline can be explained by two things: religion and oil.

In contrast to Christianity, which shifted away from dogma during the Middle Ages, culminating in the Reformation, the split between the religious and the secular did not occur in Islam.

Theocracy became the political model of choice in Arab countries.

History, in Ireland and elsewhere, shows that theocracy – where the religious dominates the secular – is among the most economically regressive forms of government. Without questioning, irreverence and scepticism, there can be no experiment, discovery or progress.

Hundreds of years of theocracy have stultified Arab economies, whether under the Ottoman Empire or since independence. The inability of independence to stop the rot appears to have compounded Islamic frustration.

This long, inexorable economic decline occurred while the memory of the Islamic “golden age” remained in the arts, literature and architecture, aggravating the disappointment many Arabs feel today towards their own system and against the West.

So when someone such as Osama bin Laden invokes the “golden age” and speaks of an Arabic Iberia, he is tapping deep into the Arab psyche, Arab history and stoking a sense of Arab indignation.

Added to the deleterious impact of theocracy is the oil factor. It may seem somewhat counterintuitive to argue that the Arabs would have been better off without oil, but it might well be the case.

Today, expensive oil (at $53 a barrel), far from being the Arabs’ source of wealth, is the source of their poverty. One of the worst things that ever happened to the Arab world was for it to be situated on top of the globe’s biggest oil well.

Time and again, economic history links the discovery of vast mineral resources to weakening the political, economic and social structure of a country, destabilising the political system and corrupting the economy.

Conventional theories argue that a country finds oil, extracts it and the revenue flows into the country’s coffers.

These revenues are then spent on improving the education and wealth of the people, benefiting everyone. In reality (with perhaps a few exceptions, such as Norway), oil discoveries have led most countries to a litany of woes. There are two main reasons for this.

First, the discovery of oil occurs in many countries lacking strong institutions of state, and a fragile state finds itself corrupted by oil wealth rather than profiting from it. We have innumerable examples of this, from Saudi Arabia and Nigeria to Venezuela, Indonesia and Russia.

Second, oil wealth attracts unwanted attention from big powers such as the US, France and Britain, leading to governments being supported just to keep the oil in private hands, or nationalised, or whatever the vogue of the master happens to be.

Take Saudi Arabia – a family business masquerading as a country. It only exists because of oil. Everyone owes his position to the black gold: the sheikhs of the al-Saud family, their cronies, the trumped-up bullying army and the gloriously grandiose courtiers have all rigged the system to get their hands on mineral wealth.

If it is not the wealth itself, it is the licence to extract the wealth.

Everything, down to the smallest detail, is corrupted by the existence of mineral wealth and greed. The entire fabric of the economy – and many of those economies around it – is jaundiced by the desire to get close to the easy money just beneath the ground. Instead of oil making the country rich, it actually makes the country poor.

Corruption is rife. The government skews all activity and laws towards the oil industry. The productive marrow of the country is hollowed out by the desperate gold rush.

Nobody is anybody unless they are touched by the oil. More insidiously, hard work and trade are typically replaced by the lure of the quick buck. This, more than anything else, cripples the country.

Trade, innovation, saving and hard work are the things that make countries rich. Political irreverence (as opposed to sycophancy) helps, as does being surrounded by reasonably civilised neighbours – one of the most important lessons from economic history is to avoid war at all costs.

But the existence of oil or gas makes this orderly advance to general prosperity less likely.

The middle classes tend to grab the asset, forge alliances and keep others away from the stuff. They then sit on their laurels and learn to spend, rather than save. How else do we explain the ongoing current account deficits in Saudi Arabia?

Hard work is replaced by rent-seeking, which is a bit like a large game of beggar-thy neighbour that one section of a society plays with others.

With so much economic power vested in those who have the oil, we traditionally see the emergence of a class of political yes-men whose economic fortunes are dependent on ass-kissing and political subservience to the boss.

The existence of the oil renders the entire system unstable, because someone is always trying to get their grubby hands on the stuff, whether through coups, invasions, or arbitrary changes to property rights and laws.

Hitting a gusher implies that, sooner rather than later, a country will stop thinking, stifling innovation to the detriment of most of the citizens.

Given the existence of enormously wealthy elites ruling millions of semi-literate, unemployed subjects, it is not surprising that income disparities are huge.

A political vacuum is emerging, and fundamentalism is filling it. For Arabs to prosper and recapture the glory of the Alhambra, they need a reformation in Islam and the wells to run dry. On both counts, don’t hold your breath.