Economy Archives – ITSS Verona

January 23, 2023 — No Comments

The Middle East in 2023: From Revolution to Survival

Author: Omri Brinner and Chantal Elisabeth Hohe.

2022 brought about several game-changing developments in the Middle East and beyond. These events - from domestic political instability, through the weakening of American influence in the region, to the protests in Iran - will all leave a mark in 2023, a year that is shaping to be decisive for the Middle East’s future.

Of the many things to monitor in the region during 2023, four issues stand out the most, largely due to their international significance. These are the American involvement in the Middle East; climate change and the region’s efforts - or lack of - to counter it; the domestic upheaval in Iran and its global impact; and the economic situation across the region, with a growing number of countries in economic disarray (Turkey, Lebanon, Egypt and Yemen).

Image Source: https://www.spiegel.de/international/world/protests-in-iran-the-regime-s-trail-of-blood-a-8775e064-e031-4f80-8a87-5ec4cb59246c

The US in the Middle East

Going into 2023, the United State’s role in the Middle East is undefined. Had it been clear and obvious, American officials wouldn’t have to reiterate that their country will remain pivotal as it once was. The facts on the ground suggest less American physical involvement. There are less American troops in the region; American diplomacy has been weakened; and one is much more exposed to alternative soft power than before. In that sense we are expected to see declining American presence across the region. Diplomatically, the US is losing grip as well. While it largely has Israel on its side in its competition with China and Russia, other allies - most notably Saudi Arabia - are becoming less and less dependent on the US, fueling a multipolar world where the US is now one of many, rather than the one. The US can stay assured that it will continue to have leverage over several individuals and countries in the coming year, but all in all - and much due to the multipolar inertia across the region - this leverage is not infinite, and further distancing from American policies are likely to follow. This dynamic played out in the relations between President Biden and the Saudi crown prince Mohammed bin-Salman, where the latter refused to give-in to American pressure on oil prices, proving that the American leverage on him and his country is limited. In other words, American superiority will not only continue to be challenged from afar, but also from within the region itself.

Iran

2023 might very well be the year of the Persian Spring. The revolutionary protests that began in September have the potential to spin the regime out of control and to create a new reality in the country, and the region. What started as a social protest against the state’s brutality and the killing of Masha Amini has developed into a full regime-change movement, with the slogan “death to Khamenei” gaining momentum and legitimacy on social media. It is of course possible that the harsh and lethal crackdown by the state will break the back of the revolution, but these past few months and the ones to follow will certainly change Iran and affect the region as a whole, whichever way the wind blows.

Furthermore, in light of the internal turmoil and the fact that the Iranian nuclear deal is all but alive, it is likely that Iran will push to both enrich as much uranium as possible and to create destabilizing chaos across the region in the coming months. All in all, what happens in Iran during 2023 will determine the near future of the Middle East.

Climate

After a rather unsuccessful COP27 failed to produce actionable policy solutions or real commitments from the international community, a decisive year lies ahead for the Middle East, where people will continue suffering from the consequences of the climate crisis. Most prominently, water scarcity will lead to an increasingly dire situation, fueling food insecurity, economic downturn, civil unrest, and violent extremism. That said, several innovative start-ups and promising technologies are on the rise, with the GCC countries upping the funding to accelerate developments in the field. Hope now lies upon the Abu Dhabi COP28, set to take place in November and, ironically, hosted by UAE’s National Oil Company CEO, with civil society organizations and academia urging for serious action.

Economy

A cleavage in economic performance is increasingly visible among Middle Eastern countries, with the oil-based GCC monarchies witnessing continuous growth - whereas others are facing economic decline, leading to or exacerbating existing socio-political turbulences. The economic outlook for 2023 indicates that inflation is likely to surpass 30% in numerous countries, with Syria at 63% and Lebanon at a staggering 167% . Further regional actors, such as Iran, Turkey, Egypt, and Yemen, face economic hardship while also having to tackle political challenges, civil unrest, and violent conflicts. Overall, domestic and international factors - such as the war in Ukraine - are likely to deepen a looming recession and the energy crisis. While it is likely that wealthy GCC countries will continue to support struggling regional allies, countries such as Yemen, Libya and Lebanon will continue to be used as arenas for proxy wars, further deepening their economic troubles.

June 1, 2022 — No Comments

Ashik Bonofer on the Economic Crisis in Sri Lanka

Dr Ashik Bonofer talks about the ongoing economic crisis in Sri Lanka, those responsible, and what the situation in Sri Lanka means for the future of stability in the region. Dr Bonofer is an Assistant Professor at Madras Christian College in Chennai, India. Dr Bonofer specializes in International Relations, Foreign Policy, South Asia, Asia- Pacific, Human Rights, Refugees and Mixed Migration.

In this session, Dr Bonofer discusses the economic crisis in Sri Lanka, the multiple actors in the crisis, the resulting conflict and the necessary reforms that the Sri Lankan government will have to roll out in response to this conflict.

Interviewers: Joseph Moses and Alberto Trame.

May 16, 2022 — No Comments

Manochehr Dorraj on the development of bilateral relations between Iran and China

In this interview conducted by the "Iran Desk" at ITSS Verona Prof. Manochehr Dorraj addresses and analyzes the gradual development of bilateral relations between Iran and China. The interview focuses on the importance of Iran to China, how both countries try to optimize their gain and influence through this bilateral relation, and how this relation is affected by and may affect regional bilateral relations with China.

Manochehr Dorraj is a Professor at Texas Christian University where his areas of focus cover International Affairs, Comparative politics, Political Theory and Middle East politics. He received his Ph.D. from the University of Texas at Austin. He is the author, coauthor, editor or coeditor of 7 books and more than 80 refereed articles and book chapters.

Interviewers: Shahin Modarres, Yasmina Dionisi and Filippo Cimento.

July 22, 2021 — No Comments

From Geopolitics to Geoeconomics: The Importance of Economic Strategy and the Case of China

By: Riccardo Bosticco

World order dynamics and world order itself have changed substantially in the last thirty years. The evolution of it derives from those dynamics that determine the way it works. This article will discuss the specific case of China.

Nowadays, military conflicts are mostly concentrated in least-developed areas, whilst western and eastern major countries exited the logic of the Cold War - when balance and peace were possible mainly thanks to military deterrence. From those times, conflicts have been substituted by other means of states’ competition. From the ‘90s onwards, commerce has displaced war - as pioneer Edward N. Luttwak states -, with economic and financial capital in place of firepower, civilian innovation instead of military technological progress, and economic incursion rather than military bases building. These are the new tools employed by states to grow their power and spread their influence, and of course, the elements that can explain the relationships among international actors. The logic of war has to be read through the grammar of commerce, but do these new means serve the same interests as artillery pieces used to before?

Especially among the theorists of interdependence, many believe that the growing importance of industrial and financial entities and economics as the lens through which to understand international relations would imply a shift from “world politics” to “world business”, thus reducing warlike escalations. However, they are still the states that can extract and regulate economic resources; and they are still territorial authorities. In these terms, we can understand geoeconomics: an evolution, and not a revolution, of geopolitics.

To better conceive this evolution, definitions are of some help. Geoeconomics can be considered applied research, and it can be understood as both an analysis and practice by states and businesses. It is an interdisciplinary subject including geopolitical features, strategic analysis and foresight, and economic intelligence. Saying geoeconomics is an evolution of geopolitics does not mean that the latter disappeared. The relationship between economics and power ever existed throughout history indeed. As an example, starting from the XI century, Venice became a powerful geoeconomics actor. It built its considerable power not flexing muscles, but presenting itself as a strong diplomatic and trading power, mastering advanced naval technologies and using economic espionage.

More precisely, Soilen defines geoeconomics as “the study of spatial, cultural, and strategic aspects of resources, with the aim of gaining a sustainable competitive advantage”. It is different from geopolitics under two aspects: for the topic, since it focuses on economic means and not military or political; and for the actors, because it does not look only to individuals representing the state, its institutions, or the state as a whole, but to individuals who conduct relevant economic activities, corporations and other national and non-national institutions operating in the economic field. Despite this, they remain very similar to each other. Indeed, they both study how certain instruments can serve national purposes. Strategy is “where we define an optimal plan for our organizational or institutional objectives” SOILEN -1). In a world where war is banned, civilian technology is more strategic than a bomb.

This means that those actors with hands over new technologies are more inclined to gain additional power and influence. China figured it out during its economic global ascendance and engaged to “master core technologies” in any imaginable area. If from the 80s to the mid-2000s, China’s economic policy was to encourage foreign direct investments in the country through often unfair incentives and advantages to investors; from 2006, China turned to “China Inc” and began promoting “indigenous innovation”, freezing the pursuit of international investments.

Published in 2006, the “MLP”, standing for “The Guidelines for the Implementation of the National Medium- and Long-term Program for Science and Technology Development (2006-2020)” stressed the need to “create an environment for encouraging innovation independently, promote enterprises to become the main body of making technological innovation and strive to build an innovative-type country.” Thus, today’s Chinese economic policy can be considered a long-term oriented pattern focused on the welfare of internal producers. In other words, what China has adopted is a mercantilist set of policies aimed at defeating non-Chinese competitors.

Why is geoeconomics important? Because the means are financial and industrial, and the strategy is mainly territorial. The main example of Chinese current economic policy? The Belt and Road Initiative. For this to be realized, the geographical dimension is vital. In particular, infrastructures in South and Southeast Asia are crucial since they are key to the connectivity envisioned by BRI. These countries are the most likely to allow Chinese naval bases or to serve as strategic pivots for commercial and military needs. This would let China build strong regional power at the first stage, and expand its activities then. Therefore, one might argue that geoeconomics is the evolution of geopolitics and that geoeconomics could serve geopolitical interests. Indeed, the BRI aims to build linkages with other countries and regions through investments, infrastructures, opening corridors, and connecting with them “physically, financially, digitally, and socially”.

In conclusion, the growing importance of economic connections and tools in this technological era makes it the new paradigm to intend power in the XXI century. Wars have been marginalized, and thereby governments ought to find a new way to propagate their power. Notwithstanding, territorial dynamics still play significant roles, even in times of faster communications and digital transactions. This is the case of China, a growing “territorial ruler” with global ambitions that offers advantageous economic opportunities to bring other countries in its orbit while expanding its own economic, diplomatic, and military projections of power.

May 31, 2021 — 1 Comment

China and the Belt and Road Initiative: An Interview with Alice Politi

Alice Politi from the Lau China Institute at King's College London answers some fundamental questions on the implications of the Belt and Road Initiative in a post-pandemic world.

Interviewer: Carlotta Rinaudo.

May 20, 2021 — 1 Comment

How Poverty Breeds Insecurity

By: Ludovica Aicha Brambilla.

The Global Humanitarian Overview 2021 has projected a historic level of food insecurity, with famine looming in several countries, due in large part to conflict and systemic violence. This forecast took into account the rising trend of the last two years; in 2019, in fact, seventy-seven million people in over 22 countries have experienced starvation due to armed violence. The new 2021 Global Report on Food Crises has confirmed that conflict has been the main driver of food crises also in 2020. Throughout the past year, up to 100 million people in 23 countries have experienced starvation because of violence and insecurity. The evidence that conflict causes food insecurity is well established. For instance, the FAO reports of the past decade have highlighted a recurring figure: The proportion of undernourished people is almost three times as high in countries in conflict than in other developing countries. This is also the result of the rapidly increasing civil displacements which can result in conflicts between social groups, causing food insecurity and a significant loss of income, resulting in acute famine and poverty.

However, these factors can sometimes interplay the other way round. Often poverty fosters conflict dynamics and insecurity; resource scarcity is a key factor of mass migrations and displacements which can result in conflicts between social groups. Economic inequalities are often seedbed for instability and represent a crucial contributing factor of violence together with socio-cultural and political factors. But poverty exacerbates all human vulnerabilities exposing people to a series of different types of risks. The condition of insecurity driven by privation concerns every dimension of life and it binds with multiple factors which reinforce each other and only eventually result in violence.

For instance, poverty is a key element when addressing food insecurity issues. Food security is a condition in which everybody has regular access to nutritious food, thanks to one’s own livelihood or a safety net provided by the state or any other organisation. Ensuring food security means guaranteeing the production of a sufficient amount of food in total and, especially, that everybody can access such vital resources. The Nobel Laureate in Economics Amartya Sen stated that the root cause of the continuation of world hunger is the continuation of poverty, despite the increasing total prosperity. In fact, even in periods of tight food markets, there is enough food available, but a large number of people are just too poor to afford it.

Many families, especially in developing countries, are particularly vulnerable to high food prices and they lack proper training on how to produce more food more sustainably. Agricultural development plays a key role in generating the incomes needed to ensure food security. In fact, two-thirds of the poor live in rural areas where agriculture is the dominant sector, but poor farmers are extremely vulnerable to the decline in agricultural output and aren’t able to benefit from basic infrastructures and access to markets. Income growth is necessary but the composition of growth matters too, as more equal growth is likely to lead to long-lasting food security. As a matter of fact, other compliments such as safe drinking water, awareness regarding adequate nutrition and access to health services are vital. In light of this approach, to tackle the causes of hunger, the policy objective should be the implementation of social norms dedicated to improving the conditions of the poor rather than concentrate on the overall agricultural production.

Food insecurity is, indeed, the result of many factors chained together. Some of them include privation and low wages coupled with poor education and inadequate health assistance. Malnutrition can be both a cause and a result of health problems. This depends on the quantity and quality of the food a person eats; the diet which a person can access must be sufficiently balanced otherwise a vicious circle begins. In this context, the crucial matter of health care deprivation and discrimination against women deserves a special mention. In fact, the vicious circle starts with maternal malnutrition and pours out, becoming a mass phenomenon further feeding famine and insecurity. The level of education is an important piece of the puzzle. Education significantly influences the information available and the possibility to obtain a well-paid job by which one can access sustainable and healthy food. But the possibility of having access to education and completing it depends precisely on the state of indigence. Malnutrition affects school performance and the diseases, often related to poor nutrition, reduce one’s opportunities in the labor market. In this way, the vicious cycle keeps feeding itself, pressing people in the tight grip of the poverty trap.

Ultimately, hunger driven by poverty can be both a cause and a consequence of conflict. The threats to food security can trigger unrest and provides a tangible reason for the instigation of violence. The 2015 FAO report Peace and Food Security estimated that post-conflict countries with high food insecurity are 40% more likely to relapse into conflict within a 10-year timespan. The report also highlighted how the increase in food prices in 2008 together with cuts in food subsidies, reduced real incomes triggering food riots in many countries.

Thereby, investing in food security may strengthen the effort to prevent conflict and achieve stability. To build long-lasting peace, it is essential to understand the mutual link among poverty, food security and conflict.