Why the Arab world needs a new economic bloc

Why the Arab world needs a new economic bloc

A new reality has emerged on the world stage, and at the heart of it is Donald Trump’s leadership of the world’s largest economy and most powerful military.

Before Trump’s ascent, most of the world had settled into a peculiar cycle every four to eight years, depending on which Republican or Democrat occupied the White House. While there were some policy differences, American presidents inherited a world order created by generations of Americans before them. 

US leaders knew that system well and worked hard to expand, safeguard or realign it. Since the Second World War, no US president has openly advocated a total abandonment of hard-fought and hard-won dynamics that favored US domination over global politics, economics and cooperation against isolationism or nationalism — until Trump.

In a way, the realities of the post-1945 era were far too different from what came before, to the point of being unimaginable. What may have worked for the Weimar Republic and Adolf Hitler’s Germany, imperial Japan, the Soviet Union, Europe’s colonial powers and even a powerless League of Nations would not work now in a post-Second World War era of accelerated globalization, sustained international cooperation and increasing social, economic and political parity among newly independent nations. 

Thus, when billions in American economic aid arrived in Europe via the Marshall Plan and ships, tanks, trucks and troops marched and occupied territory pursuant to the Truman Doctrine, the world settled into a new dynamic.

Nations no longer needed to concern themselves with erecting trade barriers, fighting wars of expansion or expending resources and capital on armaments and other projections of strength to sustain national pride and territory. 

Aside from the many wars in pursuit of self-determination, nations had the chance to focus on enriching their citizens and creating industries, markets, societies, education systems, and even politics aimed at fostering closer global economic cooperation. In exchange, governments could access international legal protection and capital, as well as tap many other types of resources for industries at home to churn out goods and services for local consumption and exports to fuel global trade.

There was, at least theoretically, no longer any need for nations to expend public budgets and even political capital in pursuit of the reassurances offered by isolationism, nationalism and aggressive foreign policy. 

The only option that Arab countries have to maintain stability and ward off any unwelcome dominance by others might be to band together and create a strong pan-Arab regional economic bloc that will allow them to pool their resources to face an uncertain future.

Hafed Al-Ghwell

Reassurance now came in the form of the United Nations, international legal institutions, the World Bank, the International Monetary Fund, NATO and a flurry of other global and regional organizations and far-reaching trade agreements aimed at fostering stability and closer cooperation, if only to deter another devastating world war, and all protected by the might of the American military. 

All governments had to do was engage and then commit through initiating, sometimes painful, domestic reforms with an eye toward long-term economic gains and the broader social developments born from them.

The foundations of these new international pillars for long-term global stability lay in the firm commitments by US politicians and leaders to fund, support, protect and expand the roles of these American-made organizations to usher in a newly globalized world. 

Government officials were supposed to be backed by a voting populace sufficiently tuned into global affairs, and free enterprise, particularly aimed at limiting the spread of communism. Additionally, defeating Soviet authoritarianism in Europe and Asia even led some to believe the US could exercise a sort of manifest destiny and “exceptionalism” over the rest of the world through spreading the virtues of capitalism and democracy. 

However, when US voters elected a president who calls for an end to most of the systems and mechanisms that have propped up the world since 1945, it sets the world on a very different course. A breakdown in global cooperation would make the world unstable for developing countries in particular, including the Arab countries who have relied a great deal on the international order and the protection of the US. 

If Trump succeeds with his isolationist policies, the Arab world faces serious challenges to its national and economic interests. 

First, as the US retreats from the world, much of the region is being exposed to competing interests from other emerging global powers, not all benevolent, competing to fill the void. 

Second, as the US weakens its support for international institutions, Arab countries will be left to fend for themselves or fall under the domination of new powers filling the void. 

Their only option to maintain stability and ward off any unwelcome dominance by others might be to band together and create a strong pan-Arab regional economic bloc that will allow them to pool their resources to face an uncertain future, especially as the era of oil comes to an end as well. 

  •  Hafed Al-Ghwell is a non-resident senior fellow with the Foreign Policy Institute at the John Hopkins University School of Advanced International Studies. He is also senior adviser at the international economic consultancy Maxwell Stamp and at the geopolitical risk advisory firm Oxford Analytica, a member of the Strategic Advisory Solutions International Group in Washington DC and a former adviser to the board of the World Bank Group. Twitter: @HafedAlGhwell


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