Missiles will not ease Syria’s woes

What the troubled Middle Eastern country needs is economic transformation, says Allister Heath

Syria’s mass poverty and lack of opportunity are features of the system; informal grass-root businesses are no match for the corporatist oligopolies

REVOLUTIONS, wars and the emergence of totalitarian movements are rarely just about grand ideals, political philosophy or theological disputes. Economic forces are usually central to the violent upheavals that regularly tear societies apart.

Sometimes the economic factors are hidden, but mostly they are glaringly obvious, as with the rise of Nazism, which followed the Weimar hyperinflation of the 1920s and the German economic crisis of 1931.

The economic backdrop to the Arab Spring uprisings and now Syria’s civil war is equally selfevident. With only a small number of exceptions, states in the region have long specialised in economic failure of the most abject kind.

Syria’s GDP per person is just $3 289 (about R33 600) a year; it is no coincidence that it is almost identical to Egypt’s, another country where a small ruling class has mastered the art of kleptocratic exploitation. Add to that a despotic political system, rising food prices, a youthful population with little hope of fulfilling its dreams and well-organised extremist movements and you get a predictably explosive cocktail.

There have been plenty of explanations for the failure of almost all of the economies in the region, their dalliance with extremism and apparent inability to reform themselves. Some have blamed geography, and others the “resource curse” that has been oil.

Yet none of these narratives is convincing. Some Middle Eastern countries have done much better than the rest by opening their economies; other coun- tries on poor continents have broken free by reforming their economies and societies and unleashing economic growth, including Botswana. So why do so many fail to break free, or botch their transition?

The best explanation for what is going wrong in Syria can be found in Why Nations Fail: the Origins of Power, Prosperity and Poverty, by US economists, Daron Acemoglu and James A Robinson. It has a thesis that is as simple as it is powerful.

Countries can be divided into two broad groups, it argues, depending on economic and political structures.

The first includes Western economies and countries such as Australia, New Zealand, Singapore, South Korea, Japan and Botswana. These have in common inclusive economic institutions that encourage and incentivise the vast majority to take part in freely chosen economic activities that make the best use of their talents, skills and interests. Such benign economic institutions include secure and well-respected property rights, a trusted system of law and order, a decent infrastructure, a sound regulatory framework for markets, low barriers to entry that allow indi- viduals and companies to enter new markets and compete with incumbents, and access to education and economic opportunity for the majority.

These economic institutions are buttressed by equally inclusive political institutions.

The only revolutions that succeed in sustainably improving a country are those that establish such inclusive institutions.

By contrast, the second group of countries, which include Syria, Egypt and all of the other failed states, have been saddled with what Acemoglu and Robinson describe as extractive political institutions.

These are designed to grab the incomes and wealth generated by the economy for the benefit of a small elite and are buttressed by equally extractive political institutions that have handed all the power to these same few. The best and often only way to get rich is to have good connections and to exploit the power of the state to crush competitors.

Most depressingly of all, the elites do not have an incentive to change. Bashar al-Assad’s exploitation of his people is a deliberate strategy to maximise his own power and wealth and that of his associates: he needs some economic growth but does not have any incentive to unleash the creative destruction of proper free-market capitalism. Syria’s mass poverty and lack of opportunity are thus features of the system, not bugs; informal grass-root businesses are no match for the corporatist oligopolies at the top of the pile.

Instead, regimes across the region rely excessively on oil, remittances from expatriate workers and hand-outs from foreign governments — income flows that help perpetuate the extractive institutions. The poor have been the greatest losers.

It is difficult but by no means impossible to overthrow a wellentrenched set of extractive institutions. But merely replacing a dictator is not enough.

The only answer is a complete economic, political and cultural transformation, including an embrace of real, liberal capitalism, the dismantling of monopolies, a bonfire of privileges and the introduction of genuine pluralism and constitutionally limited government.

None of this tells us definitively whether the West should intervene in Syria, but it confirms that merely lobbing a few missiles at the regime will not be enough to make a real difference. — © The