عوامل تعیین کننده اقتصادی و سیاسی وام دهی صندوق بین المللی پول و بانک جهانی در خاورمیانه و شمال آفریقا

This paper assesses the economic and political determinants of IMF and World Bank program loans to the Middle East and North Africa. First we assess what is already known about the geo-political influences on aid flows to the Middle East and North Africa (MENA) region and the potential for this to operate via the IMF and World Bank. From this we conclude that there is scope for IMF and World Bank lending in the region to respond to the political interests of their major shareholders, particularly the United States. We support these arguments with both a qualitative and a quantitative analysis of the determinants of World Bank and IMF program lending to the region, focusing on both economic need in the MENA countries and the politics of donor interest before concluding.

The Middle East and North Africa (MENA) consists of the predominately Islamic cultures of the Gulf Arab countries, the Levant, the countries of North Africa, plus Iran, and the more industrialized country of Israel.1 MENA assumes both political and economic significance. Politically, it is arguably the epicenter of world crisis, chronically war-prone, and the site of the worlds most protracted conflicts (Hinnebusch, 2003, p. 1); economically, it owns the bulk of the world’s oil reserves, driving in particular the USA economic engine. In light of the region’s geo-politically and economically strategic position in the world economy, it is clear that economic and political factors are inextricably linked when it comes to the manner in which the West, particularly the United States, responds to the region’s needs. There is a long and rich theoretical and empirical literature on the determinants of the geographical allocation of foreign aid.2 It is generally accepted that this allocation is influenced by both recipient need and donor interest and that multilateral aid is less susceptible to donor interest than bilateral aid (Maizels and Nissanke, 1984 and Rodrik, 1995). In the past donor interest has often reflected the geopolitics of the Cold War, with pro-western regimes, regardless of economic need and their record on human rights, being large recipients of western aid.3 Even before the collapse of Communism in the late 1980s and early 1990s, a new theory was emerging to the effect that “Islam [is] the new Communism and [hence represents] a grave threat to Western civilization” (Niva, 1998, p. 27). Consequently, “rogue states” were isolated while pro-western regimes, particularly if they were threatened by Islamists, were rewarded for serving Western interests (Hubbell, 1998, p. 9). Hence, the end of the Cold War replaced the old dichotomy in the Arab World between conservative pro-Western and socialist pro-Communist Arab regimes with a new and less covert formula based on “friends or allies, or good or bad” regimes (Perthes, 1998, p. 30). It is possible that past aid allocations to MENA have been influenced by United States interests in the region, and that the IMF and World Bank are not immune from such influences. It is often argued, particularly by the anti-globalization movement, that the two Washington-based multilaterals are strongly influenced by the economic and political needs of their major western shareholders, especially the United States. This influence can take two forms—determining the geographical flow of funds, that is, who gets what from the IMF and the World Bank; and influencing the conditionality attached to such funds, that is, program loan recipients are expected to undertake economic liberalization programs, which help to open up their economies to the global economy and Western economic penetration. In addition, we can speculate that if there is evidence that past financial flows into pro-western MENA countries have responded to donor interest rather than recipient need, then, given the post 9/11 foreign policy concerns of the west, this may well intensify in the future.4 In light of the above, this paper attempts to assess whether donor interest, particularly the political interests of the United States, have affected the flow of funds from the IMF and World Bank to the MENA region. Although there is a large body of literature on the multiple determinants of aid allocation, much of the empirical work does not disaggregate aid by donors and when it does it tends to focus on bilateral donors. In addition, the more recent empirical work tends to employ panel data which aggregates recipients. Although there is a small but growing literature on the influence of the political preferences of the IMF and World Bank’s principal shareholders on lending decisions (Barro and Lee, 2001, Bird and Rowlands, 2001, Fleck and Kilby, 2001, Killick, 1995, Rowlands, 1995 and Thacker, 1999) to the best of our knowledge, this is the first paper which attempts to specifically analysis this phenomenon in the geopolitically strategic MENA region. In addition, the fact that we concentrate on specific MENA countries enables us to capture political influence in a manner somewhat different from the existing studies which tend to look at IMF lending in aggregate. Such an analysis is timely given the new foreign policy interest of Western powers in MENA. The remainder of this paper is divided up as follows. In the next section, we assess what is already known about the geo-political influences on aid flows to the MENA region and the potential for this to operate via the IMF and World Bank. From this we conclude that there is scope for IMF and World Bank lending in the region to respond to the political interests of their major shareholders. We support these arguments with both a qualitative and a quantitative analysis of the determinants of World Bank and IMF program lending to the region, focusing on both economic need in the MENA countries and the politics of donor interest before concluding.

Our qualitative and quantitative analysis enables us to conclude that both recipient need and donor interest influence the granting of IMF and World Bank program loans to countries of the MENA region. This is not surprising given that our literature review indicated that most empirical studies of aid allocation find that donor interest, including geo-political interest, influences who gets what in terms of aid. The generally accepted view is that donor interest plays a more important role in bilateral aid allocation than in multilateral aid allocation. This may be so, but we have identified important reasons why the major western shareholders might be able to influence the flow of funds from the two major Washington-based multilaterals. Given its voting power in both the Bank and the Fund, the United States is in a particularly influential position. Our qualitative analysis focused on the five major MENA recipients of IMF and World Bank program loans—Algeria, Jordan, Morocco, Tunisia, and Egypt. Looking at each country’s macroeconomic performance in the year in which they commenced their first phase of program loans, we see very little evidence of economic need. Only in the case of Jordan in the late 1980s and Egypt in its first phase of loans during the mid-1970s do we see any clear sign of recipient economic need in terms of a significant deterioration in the macroeconomic indicators that the IMF is usually concerned with. It seems therefore that we must look to other factors to explain the IMF and World Bank engagement with Egypt in the 1980s and with Morocco, Tunisia, and Algeria. In all cases a cursory political analysis would indicate that a shift toward a pro-western foreign policy, peace overtures to Israel, domestic political liberalization, and the often related challenge to the regime by Islamic opposition prompt an inflow of funds not just from the United States but also from the Bank and Fund. Even in the case of Jordan, which became a recipient of such loans in 1989, the severe economic crisis of that year was inextricably linked with such foreign policy and domestic political events. The above findings are further supported by our more formal quantitative analysis. Using a Probit model to estimate the determinants of IMF lending in the region we found that a model that only includes variables representing recipient need performs very poorly. However, once we include foreign policy and political variables the model performs extremely well. In this supplemented model the only economic variables that help to predict whether a MENA country will be granted an IMF loan are a change in foreign reserves and total debt service—a decline in reserves or a high debt service ratio are good predictors of an IMF program. Signing a peace treaty with Israel improves a country’s chance of a loan as does improving democracy. Related to the latter, we also found that holding an election is likely to be followed by an IMF loan in the post-election year. The above findings are important, not just because they add to an already large body of empirical work on the determinants of aid allocation, but also because they have important policy implications. The fact that IMF and World Bank lending in MENA seems to be orientated toward pro-western regimes that introduce western-style democracy, and adhere to US foreign policy interests in the region suggest that factors other than recipient need are influencing global aid allocations. This has two important implications, which go beyond the scope of this paper. Firstly, it may well reduce the developmental impact of a scare resource, namely aid. Low income countries or those that can use aid to the best effect, may not receive as much aid as wealthier countries or countries with weak policies, where aid has been shown to be less effective (Burnside & Dollar, 2000). As Collier and Dollar (2002) have argued, a more poverty-efficient allocation of aid has the potential to double the number of people lifted out of poverty from 10 to 20 million. Secondly, the politically motivated flow of funds to MENA may well trigger adverse social and political effects. Program loans from the IMF and World Bank have economic liberalization conditions attached to them. Such reform conditions, although they often have the potential to bring significant economic gains, may well have negative social ramifications in the recipients unless adequate social safety nets are in place. For example, reforms such as privatization, removal of state subsidies on foodstuffs, devaluation, and trade liberalization can potentially increase unemployment and income inequality as well as reduce real incomes of the poor. This, in turn, may lead to the growth of anti-reform movements challenging incumbent regimes. There is already ample anecdotal evidence that this has occurred. The 1990s and the first four years of the 21st century have witnessed a rise in the number and forms of distributive conflicts in the Arab World, including riots, demonstrations, strikes, violence, assassinations, clashes with labor unions and university students in addition to an increase in crime rate (Ayubi, 1995, Economist, September 5, 2002, El-Ghonemy, 1998, Richards and Waterbury, 1996 and Shafiq, 1998). Quite often this unrest has an explicitly anti-western, anti-globalization, and anti-IMF focus. In some instances, such as in the riots in Jordan in April 1989 and August 1996 prompted by the IMF-induced lifting of price supports, the IMF and the World Bank were viewed by many of the opponents of reform as synonymous with the American presence and interests in the region. If this persists, the very regimes that America and the west are trying to support with funding and reform packages may well not survive. Many such opposition movements have centered on Islamic-based political parties. Political Islam and Islamic fundamentalism should not be confused. But a vicious cycle of declining social welfare caused by possible effects of economic liberalization, increased domestic opposition to pro-western local regimes implementing such programs, and repression of such opposition by the same regimes is likely to force frustrated religiously based political groups into increasingly extremist responses as well as enhancing their appeal to impoverished and disaffected members of society. The general influence of the IMF and World Bank in MENA, the welfare effects of IMF and World Bank programs in MENA countries as well as local perceptions of these two institutions is hence an area that deserves further research. It may well be that in view of the fact that IMF and World Bank funds have accounted for only a small percentage of the flow of funds into the region (see Table 1) that their influence over policy and liberalization is correspondingly small. In addition, the very fact that the flow of funds is politically motivated may mean that the conditions attached to these funds are weak. Indeed, both these factors help explain why the Bank and the Fund have had relatively little influence over the economic reform process in Egypt in comparison with the influence of USAID. On a more general global level, there is a growing body of literature that suggests that IMF conditionality is not effective in obtaining intended reform outcomes (Dollar and Svensson, 2000, Goldstein, 2003, Mercer-Blackman and Unigovskaya, 2004 and Mussa and Savastano, 2000) and that it does not have a catalytic effect in terms of access to the international capital market (Bird, 1996, Bird and Rowlands, 1997, Bird and Rowlands, 2000, Bird and Rowlands, 2001, Bird and Rowlands, 2002, Rodrik, 1995 and Rowlands, 1996). If the latter is the case, then effectiveness of granting or withholding IMF and Bank loans in terms of the carrot and stick effect is severely weakened. On the other hand, there are many, including many groups and individuals in MENA countries, who continue to believe that the IMF and World Bank wield considerable influence over their economies. The basis, origin, and accuracy of such beliefs in the specific context of MENA countries are essential area of future research.