Reflections on oil and autocracy in the Middle East.

After the 1973 international financial crisis, the oil producing countries formed OPEC in an attempt to control their prices and increase their share of the surplus resulting from oil production. Indeed prices increased and huge profits accumulated to the producers. Contrary to hopes for the opposite, this increase surplus did not change the realities for the peoples of the region or the understandings between the West, the local elites and the oil Companies. In Saudi Arabia for example, the tacit understanding was that the Saudi Kingdom benefited from the enormous profits, the American companies continued “to enjoy a privileged position in their relation with the oil industry”, and the US continued to enjoy its strategic position in the country. The US also benefited from the growth of the Saudi economy, as the latter fueled demand for consumer goods and American investment, as well as weapons procurement that required training by American experts. Throughout the Middle East, the oil price increases led to little or no increases in the wealth of the people of these societies. None of these countries had been a democracy, and the increased flows of revenue strengthened the predispositions of the Middle Eastern states towards centralization. Thus, states became stronger and more repressive, new state structures emerged and the elites became harder to remove. Instead of a share of the increased revenues flowing to the people of the Middle Eastern countries, it “ended up supporting a vast system of patronage and corruption that upheld” the dominant class. States grew larger and “dominated the society and economy”, while “blotting out in many cases the possibility of real steps toward a more open society”. The oil revenues also resulted in increased dependency of the citizens to the state and of the state to external patrons. The former for more handouts or access to power and the latter for protection against the local rivals and for weapons procurement.

The French Election

The right candidate Nicholas Sarkozy, won the French national election in France today. I am happy he did.

France's problems are typical of the problems plaguing many European countries. Stagnating economies, slow growth, even less innovation and investment, a large unassimilated immigrant population, and a crumbling, expensive social welfare state. In Frace the social contract was a peculiar one indeed: the people, dissapointed, voted the same people over and over. . .and over. The tacit understanding was that the elected politicians would not improve the economic conditions in the country, but at the same time they would not touch the social welfare provisions. It is clearly an unsustainable bargain.

This is why Sarkozy's victory is important. He is an unusual politician. He is a protectionist in industrial matters. He is a liberal in employment. He is against the 35 hour week, which was one of the culprits of France's slow growth, and talks about tax cuts. At the same time he advocates increases in pensions of the order of 30%. He has been silent on sensitive issues such as immigration and integration of second generation immigrants to win votes from the far right. He has at the same time talked about an inclusive French national identity. This victory is important, because it indicates that French voters, in want of change, were ready to support an unsual candidate. And supported him they did.

If Mr. Sarkozy's is able to push his programs through despite the opposition they might spur, and if they are ultimately successful, they may set a new example for Europe.

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