The Unmaking of Arab Socialism

Front matter

Ali Kadri ix

Anthem Frontiers of Global Political Economy

The Anthem Frontiers of Global Political Economy series seeks to trigger and attract new thinking in global political economy, with particular reference to the prospects of emerging markets and developing countries. Written by renowned scholars from different parts of the world, books in this series provide historical, analytical and empirical perspectives on national economic strategies and processes, the implications of global and regional economic integration, the changing nature of the development project and the diverse global-to-local forces that drive change. Scholars featured in the series extend earlier economic insights to provide fresh interpretations that allow new understandings of contemporary economic processes.

Contents

Introduction From Arab Socialism to Neo-liberalism: The Politics of Immiseration l l. Arab Socialism in Retrospect 29 2. The Devastation of Peace in Egypt 77 3. The Infeasibility of Revolution in Syria 117 4. Iraq — Then and Now 159 5. The Perverse Transformation 201 6. Permanent War in the Arab World 249 Bibliography 285

ILLUSTRATIONS

Tables

Introduction

FROM ARAB SOCIALISM TO NEO-LIBERALISM: THE POLITICS OF IMMISERATION

At the time of writing this introduction, in early 2016, the richest countries on earth, the Gulf States, were bombarding Yemen, possibly the poorest of all countries. Conditions of malnutrition, conflict, or a combination of both, characterise most Arab countries today. But things were not always as bad. As in much of the developing world, the immediate post-independence period represented an age of hope and relative prosperity. Yet, imperialism does not fall asleep while the Third World develops. No sooner than it could intervene with the assistance of its class allies to destroy Arab post-independence achievements, imperialism did so in a big way. ‘Two principal defeats by, and losses of territory to, Israel in 1967 and 1973, and many others that followed, left behind more than mere destruction of assets and loss of human lives; the Arab World (hereinafter the AW) lost its ideology of resistance, Arabism, and its associated socialism. This book is a modest attempt to understand why Arab development declined from its peak in the heyday of Arab socialism to the present desolate conditions.

Reversing this defeat and ideological defeatism requires a metamorphosis of the multitude into the masses and of the working class into a proletariat. It requires people who espouse an ideology — the actualisation of which, through policy, assigns a greater share of wealth to the security of the working classes. A living security, nonetheless, which obtains from an anti-imperialist struggle because the higher share of wages in the aristocratic nations have for long created the colonial mercenaries who pillaged the developing world. Undoubtedly, all ideologies will represent a system of thought shaped by the conditions of the class struggle. Revolutionary theory regards reigning ideology, even its own, as involving a biased perception of real processes. Capitalistic ideologies, however, are either the prefab social dicta meant to discipline labour or the unexamined assumptions upon which theory is built to strengthen the rule of capital. Deciphering positive from negative ideology requires more than just the Debord (1967) criterion: the true is a moment of the false. In revolutionary praxis, the true is not any moment of the false; the true is its determining moment; the true is its state of becoming in continued anti-imperialist struggle and all-round development.

The consensus on the significance of ideological shifts to policy turnarounds dates back millennia.

The Annunaki of the sky

Made the Igigi (lower-class gods assigned hard work) bear the workload

They were counting the years of loads

For 3,600 years they bore the excess

Hard work, night and day

They groaned and blamed each other

Grumbled over the masses of excavated soil:

Let us confront our Warden

And get him to relieve us of our hard work!

And spoke to the gods (the Igigis), his brothers:

Now, cry battle! (Atrahasis, eighteenth-century BCE, as compiled by Lambert, 1999)

It has taken the Igigis 3,600 years to rise up, win their war and retire to leisurely activities. However, as production came to depend on higher circulation of exchange value, which entailed an ‘annihilation of space by time’ (Marx [1877] 1973), ideological shifts and revolts became all the more frequent. With the growth of socialising space and communication, people unexpectedly change their views and ‘theory becomes a material force as it grips the masses’ (Marx 1844). The exercise of realising the necessity for change, or of socialising what is socially produced — as opposed to privatising — is also an exercise in individual freedom on the way to emancipation. The ethical connotations of such an ideological process may be summed up in the set of policies that negate private property (Truitt 2005).

In the Marxian sense, it is the experience of the masses in the course of the class struggle that shapes their consciousness. The recent experience of Arab working classes in the neo-liberal age is an extreme version of war, poverty and underdevelopment. ‘The combination of armed conflicts, petrodollar-funded civil society, and neo-liberalism has deconstructed working-class organisations, tarnished their symbols and engendered widespread despondency, catapulting a significant mass of working people into the lap of reactionary fatalism. But, for Marxism change is the only constant, and class war never comes to rest. It is always fought, in practice and in theory. Subjected to systematic imperialist assault, the AW has lived through an extraordinary experience in which the weapon of criticism is yet to replace the criticism of the weapon (as paraphrased from

Marx 1844). The practice of revolutionary theory in war and, especially, the war of ideas, is what resituates class struggle on an emancipatory path.

More so than in the past, the future of class struggle in the AW appears to be taking the shape of armed struggle. One is painfully aware of the fact that this would not need to be as protracted had there been advances in socialistinternationalist ideology; but that is a far cry from the way things are. In this historical epoch, Arab death rates due to hunger, disease and war rose significantly. The prevailing state of consciousness associated with war, the rise of the war economy in several Arab states and its associated war-indigent proletariat seem to prolong intercommunal conflicts and the policies that have bred abjection.' More and more, worldly phenomena acquire religious interpretations. The delusions of theocratic mysticism infiltrate and set back every aspect of social development. There are probably millions of examples that could illustrate the ebbing of revolutionary symbols and practice in class conflict, but one instance may be worth mentioning. When an Iraqi woman parliamentarian was asked why she ran for office in the National Assembly erected by Paul Bremer, she answered: ‘I really cannot care less for parliamentarianism, but my husband told me to run for office because the US-drawn constitution designated seats by quota in parliament for women, so I am doing this for my husband; otherwise the role of women is to be at home with the children’.’ Non-secular or imperialistically constructed states in which social and legal representation occurs through the sectional-identity form, as opposed to working-class citizenry, cannot intermediate social contradictions. They become the terrain of easily ignitable wars. The case is doubly relevant

1 A war economy has at its disposal real and financial resources that are put to work to produce a service, which is the outcome of the war and its power balances. It also has a ruling class composed of the relationship of the inter-fighting factions that appropriate their surplus product via the pillage of the national economy at the behest of imperialism and the regimentation or workers-soldiers, the war-indigent proletariat employed in war or war effort. The war-indigent proletariat group solidarity is established around some form of identity politics that utterly conceals the joint class lines. Although each warring section of the war bourgeoisie competes with the other for moneyed and real resources, their competition dollarises and draws down the values and resources of the national economy. In the process of the war bourgeoisie’s self-reproduction, which involves dollarisation, destruction and cheapening of third world resources and values and, ultimately, the eradication of revolutionary ideological power, the principal benefactor becomes the superior bourgeois relation of US-led international financial capital and its practice of imperialism. The transformations of the nationalist state bourgeoisie from the days of Arab socialism into a structurally imperialist-allied merchant class bourgeoisie and later into a war bourgeoisie that is consuming the life and labour of its own working class, all occur as successive concessions to defeat to the power of imperialism.

2 Discussion with M. Hage Ali of the London School of Economics.

when the developing region in question, the Arab region, is subjected to persistent imperialist offensives.

The imperialist objective of setting on course the self-destruction of Arab society is as easy as devolving funds to the working class along identity demarcation lines or applying the darker side of the Drucker thesis (1964) of management by objectives (creating incentives for agents to willingly engage in the act of self-destruction). At any rate, the practice of survival by identity-based value grab in a state whose authority over its own territory is questionable becomes tantamount to permanent inter-working class conflict. The residues of petrodollars, or only the pittance of what remains in the AW after the bigger shares of Gulf oil wealth have gone to circulate in the global money markets, underwrite the phenomenon of spiritual underdevelopment manifested in American-sponsored political Islam. In contrast to this most recent period, between 1950 and 1980, the AW experienced faster and healthier growth and social development in spite of lower earnings in oil revenues. This divergence in performance between then and now requires an even-handed explanation that steers clear of the hallucinatory constructs of individualistic freedom and choice. It does not make sense to speak of individual choices when the choice is often a single one, handed down by the class in command of history to the majority. This book is one attempt to understand these perplexing issues without resort to such ideological legerdemain. Obviously, one cannot cover all areas related to the topic, but in the present work I focus on the concept of Arab socialism in general, its application to three Arab states — Iraq, Syria and Egypt — and two cases of perverse transformation under neo-liberalism: the creation of a huge mass of redundant labour as a result of dispossessions in the hinterland; and the persistence of what amounts to permanent war in the AW. By the end, I hope to define and qualify the way the AW has become articulated with the global economy.

An Overview of the AW

Once a relatively equitable group of societies, the AW has come to be characterised by acute income inequality (nearly the highest rate, according to the Texas Income Inequality Database 2012). Several military losses shook up these societies and metamorphosed the ruling nationalist Arab bourgeoisie into a comprador—merchant class fully integrated with international financial capital. Between 1970 and 2010, the shares of manufacturing in Syria, Egypt, Algeria and Iraq went down from 19 to 5, 21 to 15, 10 to 2, and 12 to 4 per cent respectively (UNIDO, various years). With the material grounds for the reproduction of the wealth of the ruling classes shifting from national industry to the international dollar-denominated financial space, social integration, both national and regional, faced insurmountable difficulties. Arab merchant classes — sprouting like toxic mould on the back of military defeat and socialist ideological defeatism, and owning the state apparatus — constructed openness policies that acted as conduits for the usurpation of national wealth. The bulk of regional oil revenues, especially in the Gulf, fly abroad into US T-bills, affluent consumption and military and regime security spending (defence spending alone is twice the world share from GDP, according to the World Bank (WB), with American military aid to the Arab region ranking the highest). In 2004, the Inter-Arab Investment Guarantee Corporation (IAIGC) estimated that Arab assets abroad are at $1.4 trillion. This is likely a crude underestimate. In the same year, the Union of Arab Banks (UAB) estimated the figure at $21 trillion.’ The intra-regional disparities are also glaring: in contrast with the rich Gulf States, Yemen, Sudan, Somalia and Mauritania are among the poorest countries in the world. While Egypt and Morocco are not in an open-conflict condition, their working families spend 60 per cent of their income on food (WB 2011).

The Gulf States are an oddity, with citizens earning some of the highest incomes globally. The rich Gulf economies represent around 5 per cent of the total Arab population (Gulf citizens number around 20 million) but earn 1.6 per cent of world income (World Development Indicators (WDI) 2012). In less oil-endowed Arab economies, around 350 million people earn 0.9 per cent of world income, of which the labour share is estimated at 0.3 per cent of world income (WDI 2012). This figure is only slightly higher than the sub- Saharan Africa rate. Gulf industrialisation centres on costly oil derivatives or on facilities that exhibit few positive technological linkages to the rest of the economy. By reducing modern industrial expansion and its associated space for worker socialisation, the ruling merchant capital contributes to holding back the production of knowledge as the practice that engenders the development of society.

Nearly all Arab states are oil exporters and price their oil in dollars. They also peg the national currency to the dollar, despite the fact that most of their trade takes place outside the dollar zone (China and Europe). For dollarpegging states, monetary policy becomes ineffective; because the majority cannot export enough oil to earn foreign currency and pay for imports, their fiscal policy (under neo-liberal austerity) has to contract — save for the Gulf States, of course. It is not just because the exchange and interest rates do not adjust to calibrate the demands of savings or trade accounts; it is more because pegging in an open-capital-account context hands over monetary

3 Arab funds invest $21 trillion abroad, 2004. Online: http://www.albawaba.com/business/arab-funds-invest-21-trillion-abroad (viewed 9 October 2015).

policy to the country of the stronger partner to whom the currency is being pegged — in this case the United States. Also, apart from the Gulf, Arab states experience a balance-of-payments constraint and exercise an inflation-targeting monetary policy under open capital accounts leading to de facto dollarisation of the national currency. The impact of dollar fluctuations on the domestic price level has been negative, as seen in the rise of food prices in 2008 that caused death on bread queues in Egypt (Slackman 2008).

It is not easy to measure unemployment in the least-developed or war-torn Arab countries. Where unemployment has been measured, the official rate may appear as somewhere around 10 per cent, but in actuality, with absolute poverty (below 2 dollars a day) being higher than 50 per cent (AMF 2011), the true unemployment rate is also closer to the 50 per cent mark. People who are forced to eke out a living at below-subsistence levels in informal employment cannot be counted as employed. Aside from the Human Rights Bill edict on the right to work, counting them as employed contradicts the Decent Work clause of the International Labour Organisation (ILO). In some Gulf States, unemployment hits the 20 per cent mark, but given their wealth profile, the unemployed do not face the same conditions of poverty prevalent elsewhere. Yet, in the Gulf, one observes nearly 20 million foreign workers who occupy local jobs. With elastic supplies of rights-deprived Asian workers, more will be hired by profit-driven commerce because investment in local labour is much less lucrative for the ruling merchant class: they neither depend on the industrial skills of the labour force nor on a rising productivitywage internal demand component. The synergy between labour and industry that may promote rising-productivity-led development is central to building security capabilities and, as such, it represents a threat to US-led hegemony. Merchants, their neo-liberal policy patrons and their institutions engineer the necessary mismatch between capital and labour at every stage of the labour process. Many highly skilled workers emigrate, while foreign labour competes with unskilled national labour for low-paying jobs. Productivity growth often exhibits negative signs (KILM 2014). Although one may posit that productivity growth has fallen as a result of a substitution effect (cheaper labour replacing capital), the principal cause is to be found in a combination of slow endogenous technology growth and a ruling class with no commitment to capitalising the national economy.

While AW countries are deindustrialising and slowing down the rate of decent job creation, the numbers of poverty-wage service-sector jobs naturally swell. Simply put, new entrants or laid-off working people have no other source of income apart from informal/poverty work. A highly capitalised oil sector has created few jobs relative to its capital stock, and decent job expansion initially arose in the public sector — but only initially, because public-sector wages later fell, spearheading wage compression for the economy (UN 2006). Together, deindustrialisation, poverty-wage employment and the shrinking of decent job creation resulted in enormous unemployment (measured by the minimum level of decent income). The capping of resource flows to the working class, the erection of constitutional frameworks that sanctify working-class dividedness by identity and the limiting of social spaces or proxy factory floors that unify labour’s position, together resulted in inter-working class divisions that eclipsed the development of revolutionaryclass consciousness.

With comprador-merchant capital rising to power in Arab states — gradually, beginning with Egypt’s swerving to the US imperialist side after the Camp David Accords of 1978 — oil revenues were purposefully used to sow divisions in societies. Moreover, besides being a precondition for internal war, deepening working class differentiation — working class differentiation bears little or no resemblance to the apolitical ‘labour market segmentation’ of the mainstream — combined with uncertainty, also enhances short-term returns in all sectors. For economic agents holding moneyed wealth, the present becomes more valuable than the future. Above all, geopolitical uncertainty and the threat of war, conjointly with institutional brittleness, shape inter-temporal investor preferences (Do investors think they make more or less money in the future?). Investment lodges in finance or short-gestation projects. However, it is not the individual decision that matters for investment, but the overall geopolitical context. Class disarticulation in both consciousness and spatial demarcation lines associated with conflicts, in addition to deepening income divisions and rural-urban disparities, also fuels identity-based conflicts. The capacity of the working class to steer the circuit of capital for its benefit becomes estranged and demolished by sectarian or tribal politics. Working-class politics becomes a self-defeating goal as the cycle of inter-working class violence and the consequent weakening of the state continuously tip the balance in favour of US-led imperialism and its regional class allies.

For comprador-merchant capital, more-equitable redistribution in the form of presumptive income and capital gains taxation (as opposed to the predominant form of indirect taxation) and greater interest in regional development via a stronger demand side, are anathema. The merchant class reproduces itself via a commerce almost bereft of national industrial production. The social contract that brokers class differences nationally shifts from one between the national ruling and ruled classes to one between international financial capital and the ruling Arab merchant class. In the circulation of value within the triad of state, capital and labour, the policy outcome of the new external social contract is to reduce the cost of the social reproduction of the working class by a combination of dispossession, undermining public services, and raising unemployment.

In retrospect, the divide between pan-Arab secularism and monarchism- Islamism has mirrored the US—Soviet rift during the Cold War and continues to form the basis for the ‘rights of the working class versus charity to the working class’ debate. The Gulf States, whose security and sovereignty are maintained by US imperial coverage, propagate and fund free-market adhering political Islam or Salafist ideologies and movements: their funding of the Afghan jihadists is one historical watershed. After the occupation of Iraq and the rise of Iranian backed Shiite militias, US-led imperialism capitalised on such sectarianism to fuel indefinite regional conflicts sponsored by the funds and ideology of Wahhabism. The power that US-led capital amasses from rearing the Sunni-Shiite divide, the rising terror threats worldwide shifting control into the hands of capital’s security apparatuses, and the ensuing militarisation are the real loot from its invasion of Iraq.

Throughout the AW, a rise in obscurantism and identity schisms has weakened the foundation of the state as the principal body that could negotiate the position of the working class in the global economy. Given socialist ideological decline and much of the working class eking a poverty-stricken living, it takes an insignificant share of Gulf petrodollar revenues to fund unrest. In a strategic region such as the AW, political considerations eclipse short-term economic cost considerations. Nonetheless, the total volume of petrodollar flows from the Gulf (second to East Asia in size) are worthwhile to Western financial markets. The Gulf’s sovereign funds are too substantial to be controlled (not just managed) by Gulf sheikhs, and the imperialist edict to arrest Arab industrial development ensures that these assets remain unrequited transfers or uncashed cheques.

The Gulf’s earning-without-work model had served, by the demonstration effect, to disrupt the industrious and regulated Arab economies of the 1970s and had thwarted work incentives. Petrodollar remittances to non-Gulf Arab countries distorted exchange-rate regimes and had Dutch-disease—like effects on the national industry, especially on the protected economies of Syria and Egypt. These remittances did not, however, fall outside the destabilising geopolitical-rents component of imperialist intervention; they came laced with the ideological poison of colonially and American-groomed political Islam. That said, capital outflows from the majority of Arab countries (non- Gulf) are insignificant in global terms. Most non-Gulf Arab countries exhibit balance-of-payment constraints. The flows from these non-Gulf countries are gauged, not according to their money value, but according to their impact in destabilising national states and, conversely, buttressing the position of US-led imperialism, regionally and globally.

When oil prices fell at the beginning of 1981 and remained low until 2002, the biggest economy in the Gulf— Saudi Arabia — could not maintain its previous living standards as did the smaller and richer per-capita Gulf States. Saudi’s real per-capita income fell from around $18,000 in 1981 to about $8,000 in 2000 (WDI, various years). By the late 1990s, the Saudis had borrowed more than $200 billion in short-term, high-interest loans to cover fiscal shortfalls (WDI 2002). In 2003, poverty reports from Saudi Arabia indicated that nearly 25 per cent of the population subsisted at below the national poverty line.* The oil price hike, beginning in 2003, leveraged the Saudi economy; however, under the neo-liberal policy package, power delegated to private actors grew, channelling more resources away from labour. The recent fall in oil prices beginning in January 2015 may precipitate yet another, even more serious lowering of the standard of living.°

In the early 1980s, neo-liberal policies effected under the name infitah (Arabic for ‘openness’) came into operation. ‘Two significant military losses in 1967 and 1973 had already raised national social tensions and risks and had lured investors to the safety of US-dollar markets. As is typical under structural adjustment, policymakers deregulated trade and capital accounts. National industry started to shrink because of falling investment and increased

4 See ‘Poverty in the Oil Kingdom: An Introduction’, 2010. Online: http://www, jadaliyya.com/pages/index/202/poverty-in-the-oil-kingdom_an-introduction- (viewed 12 March 2014); and ‘[i]n wealthy oil-rich countries: a quarter of Saudis under poverty line’ (Arabic), 2013. Online: http://middle-east-online.com/?id=146523 (viewed 6 April 2015).

5 It was not difficult to foresee that the regional macroeconomic trends were headed for collapse. The following passages from the work of the Economic Analysis team at the Western Asia office had forewarned of decline or violent transition.

‘But only three years after the decline in oil prices in the first oil boom, per capita income fell drastically and certain States resorted to short-term borrowing from private banks at high interest rates to redress their fiscal deficits. Recently, moreover, speculative elements have accounted for a significant proportion of the oil price. If speculative pressures subside, a fall could occur again, yet this time at a higher rate (UN 2008b).’

“The full repercussions of the war in Iraq and the stalemate in the peace process are yet to be seen. In addition, and as always, continued insecurity in the Near East threatens more than just the region and raises the security premium of the member countries. If and when the very volatile oil price tumbles, a whole mode of development that is based mainly on oil revenues will be held in check (UN 2005a).’

“The likelihood that major macroeconomic and demographic variables will, inevitably, collide means that there is little space for argument over whether or not change is avoidable. The buildup of imbalances in a regional economy that does not expand at a rate commensurate with the demands of the demographic transition means that, unless the system experiences a chance occurrence of heavy oil rent fallout, change cannot be gauged in terms of degree (UN 2003).

competition from scale-enhanced foreign industry. On average, economic growth rates fell for everyone, but more so for the Gulf. The combination of shrinking public-sector revenues, lower public investment, and shrivelling national industries lowered the rate of job creation even as labour-force growth rates were not as high as those of the post-independence period. In contrast, under Arab socialism, population growth rates had reached the high plateau of 2.5 per cent as of the late 1950s, and job-creation nearly matched workforce growth (AMF 2005). Ironically, neo-liberals lay the blame for high unemployment on the demographic transition and supply-side elements (as in inapposite education), in spite of the fact that population pressure tapered off as of 1990 and neo-liberally imposed cyclical contraction crushed the previously enacted decent job-creation rate.

Economic growth rates were on average higher under state dirigisme in the 1960s and 1970s (WDI, various years).° Unemployment rates were lower as well. In the two decades between the first and second oil booms (1980-2000), the AW exhibited the highest unemployment rates, the lowest average real per-capita growth rates, and the widest gap in income distribution within and across regional countries (UN 2005). With lower oil revenues, funding to the social infrastructure retrenched, causing the quality of public services to follow suit. As for economic infrastructure, in 2002 investment rates were the lowest of all regions, at 16 per cent (WDI 2002). Intra-Arab trade remained low, between 7 and 8 per cent, with much of the Gulf’s excess savings channelled abroad (UN 2008b). With shrinking investment in plant and equipment and the hollowing-out of capital (in other words, with reduction of the technical composition of capital) for a good two decades (1980-2000) the AW was the global record-holder in malperformance. As evidenced by the pre-Arab Spring social disaster, when the new oil boom arrived in 2003, the policy of freer markets had already distorted resource-allocation mechanisms and most growth resulted in anti-development outcomes. In 2003, Saudi Arabia needed to sell its oil at $18 per barrel to balance its budget (UN 2005). In 2015, a $100 price per barrel is required for the Saudis to offset their government spending (Hallinan 2015). Rough estimates indicate that Saudi Arabia will draw down its financial reserves within a period of ten years, given oil prices hold steady at around $50 per barrel. For a state to quintuple its rate of dependency on oil revenues in the span of decade is indelible proof of massive industrial and developmental failure.

6 All Arab states adopted a high degree of dirigisme, or government intervention, in their economies. Arab socialism represented a higher degree of dirigisme combined with predistribution and nationalisation/socialisation of assets and key sectors in the economy.

Whole cities in the Gulf (‘Cities of Salt’, as per the metaphor of Saudi novelist Abdul Rahman Munif, 1987) that were constructed with little concern for energy conservation serve as monuments of the type of low output to capital ratio investment that the rest of the AW copied. Imported technology neither linked up with local industry nor deepened the production value chain (Krogstrup and Matar 2005). The combination of cultural retreat related to the sinking knowledge attendant to the development of national industry and unemployment in the absence of socialist ideological alternatives facilitated the growth of spiritual fatalism. With capital becoming more united across borders (universalising through financialisation), and its organisation becoming more effective through international financial institutions, the old-new cultural phenomenon of political, and later Salafi, Islam — beginning with colonial backing for the objectification of constructed forms of identity into states — splintered working classes. The schism in consciousness — between what it takes for the working class to grasp a higher share of the social product and the illusory ideas that sanctify private property and expropriation as entitlements — gaped further.

In the 1960s and 1970s, oil revenues funded the social and productive infrastructure through a high rate of public investment. As of 2002, rising oil revenues had leveraged speculative activities on poorly regulated stock markets that had grown several-fold in the previous ten years (WDI, various years). Hollow growth meant that the official unemployment rate for Arab countries went down cumulatively by around 3 percentage points for some 50 percentage points of growth between 2002 and 2011 (WDI, various years). A comparison between economic dirigiste regimes and the “free market’ shows that it is in the diminishing role of national agents in development and consequent declining public investment that the difference lies. As public investment fell, private investment failed to fill the gap left behind. As the former national agents of development — the military in alliance with broad sections of the professional working class and bureaucratic elites — integrate with international financial markets, a class emerges whose task is not to industrialise and trade within the region but rather to gradually dismantle the state. This class (the newly evolved merchant/comprador class) effectively becomes part of the international financial class, albeit a subordinate partner in the imperialist relationship, for whom (the combined comprador and imperialist) war is not only a profitable endeavour, but also a condition of its very existence as capital. The AW is a peculiar case; the high frequency of conflicts in a strategic region such as this turns war-for-the-sake-of-war into a medium of accumulation. The Arab wars and their associated war economy are more relevant to imperialism than buying and selling dates, cars and so forth to a part of the global working class whose income is a mere one third of | per cent of global income. Accumulation by wars of encroachment, the imperialist wars that strip nations of their autonomy and resources, as opposed to market realisation is now the mode of integration of the AW into the global economy. The implications of war to finance, imperialist power repositioning and imperial rents, as will be seen later, necessitates the disempowerment of Arab working classes and their states.