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Professional associations, the state, and fiscal crisis inthe Middle East

Pete W. MooreUniversity of Miami&

Bassel F. Salloukh American University of Sharjah, United Arab Emirates

December 2003

*Please do not cite without permission*


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ABSTRACT

Recent scholarly interest in the variation of Third Wave democratization has utilized crossregional frameworks in which the Middle East often comprises a single outcome: nodemocratization or enduring authoritarianism. This paper contributes to these debatesfrom a different direction by assessing intra-Arab variation and political change in state-society relations short of democratization conceptualized as contestation or coordination.

These types are operationalized through comparative examination of relations betweenstate authorities and organized professional syndicates (engineers, lawyers, doctors, and soon), labor unions, and business associations, collectively termed professional associations.

The paper examines how three non-democratic Arab regimes in Jordan, Syria, and Kuwait weathered the fiscal crises in the 1980s and 1990s through either contested relations orcoordination with their professional associations. Two general variables are advanced toexplain the variation: (1) pre-crisis political trajectories including, distinctions among the typesof professional associations, how state and ruling coalition formation conditioned thecapabilities and capacities of professional associations, and how the social bases of professional associations shaped the history of state-association relations; and (2) the character and depth of the fiscal crisis itself which structures the incentives for contestation orcoordination.


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1. Introduction

Mixing authoritarian rule with fiscal crisis is supposed to bring about regime

change. This is a well-established theme among general comparativists1 as well as a long

expected outcome among scholars and observers of the non-democratic regimes of the

Middle East.2 Despite nearly twenty years of chronic fiscal crisis and dislocation, the

expectations that fiscal crisis would weaken authoritarian regimes and herald

democratization in the Arab World have proved disappointingly unfounded. 3 A number

of promising research projects have responded by assessing quantitatively and qualitatively

factors that may account for divergence in the Third Wave of democratization and the

Arab regions seeming imperviousness to deeper political liberalization.4 The purpose of

this paper is to contribute to these responses in three ways.

First, we shift from considering political outcomes during fiscal crisis among the

Arab states as constituting a single bivariate outcomedemocratization or

authoritarianism--to assessing important political change short of democratization, which

we conceptualize as contestation and coordination in state-society relations. We argue that

coding such disparate cases as Jordan, Kuwait and Syria under the rubric of non-

democratic change in order to compare cross regionally makes methodological sense in

pursuing certain questions, but there are costs. Lost is an appreciation of the actual

patterns of local political struggles between state and society in these cases. To make the

1 Juan J. Linz and Alfred Stepan, Problems of Democratic Transition and Consolidation: Southern Europe, South America,and Post-communist Europe (Baltimore: Johns Hopkins University Press, 1996); Barbara Geddes, What Do We Know

About Democratization After Twenty Years? Annual Review of Political Science 2 (1999); and Stephan Haggard and RobertR. Kaufman, The Political Economy of Democratic Transitions (Princeton: Princeton University Press, 1995).

2 See John Waterbury, From Social Contracts to Extraction Contracts: The Political Economy of Authoritarianism and Democracy; Lisa Anderson, Prospects for Liberalism in North Africa: Identities and Interests inPreindustrial Welfare States; and Clement M. Henry, Crisis of Money and Power: Transitions to Democracy? in JohnP. Entelis, ed., Islam, Democracy, and the State in North Africa (Bloomington: Indiana University Press, 1997), pp. 141-176,127-140, and 177-204 respectively; Anoushiravan Ehteshami and Emma C. Murphy, Transformation of the CorporatistState in the Middle East, Third World Quarterly 17, 4, (1996), pp. 753-772.

3See Eberhard Kienle, More than a Response to Islamism: The Political Deliberalization of Egypt in the1990s, Middle East Journal 52, 2, (Spring 1998), pp. 218-235; Laurie A. Brand, The Effects of the Peace Process onPolitical Liberalization in Jordan,Journal of Palestine Studies 28, 2, (Winter 1999), pp. 52-67; Quintan Wiktorowicz, The

Limits of Democracy in the Middle East: The Case of Jordan, Middle East Journal 53, 4, (Autumn 1999); DanielBrumberg, Authoritarian Legacies and Reform Strategies in the Arab World, in Rex Brynen, Bahgat Korany, and PaulNoble, eds., Political Liberalization and Democratization in the Arab World: Theoretical Perspectives (Boulder: Lynne Rienner,1995), pp. 229-259; and Glenn E. Robinson, Defensive Democratization in Jordan, International Journal of Middle East Studies 30, 3, (August 1998), pp. 387-410.

4See, Jason Brownleee, And Yet They Persist: Explaining Survival and Transition in NeopatrimonialRegimes, Studies in Comparative International Development 37, 3 (Fall 2002); Michael McFaul, The Fourth Wave of Democracy and Dictatorship: Noncooperative Transitions in the Postcommunist World, World Politics 54 (Janurary 2002); Gerardo Munck, The Regime Question: Theory Building in Democracy Studies, World Politics 54 (October 2001);Michael Herb, All in the Family: Absolutism, Revolution, and Democracy in the Middle Eastern Monarchies (Albany: SUNY Press,1999); and Michael L. Ross, Does Resource Wealth Cause Authoritarian Rule? World Politics (April 2001).


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point in another way, authoritarian Arab regimes have weathered fiscal crisis differently,

and these differences are important to the prospects of future regime shifts, an implication

we will return to in the conclusion.

Second, shifting the explanatory target in this manner places fiscal crisis, not as a

monolithic catalyst to change, but as a varied factor in already established and evolving

state-society relations. This recognizes that fiscal crisis is not the same in all cases (even

within the region) and that the condition of state-society relations that exist before crisis is

important for gauging what happens during and after fiscal crisis. Third, in the cases of

Jordan, Kuwait, and Syria we operationalize contestation and coordination through

comparative examination of relations between state authorities and organized professional

representatives (engineers, lawyers, doctors, and so on), labor unions, and private economic

interest groups represented by the chambers of industry and commerce. Collectively, these

are termed al-Niqabat al-Mihaniyya (professional associations).5 This clearly defined target

allows us to systematically frame a tapestry of political struggles which fall well short of

democratization yet nevertheless amount to crucial shifts in state-society relations.

Table one provides a summary of the case features and outcomes to be explained.

Table 1: Case Features

Regime type Socio-ethnic divisions Relative wealth Association-statein state and society (GNI per capita*) relations during crisis

( 1980s-1990s)

Jordan Monarchy Historical Origin: 1,750$ ContestationFrom Arabian East/West Bank Penisula

Kuwait Monarchy Historical Origin, 18,270$ Coordination Indigenous Urban, Bedouin,

Religious: Shia/Sunni

Syria Authoritarian, Minority dominated 1,000$ Suppressed contestation Baath Party rule regime Selective coordination

*Gross national income (domestic and international) divided by mid-year population, World Bank

Outcomes can be framed along a continuum of ideal types, coordination and contestation. 6

Coordination in the associational sense recalls Peter Gourevitchs observation that state

5 The Arabic term al-Niqabat al-Mihaniyya can also be translated as professional syndicates. The intent is tospecify formal professional representation as opposed to the larger set of interest associations, which encompass non-governmental and informal ascriptive organizations.

6 This typology derives from Robert Dahls, Polyarchy (New Haven: Yale University Press, 1971).


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action is frequently corporatistic, in that state and groups borrow from each other the

authority to do what they cannot do alone. 7 Borrowing to formulate and implement

policy reform in the face of chronic fiscal crisis best describes Kuwaits association-state

relations through the 1980s and 1990s. Contestation refers to association mobilization to

block state policy or voice opposition. This situation has prevailed in Jordan since the

1980s, intensifying through the 1990s. Syrias experience falls somewhere in between.

Contestation by professional associations prior to the onset of fiscal pressures in the mid-

1980s prompted state actions to crush associational autonomy and voice. Coordination has

been selective and limited, with only those actors closest to the regime and deemed safe

involved in policy reform implementation. 8 These three cases represent typical Arab

countries enduring fiscal crises in the 1980s and 1990s. Jordan, Kuwait, and Syria also

present typical regime types in the region: two types of monarchial rule in the former cases

and single-party, populist authoritarian rule in the latter.

To explain these outcomes, our argument rests on two general variables: the

character of the crisis itself and pre-crisis political legacies. We contend that all Arab states

endured some form of fiscal crisis in the 1980s and 1990s, but as the cases of Jordan,

Kuwait, and Syria demonstrate, the pace and extent of crisis is not uniform. This variation

structures both state and association responses to crisis, and, consequently, creates the

political incentives for contestation and coordination. The more severe and acute the

crisis, the stronger the incentives will be for quick coordination between associations and

state authorities. However, reading domestic reactions as simply a consequence of

different types of crisis is problematic because there is little account for how interests

translate into action and little understanding for variation in the political and economic

effects of associational contestation and coordination. A full explanation requires inclusion

of relevant political features prior to the onset of crisis: (1) distinctions among the types of

professional associations; (2) how state and ruling coalition formation conditioned the

institutional capabilities and capacities of professional associations; and (3) how the social

bases of professional associations shaped the history of state-association relations.

The paper proceeds first by addressing the importance of associational politics in

the context of fiscal crisis in the Middle East. Section three elaborates and illuminates the

arguments about pre-crisis factors with evidence from each case. The fourth section briefly

summarizes contestation and coordination during crisis in each case. The concluding

7 Peter Gourevitch. Politics in Hard Times: Comparative Responses to International Economic Crises (Ithaca: CornellUniversity Press, 1986), p. 230.

8 Of course as ideal types there is no claim here that contestation and coordination are mutually exclusive. The


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section generalizes about late-development and professional associations in the Arab

World.

2. Responding to fiscal crisis and the new associational politics

One of the more influential claims in the literature on associational politics,

governance, and regime transition holds that associations are generally more important for

the type of democracy that is consolidated than the actual transition from

authoritarianism.9 This paper examines comparative evidence, which suggests that the new

associational politics maybe relevant to trajectories from authoritarianism in so far as they

have been relevant to changes within authoritarianism in the Arab World. The association-

state matrix is part and parcel of how states have responded to fiscal crisis, what the

political-economic repercussions have been, and whether a firewall against further

liberalization can be maintained.

Within the region there is mounting empirical evidence that this is the case. 10 Arab

regimes certainly take their professional associations seriously and invest considerable

resources toward their management and containment. Both the late King Hussein and his

successor King Abdullah have publicly criticized and jailed Jordans association leaders

while investing state resources to curb associational mobilization. The Bath regime in

Damascus began its early 1980s crack down on dissent by first smashing the autonomy of

the countrys professional associations, paving the way for their re-organization along strict

corporatist lines. Kuwaiti state officials have at times disbanded some professional

associations only later to invest significant political and monetary capital toward the

creation of new associations. In all cases, leadership elections of professional associations

are among the most heated and publicized domestic events, even in Syria where elections

are state-controlled. In terms of general theory, there are additional reasons to consider

associations in a new light.

judgment on outcome is an assessment of which best describes association-state relations over the last two decades.9 Philippe Schmitter, The Consolidation of Democracy and Representation of Social Groups, American

Behavioral Scientist 35, 4/5 (March-June 1992).10See Zayd Hamza, Al-Infitah al-Siyasi wa Ada al-Munazamaat al-Naqabiyya wa-l-Mihaniyya, [The

Democratic Openness and the Performance of the Syndicate and Professional Organizations] in Hani Hourani, ed. Al- Masaar al-Dimuqrati al-Urduni...Ila Ayn?! [The Jordanian Democratic Path...Where To?!] (Amman: Al-Urdun al-JadidResearch Center and Sindbad Publishing House, 1996), p. 157-163; idem., Odwiyyat al-Naqabaat. [The Membership of the Syndicates] Paper Presented at the Conference on Professional Syndicates, Urdun al-Jadid Research Center, Amman,1998; Ninette S. Fahmy, The Performance of the Muslim Brotherhood in the Egyptian Syndicates: An AlternativeFormula for Reform? Middle East Journal 52, 4, (Autumn 1998), pp. 551-562; Carrie Rosefsky Wickham, IslamicMobilization and Political Change: The Islamist Trend in Egypts Professional Associations, in J. Beinin and J. Stork,eds., Political Islam (Berkeley: University of California Press, 1997), 120-135; Mustapha K. El Sayed, Professional

Associations and National Integration in the Arab World, with Special Reference to Lawyers Associations, in AdeedDawisha and I. William Zartman, eds., Beyond Coercion: The Durability of the Arab State (London: Croom Helm, 1988), pp.88-115; Nina Sovich, Palestinian Trade Unions, Journal of Palestine Studies 24, 4, (Summer 2000), pp. 66-79; and Sami E.Baroudi, Economic Conflict in Postwar Lebanon: State-Labor Relations Between 1992 and 1997, Middle East Journal 52,4, (Autumn 1998), pp. 532-550.


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First, the fiscal crisis of the state in the Middle East is increasingly threatening

populist commitments of past decades. According to the logic of these commitments,

regimes provided a minimum of social welfare services - education, health care, subsidies

on primary food products - in exchange for political support and acquiescence from

strategic sectors of the population, especially the urban lower and middle classes, peasants,

and workers.11 In the 1960s and 1970s, much of this investment derived from external

sources and commodity export allowing countries like Jordan to live far beyond what their

production profile would suggest. The danger of course is that such public commitments

and welfare provisions made for sticky expectations among Arab societies; expectations

that did not decline as the ability of Arab states to continue their largess weakened in the

1980s.12

Political parties were the primary victims of these processes as most Arab countries

simply outlawed or co-opted them. In Syria, so-called progressive parties are subordinate

to the ruling Bath party; parties in Kuwait are illegal, and Jordanian parties are legal yet

historically weak.13 Professional associations, on the other hand, have retained greater

degrees of autonomy and in some cases flourished. Prior to 1980, Syrias professional

associations were the primary venues of open and vocal opposition to Bath rule. They

were loosely organized at the provincial levels, and their organizational autonomy was

respected by the regime. In most syndicates, professionals with dual membership in the

Bath party were a numerical minority. Since 1989, Jordanian engineers, doctors, and

lawyers associations have rallied rank and file members to protest a number of issues

including normalization with Israel, state imposed austerity measures, and changes in the

electoral laws. In Kuwait, nationalist and loyal opposition to the ruling al-Sabah family has

often been located within the national chamber of commerce. The leadership of this

association has traditionally embodied a quasi-party identity in Kuwaiti domestic politics.

Consequently, and in the absence of the kind of deeply rooted political systems that long

cushioned authoritarianism in countries like Taiwan, Mexico, Zambia, Kenya, and

11For examples see Brumberg, Authoritarian Legacies and Reform Strategies in the Arab World; Ehteshamiand Murphy, Transformation of the Corporatist State in the Middle East; Ayubi, Overstating the Arab State , chapters 6and 7; and Raymond A. Hinnebusch, The Political Economy of Economic Liberalization in Syria, International Journal of

Middle East Studies 27, 3, (August 1995), pp. 305-320.

12 This is essentially a restatement of the relative deprivation thesis, see: Ted Robert Gurr, Why Men Rebel (Princeton: Princeton University Press, 1970).

13 Ellen M. Lust-Okar, The Decline of Jordanian Political Parties: Myth or Reality? International Journal of Middle East Studies , 33, 4 (November 2001).


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Indonesia,14 many Middle Eastern regimes are now facing the challenge of gradually

replacing or augmenting their former social contracts. 15 Second, chronic fiscal crisis and

slow economic growth have challenged the bureaucratic capacities of Arab states to fashion

and implement deeper reforms. Creating economic reform policies, gathering information,

and implementing reform have proven tasks not easily addressed by regimes nourished on

a variety of exogenous rents. Distribution, not redistribution, has comprised the dominant

skill sets of Arab states. In all three cases under review, crisis and economic reform have

revealed the limited nature of state capacities to formulate reform legislation and ensure

implementation. For example, Jordan twice misreported its GDP figures in the late 1990s,

while in Kuwait impressively financed and equipped government ministries were unable to

quantify the magnitude of domestic debt from a stock market crash in the early 1980s.

Consequently, a major state response to fiscal crisis has been to extend policy participation

to business associations and gain private sector assistance in the difficult administrative and

informational functions that comprise economic reform. These twin pressures have

opened the way for greater associational participation in the bread and butter struggles of

local politics.

Against these interpretations, one can raise a clear objection: why focus on formal

associations when informal patron-client networks may prevail and be more important?

Trends in the study of Arab politics have tended to reinforce the epiphenomenal view of

domestic institutions. Modernization theorists of the 1950s and 1960s commonly

concluded that Arabs lacked the skill to join professional associations or such institutions

were simply irrelevant.16 The advent of rentier state theory hardened these views. Rentier

theorists can be credited with advancing a neat, influential framework built upon a rather

modest commitment: the character of a states finances conditions its basic politics. 17

Thus, among the oil and commodity dependent Middle Eastern states, easy external

financing was expected to strengthen patrimonial rule. The top-down dynamic of rentier

14 Stephan Haggard and Robert R. Kaufman, Economic Adjustment and the Prospects for Democracy, inThe Politics of Economic Adjustment , edited by Stephan Haggard and Robert R. Kaufman (Princeton: Princeton University Press, 1992), pp.327.

15 With what John Waterbury has termed extraction contracts. Waterbury, From Social Contracts toExtraction Contracts.

16 A.J. Meyer, Middle Eastern Capitalism: Nine Essays (Cambridge: Harvard University Press, 1959), p.41. Seealso, Robert Springborg, Patterns of Association in The Egyptian Political Elite, in Political Elites in the Middle East ,edited by George Lenczowski (Washington, D.C: American Enterprise Institute, 1975), p.83.

17 Terry Lynn Karl put it this way: Simply stated, the revenue a state collects, how it collects them, and theuses to which it puts them define its nature. in The Paradox of Plenty: Oil booms and Petro-States (Berkeley: University of California Press, 1997), p.13.


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arguments tended to see politics during the high rent, pre-crisis years as almost suspended,

whereby fiscally autonomous states simply bought off all opposition.18 Professional

associations meant to support collective action were logically assumed away since exclusive

rent distribution trumped individual over collective engagement. The trouble comes with a

decline in rents. The precipitous drop in commodity prices and aid in the 1980s generated

the scholarly response that a reversal of fortune, so to speak, should engender a reversal in

politics. Though not explicitly addressed in these reactions, there was the palpable

expectation that the once muted social associations would resuscitate themselves in ways

that would challenge political authority and potentially bring about regime change. The

diversity of associations-state relations supports the larger observation that rentier crisis

outcomes have not been uniform. Our response to the (formal) associations versus

(informal) patronage question acknowledges that forms of associational contestation may

involve rent demands or that coordination may carry a patronage price tag, but professional

associations in the Arab World are far more than rent-seeking venues. 19

The issue should not rest as a binary choice between informal patronage and formal

association, but rather should engage how formal associations intersect with informal

networks over time. It seems clear that as Arab populations have grown, as states have

taken on more complex functions, and as reservoirs of patronage have dried up, old

methods to absorb individuals into established patronage networks have weakened. As

institutions of study then, professional associations can be considered both agents and

objects of change. A focus on the context of crisis as well as historical trajectory aims to

treat both ends. 20

3. Crisis type

Associational formation and reassertion are dynamics influenced by each states

revenue base, without question. Links with state authority and the resources that flow from

those relations are issues of central concern to professional associations in every Arab

country. Therefore, any analysis of crisis outcomes should begin with consideration of the

fiscal crisis itself. The pace and extent of crisis shapes two crisis mechanisms: the terrain of

interests around which political struggle will take place; and the countrys perception of the

18 Gwenn Okruhlik, Rentier Wealth, Unruly Law, and the Rise of Opposition: The Political Economy of OilStates, Comparative Politics , 31 (April 1999).

19 This conviction is supported by conclusions in other regions that rent-seeking accompanies both patterns of underdevelopment as well as development. See, Rents, Rent-Seeking and Economic Development: Theory and Evidence in Asia ,edited by Mushtaq H. Khan and Jomo K.S. (Cambridge: Cambridge University Press, 2000).

20 Our rendering of these important institutionalist debates is admittedly elementary. See, David WaldnerFrom Intra-Type Variation to the Origins of Types: Recovering the Macroanalytics of State Formation.http://www.people.virginia.edu/~daw4h


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seriousness of the crisis. Table 2 displays select measurements on variation in the pace and

extent of crisis across the three cases.

Table 2: Comparative Fiscal Crisis Indicators

Jordan Kuwait SyriaGDP per capita1981-91 -2.5 -1.0 NA1991-01 1.0 -1.5 2.1

Total external debt% increase 1980-98 23 NA 16

Changes in net reserves(US$ millions)1981 -47 -283 812000 -681 -2,259 -740 Sources: International Financial Statistics Yearbook, 2000;Government Finance Statistics Yearbook, 2000

In oil rich Kuwait, the crash of the unregulated Souq al-Manakh stock market in 1981

amounted to an immediate and massive fiscal crisis ($92 billion in debt or more than 17

times the foreign reserves of Kuwait, and 4 times that of Saudi Arabia). Less than a year

later significant drops in the price of oil and deficit spending galvanized public fears that

the crisis threatened national solvency. Invasion by Iraq, the costs of reconstruction, and

depressed oil prices into the 1990s amplified these initial shocks. Despite these bleak

circumstances, the abruptness of the downturn, its extent, and the fact that the sector most

in need of reform was banking meant state officials could not be idle. For example, only a

few days after the 1981 crash, state officials turned overtly and often to Kuwaits peak

business association, the Kuwaiti Chamber of Commerce and Industry, to coordinate a

national resolution strategy. This close coordination intensified over the next two decades

to include joint proposals for debt relief, legislative reform, and economic liberalization.21

Jordans fiscal crisis was more gradual, yet punctuated with crisis spikes (internal

and external) throughout the 1980s and 1990s. Mounting fiscal pressures and debt

culminated in the sudden devaluation of the Jordanian dinar in the late 1980s. The

invasion and liberation of Kuwait sent thousands of Palestinian-Jordanians back to Jordan

precisely at the time foreign aid was in decline. Instead of rapid and massive dislocation,

Jordan has been on a slow burn in which the poor and Jordans professional classes have

seen their per capita income essentially stagnate since 1984.22 Counterfactually, had

21 Pete W. Moore, What makes successful business lobbies? business associations and the rentier state in Jordan and Kuwait, Comparative Politics , January 2001.

22 For the calculations, see, Marwan A. Kardoosh, Jordans economy from a Western perspective, The Daily Star , 26 November 2002.


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significant amounts of US aid and military support not began arriving in the mid-1990s

(official grant aid approached 1$ billion by 2003), Jordans economy would likely have

shrunk under massive debt.

Of the three, Syrias crisis has been the most gradual starting from a history of less

external rent dependency, realizing increasing oil concessions into the 1990s. Soviet aid,

while in decline, still contributed some $20 billion from 1977 until 1988, worker

remittances increased in that same period, and external debt remained low by regional

standards. Balance of payment problems and declining foreign currency reserves in the

mid-1980s did force some austerity measures felt by the regimes core constituency, yet

after the fall of the Soviet Union, new external financing sources came on line. Syrias

participation in the coalition to liberate Kuwait reportedly netted it $2 billion, while steady

increases in domestic oil production 23 also helped fill the gap. More gradual crisis in Syria

has therefore lessened the structural openings for associational reassertion. Consequently,

Kuwaits early start toward a clear objective (solving the debts of the crash and rebuilding

from the Iraqi invasion) fostered solid political opportunities for coordinated association-

state relations, which was not the case in Jordan and Syria. But opportunity is only part of

the story.

4. Pre-crisis analysis: disaggregating associations, state formation, and the social

bases of agency

This section unpacks three pre-crisis factors which allow us to explain why and

how association-state relations unfolded in Jordan, Kuwait, and Syria in the 1980s and

1990s. First, professional associations are not all of equal weight, function, or capacity. As

a strategy for explaining change at this level of state-society relations, it is necessary to

disaggregate associations. We divide associations in our cases into the professional

syndicates ( al-niqabat al-mihaniyya ) such as lawyers, engineers, and the like and the peak

business representatives or chambers of commerce ( ghuraf al-tijara ).24 There is broad

agreement across ideological divides that private sector representatives operate under

particular logics. Business enjoys political advantages from its investment decisions and

from its self-organizational capacities.25 Individual firms can join multiple organizations

23 Oil exports went from 405 thousand barrels per day in 1989 to over 550 in 1993. Estimates suggest oil now comprises 70 percent of Syrias exports and 50 percent of government revenue. Bassam Haddad, "Business As Usual inSyria?" MERIP Press Information Note 68 (September 7, 2001).

24 There is some confusion in terms in the case of Kuwait where professional associations have never beenformally supported by the state and hence Kuwaiti social associations are termed in Arabic: al-nawadi (clubs) and jamiyyat (societies).

25 Charles Lindblom, Politics and Markets: The Worlds Political-Economic Systems (New York: Basic Books, 1977).


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whereas laborers and professionals are generally circumscribed to one membership in their

specific craft.26 Moreover, business associations differ because they provide continuous

representation especially in times of fiscal and economic crisis.27 State authorities turn to

business associations to provide clear signals on private sector interests. In distinguishing

business associations however, we are cautious in applying binary distinctions between

rent-seeking or productive engagement with political authority, or business engagement

with the state that can be rendered as simply either non-democratic or pro-democratic. 28

The comparative evidence reveals business association politics that move across these

spectrums over time and are highly dependent upon broader political factors. Kuwaits

peak business association traditionally pressed for elected assemblies as a means to subject

the ruling Al-Sabah familys decisions to wider consultation. Since the fiscal dislocations of

the 1980s however, association leaders have been more circumspect since widening

political participation could strengthen societal elements often in opposition to business

interests, namely Islamists and tribal elites. In Syria, the Damascus Chamber of Commerce

was a leader in organizing strikes and protests to resist the expansion of Bath Party rule in

the 1960s. In all of the cases, business representation has at times allied with the other

professional associations in opposition to specific state politics, yet at times when regime

rule is directly challenged, business has opted for loyalty. During the 1970 civil war in

Jordan between the Hashemite monarchy and PLO commandos, the Amman Chamber of

Commerce remained loyal to the monarchy while many of the other professional

associations backed the rebels. In the late 1990s, Jordans business associations joined

other professional associations in boycotting state efforts to normalize peace with Israel

through joint trade fairs and business dealings. Beyond these general propositions, there

are compelling political features of the post-colonial Middle East to theorize about Arab

business associations and their interactions with political authority differently.

To begin, formal organized business representation pre-dates other professional

association formation. The largest and historically most important business association in

Jordan, the Amman Chamber of Commerce, was founded in 1923. Since the 1950s, the

26 Claus Offe, Political authority and class structure: an analysis of late capitalist societies,International Journal of Sociology 2 (1972); andDisorganized Capitalism: Contemporary Transformations of Work and Politics (Cambridge: Polity Press,1985).

27 Philippe C. Schmitter and Wolfgang Streeck, The Organization of Business Interests: Studying the Associative Action of Business in Advanced Industrial Societies, Max-Plank-Institut fr Gesellschaftforschung,Discussion Paper 99/1 (March 1999).

28 For critiques of these new institutionalist dichotomies see, Richard F. Doner and Ben Ross Schneider, TheNew Institutional Economics, Business Associations, and Development, International Institute of Labor Studies,Discussion Paper Series N 110 (2000), p.19; and David Kang, South Korean and Taiwanese Development and the New Institutional Economics, International Organization 49, 3 (Summer 1995).


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Amman chamber has controlled Jordans peak, national representative, the Federation of

Chambers of Commerce. The regions first business association was founded in 1841 in

Allepo, Syria. However, the Damascus Chamber and its Damascene merchant elites would

evolve as the peak representative and play the most overt political roles. Though Kuwaits

business elites, sometimes referred to as asil (original), formally created their chamber of

commerce in 1961 (Kuwaits date of independence), these elites had long experience in

creating municipal, educational, and parliamentary institutions since the 1920s. They have

historically identified themselves as equals with the ruling Al-Sabah family, and in hand

with their growing economic clout, they would be the leading political opposition and

institutional innovators through the 1990s.

Second, Arab business associations played distinct roles during the European

mandate period through the early phases of post-colonial state formation. On the one

hand, British influence in Kuwait and mandate Transjordan offered the ruling families (the

Hashemites and al-Sabah) in each country external resources that decreased reliance on the

domestic business elites who controlled these associations. On the other hand, British and

French control of regional trade during World War Two significantly enriched those same

business elites through provision of monopoly trading rights. 29 Price controls, import

licensing, and contract adjudication were routed through each countrys respective chamber

of commerce.30 Thus, Arab business associations came to occupy peculiar positions vis--

vis their nascent states. In contrast to other associative interests, they would maintain a

greater degree of institutional independence from direct state control, yet their leaderships

wealth would be increasingly tied to state distribution of rents. Third, in the context of

chronic fiscal crisis and economic downturn, business associations have presented state

authorities with (hoped for) institutional capacities to address these dislocations. State

efforts to embed business representation into public-private consultation councils have

been overtly driven by state needs to compensate for weak bureaucratic capacities. In all

three cases, state officials turned to business association leaders for assistance in economic

reform. Business associations, then, have been the most likely candidates for coordinated

relations with political authority.

The professional syndicates have been no less important; however, in ways that

distinguish them from private sector associations. In much of the Middle East,

29 Robert Vitalis and Steven Heydemann, War, Keynesianism, and Colonialism: Explaining State-MarketRelations in the Postwar Middle East, in War, Institutions, and Social Change in the Middle East , edited by Steven Heydemann(Berkeley: University of California Press, 2000).

30 Martin W. Wilimington. The Middle East Supply Centre (Albany: SUNY Press, 1971); and Abla Amawi,State and Class in TransJordan: A Study of State Autonomy (Ph.D Dissertation: Georgetown University, 1993).


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professional syndicates were formed after political independence. By virtue of their

membership density, representation of diverse professions, and intra-electoral processes,

the syndicates have proven the most politically salient social associations across our cases.

Given the weakness of party systems as discussed above, it has been the syndicates who

have played the role of proxy political parties in Jordan, Kuwait, and Syria.

In Jordan, the regime welcomed the efforts of professionals when they began

organizing and forming their syndicates in the 1950s and 1960s.31 The regime also

conceded to the syndicates demand that membership be made compulsory for all

professionals. Syndicates also benefited from a legal caveat originally unnoticed by the

regime: unlike Jordans trade unions, the constitutions of the professional syndicates are

not subject to oversight by the Ministry of Labor. Consequently, the ministry cannot

interfere in their affairs at will. Albeit the regime attempted to penetrate and control them,

deploying a variety of intimidation tactics, the syndicates resisted successfully any attempt

to corporatize them. By avoiding the fate of political parties whose activities would cease

once parliament was suspended, the syndicates gained a public position that made it more

difficult for the regime to harass their members.

In the wake of the 1963 Bath seizure of power, it was Syrias professional

associations (in alliance with organized business) which protested the expansion of the

partys power. By the time Asad assumed power in 1970, the syndicates were loosely

organized at the provincial levels, and their organizational autonomy was respected by the

regime. In most syndicates, professionals with dual membership in the Bath party were a

numerical minority. This was not unsurprising of the Syrian syndicates. After all, the regime

considered them bastions of urban Sunni middle class conservatism, inimical to the Baths

rural allegiances and populist authoritarian project. However the syndicates opposition to

the 1976 entry of Syrian troops into Lebanon, and their championing of human rights in

1980 at a time when the regime was engaged in a bloody confrontation with the Muslim

Brotherhood, convinced the regime of the need to smash them and reorganize their

internal structures.

The oil-financed expansion of the Kuwaiti state beginning in the 1950s coincided

with the creation of Kuwaits other associations. A number of societies and clubs took

form in the 1950s. The Cultural Nationalist Club ( al-Nadi al-Thaqafi al-Qawmi ), the

31See Zayd Hamza, Al-Infitah al-Siyasi wa Ada al-Munazamaat al-Naqabiyya wa-l-Mihaniyya, [TheDemocratic Openness and the Performance of the Syndicate and Professional Organizations] in Hussein Abu-Rumman,ed., Al-Masar al-Dimuqrati fi-l-Urdun...Ila Ayn?! [The Jordanian Democratic Path...Where To?!] (Amman: Markaz al-Urdunal-Jadid lil-Dirasaat/Dar Sindbad lil-Nashr, 1996), pp. 158-159.


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Guidance Society ( Jamiyyat al-Irshad ), and the Teachers Club all formed independent of Al-

Sabah control and elite merchant interests. These were voluntary associations animated by

Arab nationalist sentiment of the day and frequently critical of the ruling familys

association with British authorities and foreign oil interests. By the late 1950s, the Emir

banned a number of these associations as a response to their growing criticism of the ruling

family. Merchant dominated organizations (like the Municipality) were likewise pushed

aside, either through ruling family appointments to their leaderships or outright

sequestration. With Kuwaits independence in 1961, an assembly ( Majlis al-Tasisi ) was

formed by election and Emiri appointment to write the constitution. Dominated by the

merchant leadership of the chamber, the assembly crafted a constitution, which guaranteed

free association, and ensured there would be no attempts to corporatize or make

associational memberships obligatory, and associations which had been shut down in the

1950s were allowed to reform. In times of emergency, the Emir reserved the right to

suspend associational activities (which he did following the suspension of parliament in

1976).32

These historical experiences contrast with other parts of the developing and

developed world where the social classes that formed the historic base for parties have

fragmented into specialized sectoral and professional clienteles that have sought new forms

of collective expression.33 In much of the Middle East, it is clear that strong political

parties were not institutional precursors, rather weak or non-existent party systems existed

along side the more politically vibrant syndicates. The often competitive and keenly

observed leadership elections of the niqabat attest to the political and social importance of

these associations. Therefore, in contrast to business associations, syndicates can mobilize

their members to action, a prominent feature of crisis politics. At times, the niqabat have

acted collectively, uniting against, and thus successfully resisting, regime intimidation.

Across our cases, leftist, nationalist, and Islamist political forces have vied for control of

the syndicates imbibing these associations with importance not lost on state elites (see

Table 3).34 While the intra-electoral politics of business associations provide a window on

business politics, electoral contestation among syndicates exhibits wider political trends.

32 The Constitution of Kuwait , Part III, Articles 43 and 44; Part IV, Articles 69 and 74; and Shafeeq Ghabra,Voluntary Associations in Kuwait: The Foundation of a New System? Middle East Journal, 45, 2 (Spring 1991).

33 Philippe C. Schmitter, Transitology: The Science of the Art of Democratization? in The Consolidation of Democracy in Latin America , edited by Joseph Tulchin (Boulder: Lynne Rienner, 1995), p.24.

34 It is worth noting that in none of our cases have Islamist organizations challenged for the leadership of apeak business association.


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Table 3: Political Affiliations in Jordanian Professional Associations, 1985-1995

Political Affiliations Percentage of Leadership and Council MembersIslamist 27.5%Pan-Arab Nationalist 27.5%Leftist 7.5%Individual Country 4%Independent 25%Others (Nationalists, Nationalist-Islamist, IndependentIslamist, Islamist-Nationalist)

9%

Source: Warwick M. Knowles, ed.,Professional Associations and the Challenges of Democratic Transformation in Jordan ,p. 68

The notable exception to these trends has been the almost-completely corporatized

and state-penetrated labor unions. In all cases, labor unions have been the most strictly

controlled by state authorities. Moreover, significant portions of the work force are state

employed and private industrialization has been limited.

Second, patterns of state formation and the political terrain defining state-

association relations are the most formative factors conditioning the capacities associations

bring to bear during crisis. In his study of corporatist arrangements of state-society

relations in Egypt, Robert Bianchi argues that the heterogeneous systems of interest

representation in the Middle East and Asia are neither the state corporatism of Latin

America nor the societal corporatism of Western European political systems. Instead they

are eclectic systems of interest organization, combining a mixture of corporatist, pluralist,

and hybrid structures depending on specific contextual characteristics. 35 Despite this mix,

this was a view of a relatively strong state shaping, at will, the state-society game. By

contrast, in her study of the relationships of workers and trade unions to the state in Egypt,

Marsha Posusney debunks the common statist thesis that state corporatism provides an

effective vehicle for a handful of regime elites to control masses of workers. 36 Rather, she

argues, workers will experiment with more participatory organizational alternatives,

responding to state policies on an issue-by-issue basis. We believe these positions can be

reconciled in so far as state action, over time, to pluralize or corporatize associations

immediately impacts institutional trajectory and associational capacities, key resources

during crisis. Across our cases, state intervention in associational life has taken a variety of

forms including reorganization, leadership appointment, banishment, and intimidation.

35See Robert Bianchi, Unruly Corporatism: Associational Life in Twentieth Century Egypt (New York: OxfordUniversity Press, 1989). See also the updated argument in idem, Interest Groups and Politics in Mubaraks Egypt, inIbrahim M. Oweiss, ed., The Political Economy of Contemporary Egypt (Washington, D.C.: Center for Contemporary ArabStudies, 1990), pp. 210-221.

36Marsha Pripstein Posusney, Labor and the State in Egypt: Workers, Unions, and Economic Restructuring (New York:Columbia University Press, 1997), p. 93.


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Likewise associations have responded and rolled with the punches but more often than not

associational capacities over time have been affected as state intervention shifted.

In the most severe case, after widespread human rights protests on 31 March 1980,

a number of prestigious syndicates (Lawyers, Doctors, Pharmacists, and Engineers)

organized a nationwide strike to condemn human rights abuses. The next day the regime

launched a sustained campaign to corporatize them. Eventually, the structures of the

syndicates were reorganized along pyramidal corporatist patterns at the local and national

levels, a tactic which allowed the newly installed regime-appointed leadership to screen out

unfavorable members at the intermediary level, and hence control leadership elections at

the national level.37 Leaders of prominent syndicates were imprisoned, executed, or forced

to flee the country; and the existing Executive Committees and General Congresses of the

recalcitrant syndicates - the Lawyers, Doctors, Pharmacists, and Engineers - were dismissed

by the regime. New by-laws were promulgated bringing the syndicates under the direct

supervision of the Bath Partys Professional Syndicates Regional Bureau (Maktab al-

Niqabat al-Mihaniyya al-Qutri ). Membership in the syndicates was made compulsory, yet

selective benefits were few. Thus in the years prior to the fiscal crisis, associational

capacities evolved (and atrophied) in tandem with the ministries and specialized bureaus of

the Bathi Party under which they were placed. Given this high level of state intervention

and control, there evolved little incentive for syndicate leaderships to invest in collective

action capacities, information gathering, or structural diversification.

In the wake of the 1970 civil war in Jordan, the regime introduced a number of

changes to the existing syndicate laws, including cabinet power to dissolve professional

syndicates and cabinet approval of further syndicate creation, all without an appeals

process.38 Jordans associations, therefore, were never fully corporatized yet operated

within a political environment in which clear, though contested, lines were drawn. In terms

of state intervention, Kuwaiti associations, especially business, have faired better in all

respects.

In contrast to Jordan and Syria, Kuwaits associations came into being as voluntary

societies ( al-jamiyyat ) and clubs with independent budgets. Since some 95 percent of the

Kuwaiti work force would come to work for the state, the independence of these

associations was offset by their thin membership. In the case of business, however, state

37For a full discussion see Bassel F. Salloukh, Organizing Politics in the Arab World: State-Society Relations and Foreign Policy Choices in Jordan and Syria (Ph.D. Dissertation, McGill University, 2000), chapter 3.

38See Hamarneh, Al-Urdun , p. 81.


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officials from the onset devolved important functions (import-export licensing, public

works bidding, and trade dispute adjudication) to the chamber of commerce making it

unique among Kuwaits professional associations.39 These selective benefits ensured that

the largest and most diverse business elites would actively maintain interests in the chamber

and its dealings with political authority. Beginning in the 1970s however, a wide range of

state licensing, financing, and organizational policies came to favor creation of Islamist

associational interests to rival Kuwaits nationalist left and, particularly, the elite business

tied to the chamber of commerce. Eventually, state support would result in the creation of

three different Islamist controlled associations, the Social Reform Society ( Jamiyyat al-Islah

al-Ijtimai ), the Ancestral Islamic Group ( Salaf ), and the Heritage Society ( Jamiyyat al-Turath ).

In addition, state investment and licensing inaugurated the Kuwait Finance House (an

Islamist run bank). These institutional foundations facilitated Islamists ability to win

elections to the executive board of other associations. 40 Ultimately, Kuwaits Islamists

replaced the merchants as the primary opposition force in parliament, and their growing

economic power would threaten traditional merchant sectors.

The final pre-crisis consideration regards the social grounding of associational

agency; in other words, existing social networks, elites, and ascriptive divisions (defining an

associations leadership and rank and file) inform the transaction costs involved in

associational agency as well as state dispositions toward associational leaderships. The

historical institutionalist literature argues that formative regime choices and actions, as well

as the types and arrangements of state institutions in a specific national context, structure

the parameters of political opportunities and possibilities available for interest-based groups

to emerge, develop, and successfully (or not) defend their organizational autonomy. 41

These institutions are not a structural given. Rather, they are the outcome (conscious or

unintended) of deliberate political strategies, of political conflict, and of choice, especially

by ruling regimes bent on ensuring their survival in power. 42 Depending on the peculiar

admixture of capabilities, preferences, and predilections, regimes will organize state-society

39 Al-Qanun wa al-Nizm, Grufat Tijrat wa Sant al-Kuwait [By-Laws and Rules of the Kuwait Chamber of Commerce and Industry], 1993.

40 Islamists candidates took control of the state employee labor unions. Throughout the 1980s and 1990s,Islamist candidate lists consistently ran for election to all associations, save the chamber of commerce. See, Ghabra,Voluntary Associations in Kuwait.

41See Kathleen Thelen and Sven Steinmo, Historical Institutionalism in Comparative Politics, in SvenSteinmo, Kathleen Thelen, and Frank Longstreth, eds., Structuring Politics: Historical Institutionalism in Comparative Analysis (Cambridge: Cambridge University Press, 1992), p. 13.

42 Ibid., p. 10.


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relations to, at a minimum, guarantee their survival and ensure, in the words of Adam

Przeworski, the absence of preferable [or, more accurately, viable] alternatives to their

rule.43 Based on this perspective, we highlight in our cases watershed events in the creation

of each regimes social basis. That interest associations may join or oppose that base over

time is an issue of clear political importance. Equally, issues of social make-up can be

linked to associational capabilities to engage state authority.

Scholarship building upon the social capital literature has come to take seriously the

importance of ascriptive factors (origin, ethnicity, religion, and so on) in overcoming

problems of collective action and imperfect information, problems that commonly plague

any associational project.44 Syrian associations evolved for the most part as urban, Sunni,

elite-dominated institutions. The consolidation of Bathi rule after 1963 and gradual

dominance of Alawite control in the military and public sector proved inimical to urban

Sunni socio-political interests.45 However on the morrow of Asads ascension to power in

1970, these associations faced a new political-economic trade-off: in return for a series of

economic liberalization measures implemented by the regime in the early 1970s, Asad

requested the political acquiescence of the Sunni business elite. The regime drew a clear

line between licit, hence controlled, and illicit political activity. The crushing of the 1982

Hama46 uprising was a stark reminder for all of the extent to which the regime was willing

to go to maintain its hold on power. Yet just like their Palestinian counterparts in Jordan in

1970, the Sunni business elite and the petty bourgeoisie continued to play by the rules set

by the regime.

The leadership of Kuwaiti associations, especially business, was cut from the same

social fabric as the ruling Al-Sabah family. The expansion of state power and

accompanying state attempts to co-opt a wider social base (Bedouin and Islamist) entailed

ascriptive-based challenges to associational leaderships. Kuwaiti social associations, by the

1980s, witnessed zero-sum electoral conflicts among competing groups, at times with one

side enjoying state support. The more independent chamber of commerce has enjoyed

close relations with the ruling family, in part because of its shared social origins. However

43 Adam Przeworski, Some Problems in the Study of the Transition to Democracy, in Guillermo ODonnell,Philippe C. Schmitter, and Laurence Whitehead., eds., Transitions from Authoritarian Rule: Comparative Perspectives (Baltimore:

The Johns Hopkins University Press, 1986), p. 52.

44 Janet Landa, Culture and Entrepreneurship in Less-Developed Countries: Ethnic Trading Networks asEconomic Organization, in The Culture of Entrepreneurshipedited by Brigitte Berger (San Francisco: ICS Press, 1991);Susan Greenhalgh, Networks and Nodes: Urban Society in Taiwan, The China Quarterly 99 (September 1984); andNathaniel Leff, Economic Policy-Making and Development in Brazil, 1947-1964(New York: John Wiley & Sons, 1968).

45 Mahmud Faksh, The Alawi Community of Syria: A New Dominant Political Force, Middle Eastern Studies 20:2 (April 1984).


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by the 1990s, it too faced challenges to its elite Sunni leadership from new business groups

of bedouins and Islamists, who had never before been represented in the chamber.

Balancing the ascriptive issues and responding to state challenges are tasks at which the

independent Kuwaiti associations have proven skillful.

In Jordan, the ascriptive issue is most poignant. Waves of Palestinian refugees and

returnees in 1948, 1967, and 1991 have refashioned the rank and file of social associations

at each stage. Jordans early business representation was an affair of elite merchants with

origins in Syria and Palestine who had forged close relations with the Hashemite monarchy.

Gradually, successive generations of Palestinians came to dilute and ultimately replace this

traditional leadership. Jordans professional syndicates likewise evolved into majority

Palestinian institutions while the state remained largely staffed with Jordanians of East

Bank tribal and urban backgrounds. The common quip was that only Palestinians went to

work for the Arab Bank (Jordans largest private bank) and only East Bankers went to work

for the state. Therefore, the aftermath of the 1970 civil war meant associations could not

overtly build political opposition on identity grounds nor would the legitimacy of the

monarchy be questioned. Conversely, the early 1970s taught syndicate leaderships that

collective action on political issues stood the best chance of shielding themselves from

regime pressures. That such collective action was built upon a homogenous Palestinian

rank and file has remained an enduring though, quiet feature of Jordanian domestic

politics.

In the next sections, we briefly analyze patterns of associational politics and state

reaction during crisis in each case.

5. Crisis outcomes

Jordans slow burn

By the early 1980s, the first tremors of fiscal crisis and economic downturn were

being felt in Amman. In 1980, aid comprised 40 percent of state revenue; by 1984 it had

declined to 16 percent. The stupendous annual 10 percent GDP growth of the 1970s had

been cut in half by 1982, and by the late 1980s, per capita GDP actually declined. By

November 1988 the Jordanian dinar had lost two-thirds of its value against the dollar in

only a few months time. Successive governments appointed in the early 1980s failed to

respond much past rhetoric. The turn came in 1985 with the appointment of the

government of Zayd al-Rifai to prime minister. This administration pursued a two-track

46 It should be recalled that the revolt was spearheaded by the urban Sunni Muslim Brotherhood.


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policy: pursue economic reform with the (hoped for) cooperation of organized business

and attack the political activities of the syndicates.

What followed was a haphazard process of announced economic adjustment,

followed by fitful implementation and calls for more private sector investment. While the

Prime Ministers office created a number of policy consultation committees with business

association representation (the Economic Consultative Council in 1985) and selected one

former president of the Amman chamber to a cabinet position, little actual coordination on

policy reform took place. The large and unwieldy Amman chamber lacked the leadership

coherence and capacities to take advantage of the openings while the government desired

only consultation and little policy input. 47 In contrast to these openings, state officials

reportedly inspired press campaigns against the syndicates charging them with deviating

from their professional responsibilities.48 The syndicates responded by releasing a

manifesto charging that the campaign was being orchestrated by the regime, and that its

aim was to liquidate them.49 In fact, in that same year, the Rifai cabinet had started

studying a new syndicates law.50 As fiscal crisis deepened in the late 1980s and early 1990s,

tensions between the syndicates and the government increased.

In April 1989 after riots and protests against austerity measures, nine syndicates

representing some 40,000 doctors, lawyers, and other professionals led protestors in

demanding the resignation of then Prime Minister al-Rifai. The Hashemite regime

responded with a controlled process of political liberalization initiated from above,

expanding the parameters of political participation, though under the monarchys loyalty

roof.51 The continued weakness of Jordans political parties, and the 1993 election of a

docile Parliament lacking any meaningful representation of the tapestry of the kingdoms

political affiliations, redirected the politics of contestation back to the syndicates.

By the early 1990s Islamist groups began taking control of some of the syndicates

through electoral victories to the Executive Committees. This was most evident in the 1994

47 For a similar situation of uncoordinated business-state relations and failed reform in Chile see,

Eduardo Silva, Capitalist Coalitions, the State, and Neoliberal Economic Restructuring, World Politics , 45,4. (July, 1993).48 These echoed government criticisms in the 1950s and 1970s. Recently, King Abdullahs Jordan First

Commission has concluded, The practices of professional associations and nongovernmental associations may not in any case be tinged with any specific political or ideological colour. Jordan Times , 25 December 2002.

49See Hamarneh, Al-Urdun , pp. 85-87.

50Interview with Zayd al-Rifai. Former Chief of the Royal Court and Prime Minister. Current Speaker of Majlis al-Ayan and Majlis al-Umma . Amman, 14 December 1998.

51 Malik Mufti, Elite bargains and the onset of political liberalization in JordanComparative Political Studies , 32;1 (February 1999).


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elections for the all-important Engineers syndicate. 52 From these venues, the syndicates

did not craft backward linkages with parliamentary elements; rather they pulled the

parliamentary opposition along with it. Contestation had now become contagious.

Business representation was also undergoing change. The weakness of the Amman

chamber (still the largest association in the country) at engaging state authority meant rivals

such as the Amman Chamber of Industry and the private Jordanian Businessmans

Association benefited. In the midst of these dynamics, a number of rancorous issues,

particularly the effort to craft Jordans first national sales tax, would define association-state

interactions.

Insulated business-state negotiations on the proposed sales tax took place in the

aftermath of Kuwaits liberation. These talks resulted in little agreement, and all business

associations came out of the talks in opposition to the draft law. Professional syndicates

backed by the Islamist parties orchestrated a coordinated campaign against the tax. A key

demand among all associations was that any future tax be resubmitted to parliament for

approval, an ingredient in decentralizing political authority. Debate over the draft sales tax

was unprecedented for an economic policy issue. Gradually, state extension of exemptions

for certain business sectors weakened business opposition. The Amman chamber was the

first to defect and accept the draft law without provision for future parliamentary approval.

The eventual sales tax required a number of revisions and its success in generating greater

domestic revenue has been uneven. 53 This pattern of disarticulated opposition

contestation would repeat itself into the new century. Greater economic cooperation with

Israel, the failed peace process, and war on Iraq generated collective syndicate mobilization

and opposition, while business associations contributed either lukewarm support or polite

silence.

Despite facing mobilized resistance, the Jordanian state has realized new means to

deal with its associations. Massive increases in US aid and implementation of a number of

international economic enterprises has allowed state officials to try to bypass formal

business representation in pursuit of ad hoc networks of select entrepreneurs. 54 Mobilized

52 Interestingly, leftist parties, represented by the green list, voted for Islamist, Leith Shbeilat. See al-Sabeel , 1March 1994. On the same theme see also Asharq al-Awsat , 30 March 1993.

53 This section draws on Moore, What makes successful business lobbies?

54 For instance, King Abdullahs new Economic Consultative Council was created with little of the businessassociation representation of its 1980s and 1990s predecessors. Jordans Free Trade Agreement with the US hasincreased Jordans exports to the US by several hundred-percentage points. Related free trade zones and exportprocessing zones have locked in networks of domestic investors to these state managed economic opportunities. See,Pete W. Moore and Andrew Shrank, Commerce and Conflict: How the US effort to counter terrorism with trade may


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syndicate protests in response to the September 2000 al-Aqsa intifada were met with

determined regime resistance and violence culminating in an outright ban on

demonstrations by summer 2002. With parliament out of session awaiting new elections,

the Prime Ministers office issued a string of temporary laws to further restrict the

associations political activities.55 Other temporary laws have targeted economic reform

with little business association consultation, signaling a regime desire to ignore all

associational interests. By the early 2000s, neither state nor the professional associations

could be viewed as satisfied. Jordanian professional associations have loudly contested the

stagnation of liberalization along with other unilateral state policies, while state efforts to

coordinate with organized business have generally failed.

Kuwaits crash

Despite persistent exogenous shocks, the Kuwaiti state and ruling family have been

able to move ahead with economic adjustment packages, while limiting political openings.

In the midst of internal and external turbulence, the Emir suspended parliament in 1986.

The restoration of parliament after liberation from Iraq brought participatory politics back.

However, political parties remained illegal, suffrage has remained limited to male citizens,

and the legislative powers of parliament remained as limited as the 1960s precursors.

There has been change, albeit in a different direction. Kuwaits fiscal crisis was abrupt and

massive, paving the way for institutionally intense coordination between Kuwaits peak

business representative, the Kuwaiti Chamber of Commerce and Industry, and state

officials. The timing of fiscal crises coincided with the maturation of new social and

oppositional forces, principally opposition Islamist and more loyal Bedouin groups. Thus,

the associational support the state had helped create for Islamists in the 1970s to

counterbalance the elite merchants would need counterbalancing of its own. Part and

parcel of the pursuit of crisis stabilization therefore has been a coordinated business-state

alliance to limit the political power of Kuwaits Islamist opposition and associations.56

The 1982 crash of the informal stock market, the Souq al-Manakh, crippled

Kuwaits financial system. Throughout the 1980s and much of the 1990s, debates about

resolving the debt and charting economic reform dominated Kuwaits domestic politics.

backfire, Middle East Policy , 10;3 (Fall 2003).55 Jillian Schwedler, MERIP Online, PIN 98, "Don't Blink: Jordan's Democratic Opening and Closing," July 3,

2002.

56 This section draws on, Jill Crystal, Oil and Politics in the Gulf: Rulers and Merchants in Kuwait and Qatar (Cambridge: Cambridge University Press, 1990); Ismael, Jacqueline S.,Kuwait: Social Change in Historical Perspective (Syracuse:Syracuse University Press, 1982); Ghabra, Voluntary Associations in Kuwait; and Pete W. Moore, Rentier Fiscal Crisisand Regime Stability in the Middle East: Business and State in the Gulf, Studies in Comparative International Development , 37,1, (Spring 2002).


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As backdrop to these issues, the Emir reinstated parliament in the early 1980s (suspended

in 1985) and again in the wake of liberation from Iraq. These parliaments reflected the

growing electoral power of the Islamists.57 While parties remained illegal, Islamist control

of a number of associations and food cooperatives 58 allowed for backward linkages and

support into the candidate lists that would compete for seats. These candidates and their

associational backers would converge upon similar critiques of state policies, prominent

among these was the handling of the debt crisis. From the start of the crisis in 1981,

government officials turned to their Chamber of Commerce and Industry for assistance.

The crisis directly threatened Kuwaits banking system thereby splicing a number of

business-state interests toward its quick resolution. The Prime Minister created a number

of high-level policy boards, staffed only with chamber of commerce representatives, to

hammer out resolution schemes. Gradually state and chamber officials came to favor a

similar set of reforms to adjudicate the debts, bailout debtors, reform the financial sector,

and chart deeper reform.

At every turn, Islamist deputies backed by associational mobilization resisted these

policies as unfair to the lower classes (the small debtors) and beneficial to the few. While

chamber officials could not marshal comparable political mobilization in their favor, they

did wield advantages that privileged their interactions with state elites. The administrative

weakness of the Kuwaiti state in gathering information on the debts, accessing damage, and

implementing reform meant the chamber, with its developed administrative skill set, would

be crucial to any solution. The asil leadership of the chamber was no stranger to the ruling

family, high-level government policymaking, or lobbying with parliamentary committees

responsible for debt legislation. The president of the chamber Abdul Aziz Al-Sagr

commanded wide spread respect as the first speaker of Kuwaits parliament in 1961.

Finally, the growing political power of Kuwaits Islamists helped forge a common front

between business elites and state officials. Over and above the fiscal crisis, state strategies

in the 1980s and 1990s overtly shifted toward backing nationalist and merchant elements to

counteract the Islamist opposition. 59 For the chamber leadership there was a natural quid

57 Ahmad Daher and Faisal Al-Salem, Kuwaits Parliamentary Elections, Journal of Arab Affairs , Vol.3, No.1(1984).

58 Kuwaits cooperatives are essentially grocery store strip malls located in every district of the country. Anelected board governs the cooperatives operations. Control of the cooperative affords one a mini electoral base, access toprofits from the cooperatives operations, and important market control over consumer goods distribution.

59 Throughout this period, prominent businessmen, while failing to win parliamentary election, werenevertheless appointed to important ministry positions, in some cases directly from leadership positions in the chamber.


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pro quo. State-business coordination to curb the political power of the Islamist opposition

complimented chamber desires to roll back its growing economic interests.

In the end, business-state proposals for economic reform prevailed as well as a

number of reforms to bring the Kuwait Finance House under the control of the central

bank and increase state supervision over the food cooperatives. By the late 1990s, Islamist

control of parliament had weakened and for the first time since the 1960s a prominent

businessman was chosen as speaker of parliament. 60 It would, however, be a mistake to

characterize associational politics as divided strictly between Islamist and merchant

interests. After the 1985 suspension of parliament, the chamber leadership and Islamist

controlled associations worked in tandem to persuade the Emir to reinstate parliament. 61

Overall, however, coordination has outweighed contestation and has helped the Kuwaiti

state and monarchy to weather the crisis without deeper liberalization.

Syrias clampdown

In some ways, Syria seems an artifact from a past generation. The virtual

disappearance of its primary financial and political supporters after the fall of Eastern

European communism left it an authoritarian hold out in a world of change. Other

patronage-based authoritarian systems have succumbed to the destabilizing effects of

economic and political reforms, yet the Syria regime has managed to keep its political

enterprise going.62 In part, the depth and trajectory of fiscal crisis in Syria has been the

most gradual. As well, of the three cases, the Syrian regime fully clamped down upon

interest associations prior to the fiscal crisis period, affording it a greater degree of control

yet imposing trade-offs in pursuit of economic and political adjustment.

Syrias professional syndicates have been far less fortunate than their Jordanian or

Kuwaiti counterparts. Upon assuming power through a coup in 1963, the Bath regime

proceeded to install a populist authoritarian system of rule based on the organization of

state-society relations along strict corporatist channels. The ensemble of corporatist

institutions organizing and controlling the active sectors of the population ultimately

stretched throughout society. Labor, peasants, students, youth, women, teachers, and a host

of other social groups were organized into Bathi-dominated compulsory, non-competitive,

60 The appointment of asil merchants to cabinet positions has been a consistent feature of Kuwaitgovernments. It has afforded the elite of the chamber a number of learning experiences with government service.

61 This same alliance came together in the 1990s to resist any normalization with Israel.

62 Steven Heydemann, The Political Logic of Economic Rationality: Selective Stabilization in Syria, inThe Politics of Economic Reform in the Middle East , edited by Henri Barkey (New York: St. Martins Press, 1992).


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functionally differentiated corporatist institutions. Like their Sunni Kuwaiti counterparts,

Syrias merchant elite from the capital Damascus claims a long and storied history. Unlike

Kuwaiti merchants, the process of Bath regime consolidation would alienate them from

what would become a minority Alawite dominated state.63 The curtailment of business

association power actually began prior to the arrival of the Bath to power, under the short-

lived union between Syria and Egypt. 64 In the wake of the 1963 Bath seizure of power,

the Damascus Chamber led protests of government nationalizations and campaigns against

merchants. Eventually, the protests would be embraced by a number of associations and

Islamist groups and spread across the country. Regime defeat of these protests meant

business associations would meet the same fate as Syrias other associations. Over the next

decade reorganization of business representation would entail creation of an umbrella

Federation of Syrian Chambers, Bath party representation in all regional chamber

leaderships, and encompassing membership. Chambers would still hold elections for their

executive board, but these were now closely monitored by the regime. Whereas Kuwaiti

and Jordanian state officials failed to create a fully loyal state capitalist class, Syrian officials

were more successful in encouraging a class of businessmen (so-called infitah bourgeoisie)

wedded to state enterprises yet distinct from the traditional Damascene merchant base.

These state capitalists would gradually come to dominate associational leaderships.65

Syrias economic position in the 1980s stood in sharp contrast to other parts of the

region. Even where the regime faced external payment obligations, it was able to create

new venues of patronage. For instance, repayment of Soviet debts was facilitated through

a barter scheme whereby state officials paid selected exporters to ship to the USSR, thereby

paying back some of the loans while tying state capitalists and chamber leaderships more

tightly to the regime.66

The 1980s corporatization of the professional syndicates added yet another

component to the already powerful ensemble of corporatist institutions underpinning

Asads populist authoritarian system of rule. It has ensured that no viable, institutionalized

challenge to Bathi rule may coalesce without significant cost.

63 The Alawites are a distinct tribal/religious sect from the northern parts of Syria. They dominategovernment positions and account for less than 20 percent of the population.

64 Heydemann, Authoritarianism in Syria , p.120.

65 Volker Perthes, Economic Liberalization and the Prospects of Democratization: the case of Syria and someother Arab countries, in Democracy without Democrats: The Renewal of Politics in the Muslim World , edited by Ghassan Salem,(London: I.B. Tauris, 1994), p.259.

66 Hinnebusch, The Political Economy of Economic Liberalization in Syria, p.312.


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Table 4: Percentage of Bath party members

Syndicates 1980 1985 (Total membership in 1985)

Engineers 7.3% 11.2% 17,729

Doctors 5.8 10 7,308Pharmacists 3.4 4.5 2,565Lawyers 6.4 11.7 2,558

Source: Hani Khalil, Hafiz al-Asad: Al-Dawla al-Dimuqratiyya al-Shabiyya [Hafiz al-Asad: The PopularDemocratic State] (Damascus: Dar Tlas lil-Dirasat wa-l-Tarjama wa-l-Nashr, 1987), pp. 400-403.

As in Kuwait and Jordan, Syrian officials have reached out to business associations as part

of a more gradual economic reform program. 67 A new investment law, Legislative Decree

10 of 4 May 1991, later further liberalized in April 2000, widened the scope of private

investment, enabling Syrian, Arab, and foreign investors to launch private or mixed

investments in nearly any field of the Syrian economy; a new taxation law, Legislative

Decree 20 of 1991, reduced business taxes and removed provisions that penalized business

profit; prison sentences for individuals dealing in foreign currency were reduced

substantially; and, finally, in April 2000 the role of the Economic Security Court ( Mahkamat

al-Amn al-Iqtisadiyya ) in petty economic crimes was reduced considerably. In hand with

these declarations, Damascus Chamber of Commerce involvement in policy formulation

was expanded. Since 1980 its representatives have sat on the Committee for the Guidance

of Import, Export, and Consumption. In 1990, state officials delegated licenses for

industrial investment to the Chamber of Industry. In that same year, two executives from

the Damascus chamber were elected to parliament. 68 As stark as these openings seem in

contrast to Syrias other associational interests, the comparison with Kuwait and Jordan

shows these moves quite limited. There have been no comparable moves to include

prominent business interests in the government or sustained private-public deliberation on

the direction and content of economic reform. Both the gradual trajectory of fiscal crisis

and the limited opening to business representation has meant Syrias economic reform

progress has been among the slowest in the region. With confidence then, the state

continues to identify itself as the guarantor of a minimum level of social welfare, especially

67For the views of the main architect of economic liberalization see Muhammad al-Imadi, Dawr al-Qita al-Khas wa-l-Mushtarak fi Amaliyyat al-Tanmiyya [The Role of the Private and Mixed Sectors in the Developmental Process](Damascus: Wizarat al-Iqtisad wa-l-Tijara al-Kharijiyya, 1986); idem,Siyasaat al-Tijara al-Kharijiyya fi-l-Thamaniyaat wa

Afaqiha fi-l-Tisinaat [Foreign Trade Policies in the Eighties and their Horizons in the Nineties] (Damascus: Ghurfat TijaratDimashq, 1991); and idem, Syrias Experience in Trade Liberalization and Policies of Economic Reform (Damascus: Ministry of Economy and Foreign Trade, 1994).

68 Heydemann, The Political Logic of Economic Rationality, p.20.


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vis--vis the urban poor and the peasants. 69

Clampdown through managed associational engagement has not crushed all voice.

Dissidents and opponents of Bath rule have managed to gather in so-called salons to voice

their opposition; yet this has been done outside any associational or institutional format. 70

Without such official approval, Syrian officials have found it easy to ban and jail leaders of

these groups.

8. Conclusion

In December 2002 Secretary of State Colin Powell launched the Middle East

Partnership Initiative (MEPI) with a central goal to support [the] establishment of more

NGOs, independent media outlets, polling organizations, think tanks, and business

associations -- groups that create the foundation for a vibrant democracy. Two of the

initiatives three elements (Private Sector Development and Strengthening Civil Society)

specifically target what we have termed professional associations. Domestically and now

internationally, therefore, significant expectations and policy stakes have been invested in

the capacities and activities of professional associations in the Middle East. As a response

to these expectations, this papers analysis of the patterns of association-state relations

leads to three conclusions.

First, an examination of the politics of professional associations suggests alterations

in our conceptions of the late-late developing state and relations with society. The political

requisites of economic reform literature in the developing world (Latin America and Asia,

predominately) framed state-society interaction as a two-step process. Initial policy reform

is adjudicated in isolation from organized interests, like professional associations, to free

decision makers from societal constraints. Policy consolidation then carries forth with

intense association-state cooperation to implement reforms. 71 However, among the

administratively challenged states of the Middle East, reform as a response to fiscal crisis

unfolded differently with states moving directly to engage associational assistance and

69 These conclusions are collectively drawn from: al-Hayat , 26 April 2000; Hinnebusch, The Political

Economy of Economic Liberalization in Syria; idem, Syria: The Politics of Economic Liberalisation, Third World Quarterly 18, 2, (1997), pp. 249-265; Heydemann, The Political Logic of Economic Rationality, pp. 11-39; EberhardKienle, ed., Contemporary Syria: Liberalization between Cold War and Cold Peace (London: British Academic Press, 1994); andHans Hopfinger and Marc Boeckler, Step by Step to an Open Economic System: Syria Sets Course for Liberalization,British Journal of Middle East Studies 23, 2, (November 1996), pp. 183-202.

70 One of the prominent leaders has been independent industrialist, Riad al-Seif, a businessman not connectedto any of the business associations.

71 Stephen Haggard and Robert R. Kaufman, Institutions and Economic Adjustment, in The Politics of Economic Adjustment: International Constraints, Distributive Conflicts, and the State , edited by Haggard and Kaufman (Princeton:Princeton University Press, 1993), p.19; in the same volume, as well, Peter Evans, The State as Problem and Solution:Predation, Embedded Autonomy, and Structural Change, pp. 163-166.


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support. Late-development in the Arab World entailed frequent state interventions into

associational interests, from outright corporatization in Syria, to uneven cooptation and

intimidation in Jordan and Kuwait. Such interruptions have, generally, eroded autonomy

and reduced incentives for institutional upgrading within associations. Associational

resurgence and capabilities to engage state authority on the eve of crisis were crippled in

some cases and better off in others. Skill at mobilizing members to action overshadowed

more mundane, yet critical institutional skills such as information gathering, policy

formulation, and the ability to engage important ministries. Therefore, fiscal crisis among

Arab late-developers has placed a premium upon association-state coordination; yet

previous patterns of state intervention and association formation condition those

responses.

Second, by disaggregating associations, we see a clear effort to bring business

associations into policy negotiation while bracketing participation from other associational

interests or limiting mobilization avenues. Given the acquiescence (and even support) of

business associations to the stagnation and reversal of political liberalization in these cases,

it seems apparent that organized business will support a regime in which it feels its interests

are considered, even if the speed of reform does not match its desires. 72 In a similar way,

the consolidation of the socia

pas state crisis

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