a new social contract for the middle east and north africa · • not to see a social contract as...

© d·i·e Markus Loewe: A new social contract for the MENA 1

A new social contract

for the Middle East and North Africa:

Introduction to the Third International IPR-MENA

Social Policy Network Conference

German Development Institute (DIE), Bonn, 5-6 December 2016

Markus Loewe

German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)


Arab uprisings (2011) have shown:

• MENA states much more fragile than many observers thought

• The combination of material legitimisation (through rent redistribution)

and repression seems to be

insufficient for regimes to

survive on the long-term

• Short-term stability

can be

at odds with

long-term stability

Background: Arab uprisings (2011)


After the Arab uprisings (2011 - today)

… but the Arab uprisings have not led to

the domino effect that many expected…

… at least not for the better …

Tunisia

could find its way

to democracy… Syria, Iraq, Yemen,

Libya

descended deep

into atrocious civil

wars…

Even Egypt

is back to

authoritarianism

and repression

Other countries

remain authoritarian

as well; reforms

are piece-meal


Latest AHDR just released …


“Stabilisation and development in MENA”:

• What will happen with Egypt, Morocco, Jordan, Lebanon, Iraq… ?

• What should governments in these countries do?

• How should Europe / the world act?

Implicitly: Stabilise, develop or democratise?

DIE project, funded by BMZ


Stabilisation:

Arab uprisings (2011) have shown that

efforts to stabilise regimes on the short-run are at odds not only with

goals of economic and political dev’t

but also with long-term stability in MENA countries

Development:

Western governments cannot develop –

just support development plans of MENA governments

– which do not tend to be conducive

Democracy:

Democratic transition in MENA is improbable

(MENA regimes unlikely to disempower themselves)

Democratisation efforts can lead to unintended effects

(e.g. civil wars in SYR, LBY etc.)

Democracy is a normative goal (contested by some voices in MENA region)

The challenge


Our question:

Can we imagine changes / reforms that

• improve the well-being of citizens on the short and long term

• improve the long-term potential of development

• but are also acceptable to the regimes

• and therefore good for short-term and long-term stability?

These changes/ reforms would thus lead to a new ‘social contract’ that

• is not necessarily ‘perfect’ by any criterion

• but pareto-superior to the current / ‘old’ social contract

Therefore, we suggest an alternative approach


Term extensively used to describe the situation before 2011:

(e.g. Arab Human Development Reports 2002ff.; Heydemann 2004;

Hinnebusch 2015; World Bank 2014, 2015; Yousef 2004)

but often not fully defined

Expression „old social contract“: usually used to describe

• legitimisation of MENA regimes through generous provision of

material benefits to citizens

(commodity subsidies, jobs, economic possibilities) as

• a recompensation for lack of government accountability and

political participation

How could this ‘buzz term’ be converted into a useful concept?

What is a ‚social contract‘?


Social contract:=

explicit or implicit agreement of

(i) all relevant social groups

among each other and with

(ii) the government

on rights and obligations towards each other

In contrast to the tradition of old liberal philosophers

(Hobbes, Locke and Rousseau),

we suggest

• not to see a social contract as anything good or bad by definition

• just something that tends to exist in most countries



Contents of social contracts:

„parties“ promise exchange of „deliverables“:


„Government“:

gives one or more of the following:

• state and human security

• rule of law (incl., of course, law itself,

especially the human and civil rights),

• political participation

• access to resources (land, water...)

• infrastructure

• social services (education, health...)

• wealth redistribution,

• economic policies

• ...

„Society“ :

gives one or more of the following:

• loyalty

(recognition of legitimacy)

• taxes

• some services

(e.g. military or civil service)

• …


One social contract can be better than the other

from the point of view of any of the contracting parties

Social contracts may endure

as long as all relevant parties are afraid that their position might

deteriorate if they cancel the contract

(anarchy, inferior social contract…)

=> some social contracts are respected although they look little

appealing for one or more of the contracting parties...

<= due to asymmetry in negotiating power

Social contracts end (in what ever way)

if any of the relevant parties believes that they

have a good chance to negotiate a new social contract

improving their own position



History has seen most different social contracts:


„deliverables“ of gov‘t „deliverables“ of society

medieval Europe • limited indiv. & coll.

security


• loyalty to king and church

• in-kind tributes

ancient Orient • indiv. & coll. security

• irrigation systems

(Wittfogel)

• some early legislation


• submission

• in-kind tributes

• compulsory civil labour

United States

(similar:

other OECD

countries)

• indiv. & coll. security


• rule of law

• infrastructure

• more or less social

services

• loyalty

• taxes


History has seen most different social contracts:


deliverables of gov‘t deliverables of society

Gulf countries • indiv. & coll. security

• generous material

benefits

• limited accountability


• loyalty

• taxes

Other MENA

countries

• indiv. & coll. security

• social services & other

material benefits



• loyalty

• taxes

ISIS • indiv. & coll. security

• some social services



• loyalty

• taxes

• military service


Important policy fields:

• Human security

• Social protection

• Taxation

• Economic and employment policies

• Public administration and judiciary

• Education

• Other public service delivery

• Distribution of land, water and other resources in rural areas

• …

New social contract for MENA countries


For example: social protection

Public spending

on

social

protection and

health

(% of GDP)

On the whole, social protection spending is above average…



… but available public funds are spent on inefficient and unequitable

instruments…0 2 4 6 8 10 12 14 16

Egypt

Algeria

Yemen

Jordan

Tunisia

Bahrain

Moroco

Syria

Oman

Mauritania

Pension schemes

Health system

Cash for work

Social assistance

Child allowances

Food subsidies

Energy subsidies

Source: Loewe (2014)

(per cent

of GDP)



Food and energy subsidies are inefficient and unequitable…



Social insurance schemes benefit mainly the urban middle class:

here: the effects of public pension schemes in Jordan until about 2006

Armed forces

Civil servants

Formal employees

of private

companies

Informal sector

workers

People below

national

poverty line

per capita gross receipts

from central government budget

Source: Loewe (2013)



Source: WB (2012)

Huge errors of inclusion – also by direct transfer schemes:



MOH

Other…

HIO

0

500

1000

1500

2000

2500

3000

Source:

own design,

data from:

Egypt (2007/08):

National Health Account

m EGP / a

56% of public health expenditure

is for tertiary and secondary care,

just 18% for primary

15% of MOH spending

is on administration

Inefficient budget allocation – e.g. Egypt’s public health system:



• Reduction of food and

energy subsidies

• Reduction of social

insurance subsidisation

• direct cash transfer

systems

(public works, UCTs, social

pensions…)

=> as universal as possible

• high quality public health

system

Pareto-superior:

• low-income earners: higher net benefits, more equitable distribution, higher

relibaility, more decent targeting

• government: same volume of spending but more stability

• high-income groups: less net benits, but more stability

• middle-income groups: similar level of net benefits but from other sources


DIE survey among business people and civil servants in Jordan (2006):

For example: public sector reform


• Better training and higher wages for civil servants

(starting with some segments of public administration)

• Streamlined procedures

• More transparency through e-government

• Accountability through ombudsmen

• …

For example: public sector reform


Thank you very much

for your attention!

www.die-gdi.de/mena/

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