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Jordan's Inter-Arab Relations: The Political Economy of Alliance Making
New York Chichester, West Sussex
1994
1. Economics and Alliances in the Developing World:
Bridging the Gap between Political Economy and Security Studies
The traditional focus of international relations on the so-called system-defining or great powers has meant that very little work, in both absolute and relative terms, has been done on the international relations of the developing world. Moreover, most of the literature that does treat these states is written in terms of their ties with the great powers, even though such relations may represent only a fraction of their foreign policy interaction. There is a clear need for studies that examine a greater percentage of developing states' foreign policy and that view such policy from the point of view of the smaller power, not merely as reactive to great power activity or demands.
This chapter makes a case for the primacy of economic factors in analyzing foreign policy in the developing world. This is certainly not the first attempt to examine the role of economics in foreign policy; however, as the literature review below demonstrates, previous works have serious limitations. To overcome some of these problems, the presentation here seeks to bridge the gap between the literature on political economy and security studies by exploring economic factors that may have national or domestic security implications. State economic structure and, in particular, the sources of state revenues, it will be argued, are basic to understanding both what economic security may mean in any given country and how attempts to ensure or reinforce it may drive foreign policy behavior, of which alliance behavior is a subset. Specifically, this work contends that issues of financial and budget security may be considered regime, if not national, security issues. As a result, alliance formation (a central topic in the traditional security literature) by a small, weak, or dependent state, may be viewed as a response, not to concerns about balancing or bandwagoning external power or threat, but rather to threats to state financial solvency.
In order to build a case for using economic variables to explain foreign policy behavior, this chapter first critiques the existing literature on the role of economic factors in developing states' foreign policy. It then examines the current debate regarding the concept of economic security, and constructs a case for including questions related to state finances and the budget as security issues. Finally, it discusses recent additions to the literature on alliances and demonstrates how a more sophisticated treatment of the domestic political economy of a given developing or small state in the context of a broadened concept of security may better explain alliance behavior than do the traditional realist or neorealist approaches.
Foreign Policy and the Domestic Economy in the Developing World
One of the problems with the limited general theoretical work on the role of economics in foreign policy is that it has often approached the topic from the point of view of the advanced industrialized states and examined issues of trade relations or financial policy. To the extent that such works have considered so-called developing countries, they have generally examined the relationship between a patron (usually a superpower) and a client state which has a key trade or foreign aid component. For example, in his classic National Power and the Structure of Foreign Trade, Hirschman sought to understand why and how relationships of dependency, influence, or even domination may arise out of trade relations. 1
Other studies have examined the types of dependencies that may arise from economic or military aid relationships. As one way of trying to measure the impact of such purported dependence, some of the earliest work focused on UN voting patterns of the client to determine the responsiveness of what are then termed "dependent countries" to the political preferences of the great power patron. Richardson, for example, hypothesized that "the foreign policy behavior of a dependent country will be . . . more or less in accord with the preferences of the country that dominates its economic life." 2
Yet, Richardson's findings indicate that, at least with regard to UN voting, economic dependence is a poor predictor of state behavior. Bruce Moon's work on the so-called "dependent state" has produced similar results, indicating the difficulties involved in measuring or predicting the effect of economic pressure on the client state. As such studies have shown, the concept a "dependent state" is itself problematic since, as Moon admits, the "precise make-up of the transactions which establish dependent relations is not entirely clear." 3
Thus, while the attempt to classify a state as dependent may be intuitively appealing, operationalizing the concept has proven elusive: Does it imply high levels of foreign aid support from a single state and/or heavy trade concentration with a single partner? One is tempted to answer "yes." However, whatever the existing configurations, dependence by necessity implies limited options as well. 4 If that is the case, how limited must they be to constitute dependence? Trying to refine further the concept of dependence in this light would seem to pose more problems than it may solve. It would also appear to require such specificity as to render it useless across countries.
However, the approaches discussed above are problematic beyond the difficulties they highlight in defining and using the concept of dependence. In the first place, they usually examine only one source of dependence, usually foreign aid or trade, but not both, and certainly not both as part of the larger picture of overall state economic structure. Hence, such analyses can offer only a fragmentary explanation of state behavior. Perhaps more troubling, such approaches treat the "dependent state" as largely or solely reactive to the actions or preferences of the state on which it is dependent. Finally, only single dyads are addressed, even though, as was noted above, foreign policy relations comprise far more interactions than those between a client and its superpower or great power patron. Indeed, a developing country's relationship with a superpower may tell us very little about its relations in its regional neighborhood, the arena of most of its policy interaction.
Do previous works focusing specifically on Middle East regional politics offer any greater insights? Unfortunately, the effects of foreign aid, trade, and dependence have been downplayed or ignored in such works. 5 Paul Noble has argued that while other state systems relied heavily on military and economic capabilities, in the case of the Arab states only modest military and economic means were available, at least in the 1950s and 1960s. During this period, the radical or revolutionary states (Egypt, Syria, Iraq, Algeria) had little in the way of excess capital to use as instruments of foreign policy, and not until the OPEC revolution of the 1970s did the oil states of the Gulf begin to have the kinds of surpluses necessary to project economic power. Moreover, the level of economic development limited economic interaction and few of the bilateral relationships were of any economic consequence. Hence, he maintains, instruments of political warfare, such as propaganda, cross-frontier alliances, and subversion, were the most common form of currency. 6
However, even if, as Noble points out, the use of political warfare among Arab states was characteristic of the 1950s and 1960s (and no systematic study has been done of Arab state economic interaction during this period to test such an assumption), this does not mean that economic factors played no role in generating or shaping the political warfare. Moreover, by Noble's own admission, and by the admission implicit in the work of those authors who have focused their studies on oil and its impact, even if economic factors are shown to have played only a minor role in foreign policy considerations and decisions prior to 1970, one should not assume that the nature or bases of Arab politics have remained constant since the 1950s. The single most important material factor to have influenced Arab politics since the early 1970s, from rising intra-regional capital and labor flows to increased economic capabilities for state consolidation, has been the oil boom.
Nonetheless, in Dessouki and Korany's recent The Foreign Policies of Arab States, in chapters on eight Arab countries and the PLO, economic factors are viewed as policy inputs or national attributes, but national economic structure is not discussed seriously as an independent variable capable of explaining foreign policy output, except briefly in the case of Egypt. 7 Instead, economic capability,
refers to the natural resources of a country (availability) and to its ability to mobilize them at the service of its foreign policy (control). Economic capability affects both a state's objectives and its means of implementing them. Poor states, for instance, are likely to have a low level of diplomatic representation. In the case of developing countries, [they investigate] two questions . . . : to what extent is the economic infrastructure (agriculture, industry and services) capable of satisfying the economic needs of the population, thus reducing the need for foreign aid; and does economic development tend to enhance or decrease dependence on foreign sources? 8
Economic factors appear here to be intervening variables, not really independent sources of foreign policy, although the authors do state that capabilities affect state objectives. To the degree that economic factors are considered, the question is posed in terms of dependence on foreign aid and degree of economic development. The contention here is not that these issues are unimportant; it is that the question is incomplete. Rather than seeking to understand solely how economic factors may constrain what foreign policies may be pursued, one may also legitimately ask: given a state's economic structure, what sort of foreign policy behavior may be expected? That is, to what degree are a leadership's or a regime's estimates of its economic needs and weaknesses a source of foreign policy--the independent variable--rather than mere measures of capabilities to carry out foreign policy constructed on the basis of or constrained by other factors? In other words, contrary or supplementary to the Korany and Dessouki formulation, what is being suggested here is that economic structure may be a source of foreign policy, specifically alignment policy, as well. A careful examination of the structure of the domestic economy, its strengths and weaknesses, state sources of revenue, and the like is basic to determining in which directions alignment shifts may take place.
Hence previous political economy approaches to understanding the foreign policy of small or developing states suffer from numerous problems that the approach which attempts to explain international behavior through domestic economic structure, especially state revenue sources, can obviate. The discussion in the next section argues for bridging the gap between political economy and security studies by broadening the concept of security to include challenges to the domestic economy.
The Concept of Economic Security
In discussions of the need to broaden the understanding of "security," no aspect is as popular or as controversial as is the economy. The range of opinion regarding the concept of "economic security" extends from those (generally students of the developing world) such as Caroline Thomas, who clearly consider such economic topics as trade, foreign aid, and debt as security issues 9 , to those who concede in passing that interstate wars may be caused by domestic economic or social stress, but then go no further to try to determine whether or what kind of economic issues might, by implication, constitute a threat. 10
Most international relations scholars writing on the topic, while admitting of an economic component to security, seem to spend considerable time trying to argue against an economic security component that extends beyond the military sector. For example, Robert Rothstein agrees that the traditional security studies' preoccupation with territorial integrity and political independence must be broadened to include a concern with domestic stability, and by extension domestic development. 11 Nonetheless, he insists that most of the attempts at broadening the concept of security have posited definitions so broad as to render virtually everything a security issue. 12 Although Rothstein does consider the difference between national and regime security (to be discussed further below), his argument about Third World poverty and security focuses on the effects that limited resources have on military spending, leading what he calls the "poverty trap" to become a "security trap" as well.
In his discussion of a "renaissance" in security studies Stephen Walt takes a similar position. He accepts an economics-security nexus when the issue concerns the relationship between military spending and economic performance, the political influence of the military-industrial complex, or the question of strategic resources and their potential to trigger international conflict 13 --all very close to traditional security concerns. However, he argues against broadening the concept of security to include poverty or recessions (as well as environmental threats or AIDS) because, in his words, "defining the field in this way would destroy its intellectual coherence and make it more difficult to devise solutions to any of these important problems." 14 Why he believes that broadening the concept would complicate finding solutions is not made clear.
Economist Giacomo Luciani's assessment of broadening the concept of security to include economic factors is also that it creates serious conceptual problems. He argues that if the concern is with the importance of economic prosperity in reinforcing domestic consensus or political stability, then a deterioration of economic conditions may be perceived as a threat to national security. However, he contends that while such an approach may be intuitively appealing, this "line of reasoning will lead to the conclusion that events such as increases in the price of oil, increases in interest rates, and indirectly, even the deficit in the federal budget in the United States are forms of aggression." 15 He does not explain why, conceptually, a threat must be understood only in terms of an identifiable and, presumably, punishable, aggressor.
Repeated objections to the concept of economic security on the grounds that the resulting definitions are messy or threaten the analytic coherence of the field sound less and less convincing with each rehearsal. Although some would no doubt argue otherwise, part of the explanation for these objections may well derive from a continuing, deep-seated bias toward understanding security threats in solely military terms. Old habits die hard, especially when maintaining them is far easier, more comfortable, and less threatening to the discipline. The concern that too broad a concept of security potentially renders the term meaningless for analytical purposes is certainly valid. Nevertheless, the traditional concept of security has been demonstrated to be inadequate to the concerns of a majority of the world's states, leaderships, and populations, which is a problem that should constitute reason for pause and serious reevaluation. Beyond that, however, while redefinition is difficult or problematic, the realm of solutions need not be circumscribed at the outset, which is what it appears these and other authors are attempting. Rather than thinking through more specific ways in which the concept may be broadened and not lose its coherence, they seem inclined to broaden it only in ways that continue to focus on the military or on issues of territorial defense.
Barry Buzan also expresses skepticism regarding the notion of economic security, but argues from different bases. He contends that capitalism as a system is by definition competitive and presumes risk-taking. In such an environment, therefore, how can any unit "ever be meaningfully secure when competition implies an ever-present danger of becoming a loser? Relative security is possible (some units do better than others), but absolute security is not." 16 (As if absolute security in the military realm is possible.) Moreover, he argues, the economic interdependencies that make states vulnerable can be reduced only through achieving self-reliance, which is likely to be economically inefficient and, therefore, unwise for other reasons. Nonetheless, having expressed this basic concern, if not objection, regarding the concept, he proceeds to distinguish between what economic security would mean at an individual versus a state level. At the state level, he contends, "the simplest view is to equate security with the economic conditions necessary for survival." Here he posits two constituent elements of what he terms the state equivalents of a basic human needs approach: access to the means necessary for survival, i.e., access to trade for resources not present domestically; and an ability to maintain economic "health" by "adapting towards the most advanced and successful practices elsewhere in the international system." Failure to succeed at the latter means a gradual loss in power and increased vulnerability. 17 Although this is an apparent departure from those whom one may, for want of a better word, term the militarists, it does not move us much farther toward a helpful or more easily applicable definition.
One critical element in rethinking the concept of economic security is to clarify which level(s) or unit(s) of analysis one is addressing. Although both Rothstein and Buzan take levels of analysis into consideration in one way or another, they do not do so systematically, especially when it comes to economic issues. Perhaps the most important distinction to be made because of the potential confusion it can cause, particularly regarding the question of economic security, is that between national security and regime (or leadership) security. 18 Authors writing on security in the developing world are in virtual agreement that these states face domestic security threats more often than they do aggression from abroad. European colonialism in most of these areas imposed ethnically illogical borders and established patterns of economic underdevelopment, thus laying the basis for a variety of domestic political challenges. 19 In addition, the five-hundred-year process of state formation in Europe witnessed the disappearance of the vast majority of the multitude of political entities that once dotted the map, as they were absorbed or conquered by more powerful neighbors. Today, however, the disappearance of states runs counter to international norms. (The demise of the Soviet Union and Yugoslavia should more aptly be viewed as the final stages of decolonization.) Apparent economic or political nonviability, a condition a number of developing countries have experienced or approached, has not led the community of states to accept their collapse or dissolution as political entities. 20 The case of Somalia is an excellent example. Hence, it is generally not national security, the security of the state as territorial entity, that is threatened. Rather, in the developing world, most threats are domestic in nature, taking the form of civil wars, domestic insurgencies, military coups, and the like. In such instances, what is in fact in jeopardy is the regime or, more narrowly, the leadership, not the very existence of the country as an entity.
Hence what one is usually talking about in developing countries is the issue of leadership security. It is generally these same leaderships who define or constuct what constitutes the "national interest," and therefore what constitutes a threat to it. Hence, the ease with which the two may be, and often are, conflated is readily explained. However, one can make clear analytical distinctions between the two types of security. To use several traditional examples, one might imagine a situation in which state A has irredentist claims against a small part of the territory of state B, and as a result, state A invades the territory and annexes it. Such a move would certainly by all definitions constitute not just a national security threat but aggression against state B. However, if the territory has little strategic or other importance for state B and/or the leadership of state B is capable, through whatever argument or means, of making a case to its people that reconciles them to the annexation, state A's move may well not constitute a threat to the leadership. On the other hand, a domestic insurgency in state C may well lead to a coup d'etat, but never threaten the territorial integrity of C. In such a case leadership or regime security, not national security, is threatened.
If one continues to make a careful analytical distinction between national security (defined in terms of preservation of territorial integrity and core values) and regime security (defined in terms of maintenance of power by the same leaders or ruling coalition, depending upon the complexity of the country), then a case can be made that while economic issues may prove slippery or more anomalous when confronting the former, considerations of the latter lend themselves much better to application of the concept. Price increases may lead to economic riots that force leaders to resign, failure to focus on the socioeconomic needs of particular regions or groups may lead to insurgencies that challenge the regime, or external debt may reach such levels that domestic solvency may be threatened, forcing major reforms and perhaps resulting in the ouster of a leadership.
Such an approach, which includes a concept of leadership security, also overcomes the problem of agency, which is raised in different ways by both Buzan and Luciani, although, in this writer's opinion, not convincingly. On the state level, Buzan sees the key to economic security in the position of the state within the international networks of trade, production, and finance, while on the system level he views the key as the stability of the whole network of market relations. 21 In either case, identifying a specific actor as responsible for threatening security becomes difficult. Luciani is a bit more specific in contending that in the case of many of the issues that are considered economic security threats, there is no identifiable aggressor or no clear preventative. 22 The implication is that in the absence of such an aggressor, characterizing a development as a security threat is problematic. Although neither author states clearly why agency must be identified or specified, presumably it is because defense or retribution against an unspecified actor (an unforeseen drop in world prices for a product because of a bumper crop) or an unpenalizable factor (such as the weather in the case of a flood that may cause massive loss of life) is impossible. But should the determination of whether a particular development or factor may be considered a security threat hinge on the possibility of defense or retribution against it? The rationale behind such a contention is not at all clear, is certainly not convincing, and further reinforces the suspicion that an underlying pro-militarily defined security bias is at work. In any case, the potential or real impact (which in many of these cases is ultimately at the leadership or regime level), not the specificity or coherence of agency, should be the most important factor in determining whether a development constitutes a threat to security, economic or otherwise.
Toward a Broadened Notion of Security:
The Budget and Regime Security
No attempt is made here to finalize a new definition of economic security. However, from the case studies a generalization emerges regarding the exigencies of maintaining financial solvency--what I have called budget security--as a critical component of regime (not necessarily or even primarily national) security. This section will make the argument for including such an element as a part of the definition of economic security and, by extension, as a potentially important factor in guiding foreign policy moves.
Ayoob has suggested that security should be defined "in relation to vulnerabilities that threaten, or have the potential to bring down or significantly weaken state structures, both territorial and institutional, as well as the regimes that preside over these structures and profess to represent them internationally." 23 In a similar vein, according to Ullman, a threat to national security is "an action or sequence of events that (1) threatens drastically and over a relatively brief span of time to degrade the quality of life for the inhabitants of a state, or (2) threatens significantly to narrow the range of policy choices available to the government of a state or to private, nongovernmental entities (persons, groups, corporations) within the state." 24
The understudied financial or budgetary challenges to regime or state survival fit easily into both these formulations. For, ultimately, the survival of any entity depends upon its ability to sustain or provide for itself. While the requirements of state-building and regime maintenance are many and complex, in the crudest of terms, no state, regime, or political leadership can long survive without money. Comparative numbers of tanks are irrelevant in assessing a regional military balance if a country is threatened with economic developments that could prevent the securing of fuel or spare parts. Similarly, the sophisticated nature of a state's internal intelligence apparatus may be undermined if a budgetary crisis means that the personnel required to staff intelligence positions cannot be paid. The ruling elite or coalition must ensure that it has the requisite finances and finance flows to direct policy (military, economic, social, or otherwise) and remain in control. In some cases this means ensuring the flow of revenues so that a socioeconomic coalition can be maintained, so that a state capitalist class is pacified, so that the coercive apparatuses remain placated and sufficiently strong to manage or put down any domestic discontent, or so that benefits of various types can be distributed among the population in such a way as to buy off those who might otherwise pose a challenge. In such cases, whether specifically economic instruments are used or not, foreign policy in general and alignment decisions in particular may well constitute an integral part of the state-building or state-consolidating process. Regime security in its most basic terms may in fact be budget security, understood in terms of reproducing the conditions necessary for the ruling coalition to continue to pay the bills, preempt the development of opposition, or cultivate sufficient domestic support to make coercion against such groups possible. Determining the potential provenance of such threats is best accomplished through careful examination of domestic economic structure, particularly state revenue sources.
One of the best known examples of how state and regime security may be threatened by insolvency is that of Egypt at the end of the last century. In 1875, as a result of fiscal irresponsibility, the Khedive Isma'il (the third successor to Muhammad 'Ali) was forced to sell Egypt's shares in the Suez Canal Company to Great Britain, thus strengthening the British interest in the country. Isma'il persisted in incurring additional development debt until 1876, when he simply ran out of money and postponed his debt service payment. In response, a European Debt Commission was imposed upon the country to "safeguard foreign interests," and it gradually acquired such extensive economic and financial powers that it has been referred to as a " veiled colonial administration." These developments then paved the way for a domestic revolt that ultimately led to the loss of sovereignty to British invasion forces in 1882. 25
But one need not return to the nineteenth century to see the security threat that debt may pose to a regime. Given developments in the third world in the 1980s, perhaps no more appropriate entree to a contemporary discussion of the concept of budget security can be found than the issue of debt. Although economic policymakers often argue that debt in and of itself is not bad, when debt service reaches such a level that states can no longer afford to continue to repay what they owe their external creditors, a debt crisis of the kind that has plagued states from Latin America to Africa and Asia ensues. The reasons for the Third World debt crisis have been discussed at length widely, and will not be rehearsed here. One need only consult IMF statistics to appreciate the number of countries that as a result of various combinations of factors, from mismanagement or unexpected oil price increases to primary export product price drops, have faced debt crises. 26
Whether leaderships seek to address a debt problem themselves or are eventually forced to resort to assistance from the IMF, the potential domestic impact of belt tightening constitutes the most serious security threat deriving from the budget challenge. Whatever the causes of the insolvency, government spending cutbacks of some sort, whether in the military, the bureaucracy, or various services, as well as some revenue raising measures will be needed, all of which have the potential to create domestic instability and threaten a regime or a leadership. In the case of rescheduling with the IMF, the imposed conditionality generally involves liberalization of foreign exchange and export controls, devaluation of the official exchange rate, cutting state spending (generally by eliminating such market interventions as subsidies) and raising revenues, usually through additional fees and more efficient tax collection. The latter three and particularly the last two austerity measures have the potential to trigger rioting or other forms of instability. Policies implemented to adhere to IMF conditionality have regularly been blamed for triggering domestic instability. 27
Debt rescheduling also touches on another, more traditional aspect of security, that of sovereignty. In accepting IMF conditionality, leaders in effect surrender a degree of what was sovereign economic decisionmaking power. Such a compromise may be viewed as affecting or threatening the "core values" that figure into the traditional notion of security, since such values may have included a particular form of economic organization or philosophy that would oppose various aspects of IMF conditionality. In this way, a case may be made using traditional notions of security that such economic agreements also aggress against a country's security, even though no military element or external threat is involved.
At this point, let us return to the security implications of a potential budgetary crisis. What concerns us here is the range of possible responses to challenges to financial solvency--budget security. In theory, a number of policy options are available to a leadership to address such a problem. IMF conditionality and domestic economic structure have in large part dictated the domestic policy instruments selected to address debt crises. However, what of the possible use of foreign policy to address a potential or present economic crisis? The argument made here is that foreign policy, alignment decisions in particular, may be used by a leadership to address challenges to the domestic economy. Just as in the domestic realm, clues indicating in which ways and toward which partners a state may move are to be found in the nature of the domestic economy and specifically in the structure of state revenues.
The Literature on Alliances
In order to complete the presentation of the argument, a link must now be made between financial security concerns and regime response in the form of alliance shifts, the focus of this study. In order to do so the discussion turns to a critique of the recent literature on alliances to demonstrate how adapting a version of the concept of economic security may better our understanding of how and why alignment changes may take place in the developing world.
What of work on alignment behavior by those familiar with the Middle East? In general, earlier works by Arab and Western analysts alike have been equally unsatisfying, often painting conflicts and alignments in ideological terms: between the radicals/revolutionaries and the monarchies; between the moderates and the rejectionists; between those seen as being in the Western camp, and those who relied on the former Soviet Union and its Warsaw Pact allies; between the Nasirists and the Ba'thists; or even between the Syrian Ba'thists and the Iraqi Ba'thists. 28
In a more creative approach to the study of the international relations of the Middle East, L. Carl Brown introduced the concept of "the Eastern Question system." Drawing on precedents from the eighteenth through the early twentieth century, Brown argues that the patterns of present-day Middle Eastern politics developed through the region's interaction with an increasingly penetrative European state system. Brown terms the Middle East the most penetrated, or internationalized, regional subsystem in the world, and then uses that determination to suggest a number of principles of state interaction in the area. His first two so-called "rules of the game" concern alliances. The first is that "many different regional and extra-regional political players combine and divide in shifting patterns of alliances;" the second, that "The patterns of alliance making and breaking tend toward comprehensiveness . . . so that any diplomatic initiative in the Middle East sets in motion a realignment of all the players." 29 Brown's work remains provocative. His principles do not, however, address theoretically the driving forces behind alliance shifts.
In a more theoretical vein is Stephen Walt's The Origins of Alliances, a rare example of a neorealist study of a non-Western area. 30 Using Middle East cases, Walt argues for amending or modifying traditional balance of power theory to include threats as well as power, an important distinction. Nonetheless, in estimating power and threat, he uses the standard military, industrial, and technological measures: a country's total resources (population, industrial and military capability, and technological prowess), geographic proximity, and offensive power, although he also stresses the importance of aggressive intentions. 31 He occasionally mentions the role of domestic factors, but continues to insist that decisions regarding alliance formation and alignment are made in response to external threat.
Part of the problem with Walt's study is definitional: He states that he wants to consider both more formal "alliances" and looser "alignments," but continues implicitly to assume that the only goals of alliances and alignments would be security-related, and that the only kind of security concerns or threats about which alliances would be concluded are external and military in nature. Thus he begins by assuming intent and, based on that (often faulty) assumption, proceeds to categorize Middle Eastern alliances as constituting either balancing or bandwagoning to address external threat. As a result, he mischaracterizes Arab alliance behavior in a number of instances, such as the Baghdad Pact and the formation of the United Arab Republic, and leaves a great deal un(der)explained or misinterpreted.
None of this is to say that external threats do not play a role in alliance behavior, and Walt examines numerous cases where such factors apparently did trigger alignment decisions (although in these cases as well, domestic factors should be more thoroughly explored). Yet, what Walt has done is to try to fit all examples into the same mold, and in order to make the argument work for all his cases, he is forced to argue that the type of balancing that has taken place in inter-Arab relations differs from the military power acquiring model of traditional balancing. "In the Arab world," he contends, "the most important source of power has been the ability to manipulate one's own image and the image of one's rivals in the minds of other Arab elites. Regimes have gained power and legitimacy if they have been seen as loyal to accepted Arab goals, and they have lost these assets if they have appeared to stray outside the Arab consensus." Walt defines this second kind of balancing as conducted by political, rather than military, means and as directed at an opponent's image and legitimacy. He continues to insist, however, that common to both types of balancing is the desire to acquire support from others in response to an external threat. 32
However, in arguing that a second kind of balancing takes place in the Arab world, one that is directed at image and legitimacy, Walt not only implicitly departs from the neorealist insistence upon the primacy of the international system and relative military power in determining state alliance behavior, but also descends into what for a neorealist is the "reductionist" realm of domestic politics. However, the conclusion would seem to be that a traditional balancing and bandwagoning approach may in fact explain very little about state alignment decisions, just as it ignores other possibilities such as neutrality. 33 Even when the logic does appear compelling, it is often so only well after the fact. Indeed, without the benefit of hindsight, an approach that relies only on balancing and bandwagoning classifications as traditionally defined may well be unable to predict the outcome(s) that obtain.
A number of recent additions to the literature on the international relations of third world states have challenged the explanatory power of traditional approaches that rely on the concept of balancing external threats and power. One example is the work of Stephen David, who has detailed a further modification of balance of power theory which he has dubbed "omnibalancing." 34 In David's formulation, omnibalancing offers three key correctives to balance of power theory. First, leaders should be understood not only to balance against threats or power, but also to appease secondary adversaries so that they can focus their resources on their main adversaries. Second, the leadership may need to appease other states in order to counter a more pressing threat from within. To do so, it may appease the international allies of its domestic opponents. Finally, David argues that in the Third World, the most frequent challenges to states are internal challenges to the ruler or ruling group, not threats from abroad at the state level. Since leaders may be expected to act in such a way as to keep themselves in power, they may pursue survival strategies that may not serve the larger interests of the country. 35 David's willingness to admit that domestic challenges may be just as threatening as external ones is a major step forward, as is his focus on leadership survival strategies. Both fit quite well with the distinction made above in the discussion of economic security between leadership or regime interests and state interests.
Michael Barnett and Jack Levy also argue for including domestic and social variables in foreign policy explanations. 36 Their focus is on the "impact of the domestic political economy on state trade-offs between alliances and internal mobilization as alternative means for enhancing security." They note that alliances may have an economic component, and their definition of alliance is broad, but they continue to focus on alliances as defined in the traditional military sense. 37 They do look to the domestic front for variables that may influence alliance formation, and acknowledge the value of alliances as sources of military and economic resources as well as security guarantees. However, their focus is on alternative policy instruments, including domestic ones, and their respective repercussions for dealing with external security threats (although they add that they do not assume a priori that external security goals are always given priority in the foreign policy calculations of states). A trade-off or substitution effect is thus created between armaments and alliances.
Barnett elaborates further on these themes in his book, which examines a traditional security concern, that of how states confront external military threats. 38 Barnett's innovation is in studying the effect of alternative war preparation strategies, (which he terms accommodational, restructural, and international) on state power, based on their impact on state-society relations. He is, therefore, very much concerned with domestic factors, although he does not seem to make a distinction between leadership and government, the distinction that underpins the difference between regime and national security in my argument above. 39
The definition of alignment used in this work includes both formal alliances and looser alignments, the goals of which are to strengthen a state's, regime's, or leadership's economic, military, or political position against real or potential threats which may be of external or domestic provenance. What is needed then is an approach to understanding alliances and alignments that broadens the concept of security and therefore incorporates internal threats and the role of the domestic political economy along with traditional concerns.
Domestic Economic Structure and the Quest for Financial Solvency
To review what has been developed so far, this work assumes that there is often a difference between state (national) and leadership or regime security. While national security may be most easily understood in terms of external threats of a military nature, some of the most serious threats a leadership may face may be domestic in origin. Moreover, these threats may well be of an economic, not just of a political or military nature. External aid may drop or be cut, thus forcing a state to scramble to find alternative sources of support with which to pay the army or the bureaucracy. Or, some form of internal instability may make it impossible for a traditional, key market to remain open, thus threatening the income of the private (or perhaps state) sector and directly or indirectly cutting into state revenues. While such challenges have not traditionally been discussed in the security literature, the potential they hold for creating instability is good reason to consider them threats.
Understanding the nature of many domestic threats to a regime requires an examination of the nature of the national economy. Studying domestic economic structure and, specifically, the sources of state revenue allows for a consideration of an interrelated group of the same factors that those who attempted to establish and classify dependence have tried to evaluate singly. For instance, a state may receive large amounts of foreign aid, but if that aid represents only a fraction of state revenues then its significance is far less than absolute numbers might suggest. Or, a state may have a trade relationship in which 50 percent of its exports go to a single country. However, if the total contribution of trade to the domestic economy is small, then this trade concentration is far less significant than the 50 percent standing would have indicated. Moreover, for the purposes of this study, even in a situation in which trade does contribute substantially to state revenues, the availability of substitute commodities or markets does not make the loss of a market less significant, it simply means that such a crisis is more easily addressed. Hence in this formulation, the concepts of trade and commodity concentration are important, but only when placed in the larger framework of overall domestic economic structure. Such an approach therefore requires an examination of foreign trade statistics, the nature of domestic productive forces and their contribution to the economy, the extent of foreign aid, the importance of customs duties and the like.
All of these factors are examined first in the following chapter on the Jordanian economy. However in the case studies of the bilateral relationships that follow there is separate consideration of the role that aid (grants and loans), trade, joint ventures, as well as any other particularly salient form of exchange play in the bilateral relationships. Through such an examination, the importance of economic statecraft and its role in promoting, reinforcing, or supporting domestic financial solvency are illuminated. In this way, the real economic lifelines of the state become clearer, thereby providing more fertile ground for generating hypotheses regarding state behavior. Clues emerge regarding where a state's greatest potential weaknesses are and which factors may be particularly jeopardized by domestic or international developments. Such an approach also provides insights into the nature of the dominant socioeconomic or sociopolitical coalition, and therefore enables the analyst to evaluate how the range of possible responses to crises may be narrowed based on considerations of sectoral, regional, and organizational vested interests. It also suggests what strategies or types of policy instruments--whether economic or political--a state may use to ensure the continued flow of revenue. The case studies clearly demonstrate that alignment shifts are often used to address domestic economic crises.
Hence, state or regime behavior in the Third World may often resemble not just David's political omnibalancing, but what one might characterize as economic omnibalancing: allying with a state, several states, other domestic actors or even transnational actors (like the PLO) to thwart or overcome threats to the domestic economy. According to this understanding, foreign policy in general and alliance decisions in particular may be undertaken to ensure regime stability through securing revenue sources, whether internal or external, direct or indirect. The argument here is not that such decisions are undertaken merely to increase general domestic economic welfare; rather they are made to serve a more immediate purpose of forestalling or addressing a crisis with severe budgetary implications, enhancing economic stability, or insulating against economic challenges from abroad.
Classifying Exchange Elements
The case studies that follow demonstrate that leaderships may use foreign policy, alignment policy in particular, to ensure and/or to diversify revenue sources in a quest for what will subsequently be called "budget security." However, clearly not all income sources are of equal weight or importance, and leaderships may well assign priorities to them. In examining the composition of the economic side of the bilateral relationships and the use of economic statecraft, it may be helpful to distinguish between what may be termed high-level and low-level transactions or exchange. High-level exchanges would include such forms of income as grants and concessionary loans: infusions that are usually of substantial size, are often government-to-government, and go directly into the central state coffers. Lower-level transactions would include most bilateral trade, various forms of foreign investment, customs duties assessments, and taxes and fees collected. These exchanges are generally of lesser individual magnitude, involve government at a lower level or not at all, or feature the state only as collector of individual accounts.
One would expect a leadership to place first priority on securing and ensuring (if not diversifying) the flow of the largest and/or the most fungible kinds of income. Which revenue sources represent the greatest contribution to the treasury and exhibit the greatest fungibility will vary somewhat from country to country. In some cases, general budgetary support may be given on a completely discretionary basis; in others, while it may come in the form of cash, it may well be tied to certain projects or sectors. Likewise, in some states the percentage contribution of income tax or customs duties to state revenues may be substantial, whereas in others they may represent only a small percentage.
Alternative Strategies
As a result of such diversity in economic structure and revenue sources, circumstances that precipitate a budgetary crisis in one state may pose little or no challenge to another. Moreover, a budgetary crisis may have myriad potential sources: an external shock (like the invasion of Kuwait), reduced capabilities on the part of the supplier state (as exemplified by the decline in Gulf state aid over the 1980s), or overexpenditure (mismanagement) by the recipient state. In other words, a crisis may be precipitated by either supply or demand factors.
How may a state or a leadership attempt to achieve budget security? The argument here, of course, is that a leadership may use foreign policy, particularly alignment shifts to that end. In so doing, it in effect looks outward to attempt to diversify its suppliers, to seek new kinds of support, to expand into new markets. But why such an outward-looking strategy? May a state not also look within in an attempt to bolster indigenous productive forces and gradually lessen its reliance on external sources of income?
Here Michael Barnett's classification of policy responses to the need for war mobilization is useful. Barnett details three possible strategies: accommodational, restructural, and international. An accommodational strategy involves only minor changes or adjustments in existing policy instruments; a restructural strategy involves an attempt by what he calls state managers to restructure the existing state-society compact on finance, production, and conscription; and an international strategy is one that attempts to distribute costs of war onto foreign actors. 40
It is not difficult to imagine a modification of such a schema to apply to budget security. The definition of an accommodational strategy remains the same; restructuring would involve the state's trying to create a new mix of agriculture, commerce, and industry, or the introduction of new industries, new attempts at raising revenues and fees, or perhaps cuts in state services and allocations. This, of course, is precisely what states undertake as a part of IMF-advised and generally World Bank-funded structural adjustment programs. Finally, an international strategy would involve seeking additional or diversified sources of loans or aid, attempting to open new markets or engage new suppliers, sharing the costs of increased industrialization through joint ventures, and the like.
The selection or mix of strategies or component policy measures, however, will depend upon a number of factors. If one is discussing challenges to budget or financial security, the time has probably already passed for Barnett's accommodational strategy. Hence, we will focus on the latter two. In the first place, numerous external constraints may influence attempts to implement the international strategy: the state of the economies of the actual and potential aid providers; the type of support upon which the state relies and therefore the type of support it may then seek as a supplement or an alternative; and the configuration of political forces, domestically, regionally, and internationally, that may constrain its choices of states from which to seek aid or that determine which states are likely to respond. With such potential barriers to this strategy, the former, that of restructuring in the form of working toward a reduction in the support required through strategies of developing indigenous productive forces, might seem the better course.
This inward-looking strategy would also, at least on the surface, appear most sound in the long term, by further developing the domestic economy so that its contribution to the state budget would gradually increase or be diversified and thereby wean the state away from what many might describe as an unhealthy dependence upon revenue sources over which the country may have less control. In the shorter term, however (the time frame in which political leaderships generally think), this is a risky, if not subversive, strategy. In the first place, there may not be sufficient time to await the positive effects that such a strategy may produce. Just as important, while country specifics vary, powerful forces are likely to have a vested interest in maintaining existing political and economic relations. While weaning the state away from outside income or from a particular commodity or sectoral dependence may make sense in the context of a search for greater long-term budget security or stability, it may at the same time threaten standing class configurations, and by extension, the regime. This has certainly been the case in states where short-term stabilization or longer-term structural adjustment programs have been dictated by multilateral lending institutions. Moreover, experiences to date with structural adjustment demonstrate not only the political, but also the economic and technical problems that may impede the implementation of such an inward-looking strategy. 41 Hence, one may in fact be more likely to see attempts at domestic economic reform only as a last resort. So as not to rock the domestic boat, foreign, rather than domestic policy options may be the first choice of a regime in dealing with economic crises. Although he does not deal with economic crises, Barnett's conclusions are similar.
The argument made here as suggested by the case studies is, therefore, that a leadership may choose a policy of external alliance or realignment as its response to a real or perceived economic crisis if the realignment offers economic benefits that can delay or allay an economic threat. However, even short of a crisis situation, a leadership may still choose an alliance strategy as a means of addressing a particular pressing economic need: diversifying trading partners, securing additional or alternative financial aid sources, and the like. In either case, the alliance or alignment decision should be understood as constituting a means of ensuring or reinforcing financial solvency, which has a direct impact on the security of the leadership or the regime. Finally, as this study argues, the best means of understanding what crises may arise and what strategies may be pursued in response is through examining the structure of the domestic economy and the provenance of state revenues.
Note 1: Albert Hirschman, National Power and the Structure of Foreign Trade (Berkeley: University of California Press, 1980). Back.
Note 2: Neil Richardson, Foreign Policy and Economic Dependence (Austin: University of Texas Press, 1978), pp. 69-70. Back.
Note 3: Bruce Moon, "The Foreign Policy of the Dependent State," International Studies Quarterly, 37 (3): 322. Back.
Note 4: Adrienne Armstrong, "The Political Consequences of Economic Dependence," Journal of Conflict Resolution, 25 (3): 409-411. Back.
Note 5: See for example, Malcolm Kerr, The Arab Cold War (London: Oxford University Press, 1971) and Alan Taylor, The Arab Balance of Power (Syracuse: Syracuse University Press, 1983). Back.
Note 6: Paul Noble, "The Arab System: Pressures, Constraints, and Opportunities," in Bahgat Korany and Ali E. Hillal Dessouki, The Foreign Policies of Arab States, 2nd ed. (Boulder: Westview, 1991), 60-61. Back.
Note 7: Ali E. Hillal Dessouki, "The Primacy of Economics: The Foreign Policy of Egypt." In Korany and Dessouki eds., pp. 156-187. Back.
Note 8: Korany and Dessouki, "A Literature Survey and a Framework for Analysis," in Korany and Dessouki eds., pp. 19-20. Back.
Note 9: See, for example, her In Search of Security: The Third World in International Relations (Boulder: Lynne Reinner, 1987) and her volume coedited with Paikiasothy Saravanamuttu, Conflict and Consensus in South/North Security (New York: Cambridge University Press, 1989). Back.
Note 10: See, for example, Janet Gross Stein, "The Security Dilemma in the Middle East: A Prognosis for the Decade Ahead," in Bahgat Korany, Paul Noble, and Rex Brynen eds. The Many Faces of National Security in the Arab World (New York: St. Martin's, 1993. Back.
Note 11: Robert L. Rothstein, "The 'Security Dilemma' and the 'Poverty Trap' in the Third World," The Jerusalem Journal of International Relations, 8 (4) (December 1986): 9. Back.
Note 12: Ibid., pp. 11-12. Back.
Note 13: Stephen Walt, "A Renaissance in Security Studies?" International Studies Quarterly 35 (1991): 227. Back.
Note 15: Giacomo Luciani, "The Economic Content of Security," Journal of Public Policy, 8, 2, p. 155. Back.
Note 16: Barry Buzan, People States & Fear: An Agenda for International Security Studies in the post-Cold War Era (2nd ed.) (Boulder: Lynne Reinner, 1991),p. 235. Back.
Note 17: Ibid., pp. 241-42. Back.
Note 18: It is understood that there is a difference between leadership and regime security. Leadership security involves ensuring that those particular personalities who are in power remain so. Regime security is a bit broader, for leaders may be overthrown, but if the dominant coalition and system of rule remain the same, the regime remains in tact. However, for the purposes of this argument, the distinction between national and leadership security is the most salient. Back.
Note 19: This is a point made by virtually all authors writing about Third World security. See Mohammed Ayoob, "Unravelling the Concept of National Security in the Third World," in Korany, Noble and Brynen eds., pp. 33-36; Brian L. Job, "The Insecurity Dilemma: National, Regime, and State Securities in the Third World," in Brian L. Job ed., The Insecurity Dilemma: National Security of Third World States (Boulder: Lynne Reinner, 1992); and Buzan, Buzan, People States & Fear, chapter 2. Back.
Note 20: Job, "Insecurity Dilemma," p. 13. Back.
Note 21: See Buzan, Buzan, People States & Fear, pp. 248-250. Back.
Note 22: See Luciani, "Economic Content," p. 155. Back.
Note 23: Mohammed Ayoob, "The Security Problematic of the Third World," World Politics 43 (2): 259. Back.
Note 24: Richard H. Ullman, "Redefining Security," International Security, 8 (1): 133 Back.
Note 25: Derek Hopwood Egypt: Politics and Society 1945-1981 (London: Allen & Unwin, 1982), pp. 10-12. Back.
Note 26: See Henry S. Bienen and Mark Gersovitz, "Economic Stabilization, Conditionality and Political Stability," International Organization 39 (4) (Autumn 1985): 731. Back.
Note 27: Ibid, pp. 29-30. Of course, as Bienen and Gersovitz point out, absent the option of turning to the IMF for assistance, instability may well have been even greater in some countries or have touched a greater number of countries. Back.
Note 28: See note 5, above. Back.
Note 29: L. Carl Brown, International Politics and the Middle East (Princeton: Princeton University Press, 1984), p. 16. Back.
Note 30: Stephen M. Walt, The Origins of Alliances (Ithaca: Cornell University Press, 1987). Back.
Note 31: Ibid., pp. 21-26. Back.
Note 33: See Glen Snyder, "Alliances, Balance, and Stability," International Organization, 45 (1) (Winter 1991): 128. Back.
Note 34: Stephen R. David, "Explaining Third World Alliances," World Politics 43 (2): 233-256. Back.
Note 35: Ibid., pp. 235-36. Back.
Note 36: Michael N. Barnett and Jack S. Levy, "Domestic Sources of Alliances and Alignments: The Case of Egypt, 1962-1973," International Organization, 45 (3): 369-395. Back.
Note 337: Ibid., p. 370. Back.
Note 38: Michael N. Barnett, Confronting the Costs of War: Military Power, State and Society in Egypt and Israel (Princeton: Princeton University Press: 1992). Back.
Note 39: Ibid., chapter 2. Back.
Note 40: Ibid., pp. 31-33. Back.
Note 41: See, for example, Joan M. Nelson, ed. Economic Crisis and Policy Choice: The Politics of Adjustment in the Third World (Princeton: Princeton University Press, 1990). Back.
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