Liberal Economic Reforms and the Rise of Crony Capitalism in the MENA Region

Abstract

This article examines how the economic liberalisation in the Middle East and North Africa (MENA) region created a ripe climate for crony capitalism. The incomplete character of the neoliberal program that was encouraged by Western governments and international financial institutions in the 1990s resulted in selective liberalisation and allowed for the tightening of state-business relations. The implementation of the liberal economic agenda facilitated the takeover of state resources and privileged access to the domestic market by dominant political-economic coalitions and produced a novel regime whereby hopes of a plural political system and a de-regulated free market were replaced with a version of Arab ‘crony capitalism’. The evolvement of this phenomenon is analysed and explained by appealing to the example of economic reforms that took place in Egypt and Tunisia, two countries which, between the 1990s and 2010s, were hailed as success stories of the neoliberal reforms in the Arab World. Although the façade of the countries' respective economies became apparent as de-regulated, new reforms became a powerful instrument for the foundation of a novel network of preferential beneficiaries leading to the reshuffling of alliances among the country's major players. The overarching argument of this paper is that liberalisation efforts in Egypt in Tunisia, rather than eradicating distributional coalitions, have merely rearranged them by reshuffling the existing alliance among the countries' major players.