The Ottoman Empire
At the beginning of the twentieth century, much of the Arab world was still subjected to the control of the Ottoman Empire, an Empire that dominated the world for almost 400 years prior to the First World War.
Although the Empire's main centre of gravity (population, revenue, land and army) was its European provinces, it controlled large segments of land in the Arab world, including what is today known as Jordan, Syria, Palestine, Iraq, Lebanon and North Yemen. In North Africa, the Ottomans held strong presence in Tripoli and Benghazi in Libya, Algeria, Egypt and Tunisia. Morocco was the only North African country that managed to resist direct Ottoman control, and was ruled instead by the Alaouite Dynasty (Owen, 1992, 8).The Alaouite Dynasty succeeded the Saadi Dynasty in Morocco in 1631. It has been ruling the country since then. It is therefore the oldest ruling family in the world. Both the Saadi and the Alaouite Dynasties are believed to be descended from the Prophet Muhammad through his daughter Fatima and her husband the fourth Caliph Ali. This longevity, and religious authenticity, has added a sense of continuity and legitimacy, enabling the royal family to endure through the Ottoman Empire and through European colonial rule. It was not before the second half of the eighteenth century that the Alaouite Dynasty was able to unify the country and reorganize its administration, as the Berbers and local tribes opposed their rule. The Alaouite Dynasty created a very centralized government system known as the Makhzan, and ruled as an absolute monarchy for most of its period. Despite the weakness of its authority, the Alaouite Dynasty distinguished itself in the eighteenth and nineteenth centuries by maintaining Morocco's independence while other states in the region succumbed to Turkish, French or British domination.
Little is known about the economic thinking of the centralized Alaouite state, apart from its monarchial absolutism.
In 1777, however, Morocco was the very first state to recognize the sovereignty of a newly independent USA. The consolidation of the power of the ruling dynasty in the second half of the eighteenth century led to more attention being paid to economic policies. Following the recognition of US sovereignty in 1777, the Moroccan Makhzan began relying less on mercantilist policies and promoted instead an open trade policy, particularly with the US and European countries. It also worked to modernize the army and administrative infrastructure to control Berber and Bedouin tribes. However, in the latter part of the nineteenth century, Morocco's weakness and instability invited European intervention to protect threatened investments and to demand economic concessions. This led to Morocco falling into European control (French and Spanish) in 1912 until 1956 (Library of Congress, 2006).With regard to other NA countries, their importance to the Ottoman Empire varied, with Egypt, Tunisia and Algeria occupying special significance. This was due to their geo-strategic location, trade and sources of revenue. In general, the Ottomans ruled NA through ‘governors who owed their ultimate allegiance to Istanbul' (Owen, 1992, 8). At the head of the system of government was the sultan, who maintained his rule through a grand Vizir, regarded as having absolute power beneath the ruler (Sultan). Under the grand Vizir there were a number of Vizirs, who controlled the provisional governments and key state positions, including finance and economy. The grand Vizir and his Vizirs met regularly in the palace's diwan (council) to decide economic policy in coordination with Istanbul. They made all decisions regarding economic policy, and were supported by a bureaucracy of two groups; the secretaries who drew up documents — orders, regulations and replies to petitions — and those who kept the financial records, the assessment of taxable assets and how much was collected/used and surpluses/deficits (Hourani, 1991, 261-7).
Most of the Vizirs came from the Empire's centre, and Istanbul also provided most of the economic and political input for the rest of the Empire. In fact, most appointments to key state positions were based on personal relations rather than merit. Loyalty to Istanbul was a key criterion in those appointments, and most appointees came from the family of the governor or his close circle. NA received most of its economic input from Istanbul and became so dependent on policy input from the centre to a point where it became ‘difficult for them [Arabs] to imagine a world without the Ottoman Sultan as their political and... religious leader' (Owen, 1992, 9).
The Ottoman Empire followed a mixture of Keynesian-style and liberal economic policies. On the one hand, it encouraged free trade with the rest of the world and left interest rates to be determined by supply and demand factors. It also introduced a new land registry and property rights system to improve private investment and boost the role of the private sector, and broadened the existing tax system in former Muslim states. In addition, the Ottoman Empire improved documentation, recording and tax assessment and expenditure systems. On the other hand, the state was encouraged to invest in public works and provide jobs to the local population through such projects as roads, railways, irrigation, dams and technology transfer. In each large city, a provincial government was created and became a central one in miniature, the ‘governor had his elaborate household, his secretaries and accountants, and his council of high officials meeting regularly' (Hourani, 1991, 217).
In NA, only ‘modern Egypt was built up from the beginning (starting with Viceroy Mohamed Ali) by its aristocracy, which gradually became aristocratic bourgeoisie (or a capitalist aristocracy)' (Amin, 2012, 6). Ali had conceived and undertaken a huge programme of renovation and modernization for Egypt. That experience took two-thirds of the nineteenth century and ran out of steam in the 1870s.
Its failure culminated in Britain's military occupation of Egypt in 1882 (ibid., 16). During the last hundred years of their reign, the Ottomans devoted more resources and energy towards defending their Empire and possessions in the Arab world from increased European threat. During the second half of the eighteenth century, the Ottoman Empire introduced various reforms (tanzimat). The political reforms aimed at upgrading its military and power structure. Economically, several important legal and administrative practices, which endured in the Arab world long after the end of the Ottoman Empire, were introduced. This did little to preserve the Empire.Long before the First World War, most North African countries were under European domination. Egypt and Sudan were under British control between 1882 and 1952, and 1899 and 1956 respectively. Algeria was the first North African country to be subjected to French control from 1830 to 1956. Tunisia and Morocco followed suit in 1882-1956 and 1912-56 respectively. Libya was colonized by Italy from 1912 to 1943, before falling under British control from 1943 to 1952. Autonomous economic policy was prevented from emerging in NA by the colonial authorities. Except in Egypt, where the British authorities were forced to grant qualified political independence in 1922 following a revolt in 1919, North Africans played a minimum role in running their own affairs. The colonial authorities blocked the emergence of other institutions with potential economic clout and policy influence.
This colonial management style was best described by Owen (1992, 17-18) where he stated that the constraints of the colonial management style:
left little money for development... colonies were also subject to a particular type of fiscal and monetary regime, with their currency tied to that of the colonial power and managed by a currency board in the metropolis... they were not allowed a central bank, which could have regulated the money supply or moved the rate of interest in such a way as to expand or dampen local demand.
Meanwhile, throughout most of the Middle East the new states remained subject to 19th-century commercial treaties, which until they ran out round about 1930, prevented them from setting their own tariffs. The result was the creation of more or less an open economy, subject to influences stemming from the metropolis and the world at large, over which the state had little or no control.To facilitate their grip on the countryside, the colonial authorities created alliances with large landowners, rich peasants and conservative tribal sheikhs, which controlled most rural areas (Amin, 2011). This not only led to the emergence of large landholdings, but also fostered what Richards and Waterbury (1996, 154, 172) described as ‘bimodalism', which ‘refers to a land tenure system that combines a small number of owners holding very large estates with a large number of owners holding very small farms'. In NA, the best agricultural land was seized by foreign conquerors.
This dispossessed millions of indigenous Arabs, forced them into more marginal land, and relegated them to subsistence farming or wage labour (Richards and Waterbury, 1996, 154—5; Smith, 1975; Abun-Nsr, 1971). Thus the colonial tenure system fostered poverty, social inequalities, and impeded human capital formation.