Shifting Policy from Realpolitik to Free Trade

Lawrence and Henry Gruijters see the move towards Free Trade as the way forward. But can it really supersede the current realpolitik with the troubles and tensions in the Middle East? First Published 15th July 2011 on The Graduate Times.

BBC’s HARDtalk interview with French Foreign Minister Alain Juppé, and William Hague’s foreign policy speech at Mansion House both pointed towards a shift in foreign policy. This shift suggested a departure from realpolitik, and moved towards a policy based on the transformative power of free trade. Free trade is a powerful force. Consider the historical successes of the Marshall plan, the foreign policy following the fall of the Berlin Wall, and the divergence in fates of the two Koreas.

In the case of the Arab Spring, a free trade foreign policy does however have some pitfalls. The fall of the wall and the emergence of the Arab Spring may seem very similar. Both were an inevitable uprising occurring in the face of tyranny and neither was anticipated to spread so quickly. There are some major differences between Arab states and Eastern European countries. Arab nations do not have a collective memory of democracy. Without this identity it is difficult to build the necessary institutions for democracy and enable liberal capitalism to function. Moreover, following the fall of the Berlin Wall, liberal democracy combined with free market capitalism was the clear alternative to state communism. In Arabia the choice is less clear. Many Arabs have suffered under “Crony Capitalism”. There may be an opposite drive to a more centralised regime which is not open to trade. This centralised regime will not decrease, but enhance corruption and the power of special interest groups. This would slow the reform of institutions which is necessary for an enterprising economy.

Europe too, can make mistakes. It could be inward looking at a time when it should do the opposite. Southern European countries may not look as fondly to a customs union with other countries that also produce agricultural products. This competitive pressure may, however, have positive results as countries will be forced to farm more efficiently based on their comparative advantage. Product variety may increase as different countries focus on different products which the smaller domestic market previously did not support.

In addition, Europe and the United States may fear Islamic parties. The fear of Islamic states like Iran is often seen as the main reason Western democracies supported dictatorships in the Middle East. Islamic parties should not be feared. Many European democracies have Christian Democratic parties, what is stopping Islamic countries having Muslim Democratic parties? Forcing Islamic parties to act within a democratic framework will over time turn these parties into secular parties. Turkey’s AKP is a prime example of this.

The biggest balancing act will be the different policies towards different Arab nations. Where Egypt is a more homogeneous nation, Libya is more tribal. Where we see Western intervention in Libya, we do not see the same intervention in Syria or Bahrain. We think it is quite clear that liberation must not and cannot be imposed. The EU must avoid being patronizing, whilst still helping Arab Nations to build efficient institutions. But double standards are a problem. Saudi Arabia still heavily discriminates against women and has sent Bahrain tanks which will be used on its own people. Yet Alain Juppé will tell you that relationships are as good as they have ever been with the Saudis. Effectively Europe is still pursuing realpolitik. The right option is free trade (or at least the promise of this with the EU) as a reward for good institutions, yet sticking to the status quo is seen as the pragmatic choice for other nations.

These double standards may be the greatest threat to the success of a customs union. The success of the Marshall Plan was due to enforcing trade between different European nations, which made these nations dependent on each other and the region more stable. The surest way to a stable Middle East is by making vastly different nations dependent on each other. Trade between Arab nations must also be realised in addition to trade with Europe.

Peace with Europe and stability in the region would be a body blow to Al-Quaida. The road to peace is hardly ever smooth. Success will only be achieved if countries trade and become dependent on each other. This will take multiple generations to achieve. Current politicians must realise that their legacy will depend on their successes or failures long after they have left office.

If successful, historians may see 9/11 as a dying spasm of conservative Islam whilst they may see the revolutions on Tahrire Square as a successful Arab Spring. A political failure, however, would mean that the Middle East is remembered for unrest and war. Without political and economic bravery from Europe the Arab Spring may be torn out of the pages of history.