Protesters at Pearl Roundabout, Bahrain, demanding the release of political prisoners and political reform. Photo: Wikimedia Commons/Al Jazeera English

This interview is part of the series 'Development in the Face of Global Inequalities'. You can find out more about the series, read its articles and explore the interactive roundtables by clicking here.

When Europe looks beyond the Eastern coast of the Mediterranean, it sees a region that is ‘lagging behind’. The Middle East stands in stark contrast to Europe in so many ways, despite their shared heritage, and the legacy of European imperialism that wove threads of interdependence between the two regions. Still today, economic, religious and racial differences are perceived to draw sharply defined boundaries between them and it is under these circumstances that the Middle East if often labeled a ‘basket case’: relentless military conflicts, weak economies and low levels of human development.

But before we can talk about how to pursue a developmental agenda in the Middle East, we first need to ask why the region remains in this state of persistent underdevelopment. Setting up the two goalposts for this debate, Samir Amin asks (and I paraphrase):

Are the inequalities between the regions the result of detrimental internal factors that have slowed the process of ‘catching up’? Or is this inequality the product of European, capitalist expansion itself and impossible to surpass within the current system?

Professor Timur Kuran, at Duke Univeristy, makes a valuable contribution to this debate, identifying key historical characteristics within the Middle East that have significantly undermined the region's ability to modernise and pursue a developmental agenda. Author of The Long Divergence, he has traced the different social and economic trajectories of the two regions.

I ask him what is at the core of this divergence. It is an ambitious request, considering that we’ll have to cover around 1,000 years of social and economic development to do so, but he starts by explaining the importance of ‘trust’ within any society, as a prerequisite for development. He uses an anecdote to illustrate his point:

My house needs to be repainted, so I hire a paint crew. The crew trust me to pay them at the end of the job. If I don’t, they know they can take me to court. If I do pay, they also know the cheque I give them will be honoured by the bank. Here, you can see examples of two distinct forms of trust. One, interpersonal trust, and two, trust in impersonal institutions.

Without these forms of trust, our markets and even our societies would not function. Within the economics profession, this idea of trust being part of the foundations for development did not gain much attention about until 1972, when Kenneth Arrow wrote “It can plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence.” The argument goes that in the context of trade, low trust between traders results in higher transaction costs because the parties involved have to account for the added risk of betrayal. This in turn has a wider impact, leading to poorly functioning markets. Certainly, taking results from the World Values Survey, levels of interpersonal trust are low throughout much of the developing world and the cases of Africa, Latin America, India, Russia and the Middle East seem to support this argument.

The level of trust, Timur explains, has a wider impact on how business in general is done in society. He contrasts Helsinki, in Finland, and Cairo, in Egypt:

Finland is a high-trust society. If they need something from the state, Finns believe, they need simply to follow procedure; the relevant state agency will treat them fairly, they think, and do what’s necessary. In Cairo, it is uncommon to follow procedures; instead, one contacts an insider. And if no insider is available, one asks a friend to set up a connection. In cases such as sourcing a building permit, or solving a neighbourhood traffic problem, connections are more critical than exercising rights as citizens.

This mode of conducting business through interpersonal relationships was the norm in all societies during the medieval period, but where elsewhere societies began developing impersonal trust in institutions and impersonal forms of change, the Middle East did not. As such, the description of Cairo’s emphasis on interpersonal relationships more recently is typical of the region.

This has had wider repercussions for development in the Middle East: it created private benefit for connected individuals, but not wealth; it discouraged hard work and creativity, reduced organisational efficiency, and therefore left the region’s economies ill-equipped to complete internationally.

A legacy of Islamic legal institutions

But surely, if other societies were able to develop trust between strangers through institutions, the Middle East could too. What held it back? Well, it was precisely the pre-industrial institutions that Middle Eastern societies had developed, founded within an environment that favoured interpersonal relationships, that prevented the region from developing impersonal trust: trust in strangers, trust in institutions, and trust in government.

Take the scale of enterprise, for example. In the medieval Middle East, much like in Europe, individuals pooled finance to pursue commercial projects in the form of partnerships. These were typically short-term, finite and single purpose agreements – built on interpersonal trust. In the 19th century, indigenous commercial enterprises in the region were still operating by this model. This clearly contrasts with Europe, where societies had become accustomed to a sophisticated system of joint-stock companies – large, permanent entities – supported by a legal framework that recognised impersonal institutions, as well as individuals. This is where trust in institutions and government started to form, organically and over a long period of time.

Islamic courts carry a bias that further entrenched mistrust.

The origin of this divergence is a combination that lies with the Islamic legal framework, which in its egalitarian approach to inheritance, favoured small scale, and temporary agreements between individuals and did not recognise the corporation like legal frameworks in Europe. Furthermore, individuals had an attractive investment alternative available, known as a wagf: a non-commercial, trust-like structure that typically provided public services, such as healthcare and education to society, in the place of the state. These factors ensured that the small scale and interpersonal commercial partnership was more favourable to elites than European-like reform.

As for Islamic courts, they carried a bias that further entrenched mistrust. Elites, Timur explains, often had friends in the judiciary, and they were subsequently treated very differently. This favoured male Muslims, of course, within a judicial system that already treated non-Muslims and women less favourably. This also had implications on the role of interpersonal trust. Due to their less favourable treatment in court, non-Muslims were more likely to be ruled against in trade disputes involving default or betrayal. Male Muslims, on the other hand, were much harder to get reimbursement from and therefore much more likely to default. The consequence was that elite networks, in control of lending markets, tended to favour lending to non-Muslims. This fostered a trading culture in which Jews and Christians were considered much more trustworthy than their Muslim counterparts.

Making space for civil society

Having talked me through how the scale of enterprise and bias in courts undermined development in the Middle East, the final piece of the puzzle is civil society, which Timur explains has always been notoriously weak in the region. He refers back to the waqf, the charitable endowment mentioned earlier, which in providing public services to citizens, relieved the state of that very function and at the same time was not legally accountable to its benefactors in any way. This meant that citizens had no channels through which they could organise themselves and act as a check to authority. This was a contrast to developments in Europe, where in providing these public services, local government became accountable to its citizens, who subsequently developed the vital organisational skills that underpin civil society, and in turn democratisation.

After countless interventions and uprisings in the region, is it a case of less intervention in the region?

So when we describe a weak civil society as the intended casualty of authoritarian oppression, we also need to understand the underlying reasons for why civil society is weak in the first place. And so, how does this inform the development agenda in the region?

The Middle East is, of course, not still stuck in the medieval era – despite certain attempts in Afghanistan and the Levant to take it back there. Faced with the Western economic and colonial domination that engulfed the world, in the 19th century, the region found itself without the goods, the technologies or the training to compete. Elites responded by driving reform.

Modelled on European-styled education and legal systems, the modernisation process began. Yet Timur emphasises that the desired social and economic transformation doesn’t happen overnight. In fact, transplanting institutions into Middle Eastern societies would quite clearly produce different result to those experienced in Europe following hundreds of years of evolution, and once again, that vital ingredient of trust in institutions needs time to grow.

After countless interventions and uprisings in the region - the citizens of Afghanistan, Iraq, Libya, Syria and Yemen left punished and without basic services - I wonder, when it comes to international development, whether it is more a case of less intervention that is needed, as well as time.

He agrees to an extent, affirming that the process of building general trust in society is very much an internal process, rather than one that can be imposed from outside, and stresses that there are no quick fixes. But this being said, that doesn’t mean that international actors should step away from the region. One of the main obstacles to overall development in the Middle East, in terms of providing services and encouraging trade, is a weak civil society. Although it is stronger where non-state actors deliver public services, such as in Lebanon, broader civil society movements that are fighting for human and civil rights are rarely tolerated. More space is needed for these non-state actors.

This is where the region lags behind other developing countries, and where external intervention is needed. It is in this sector, through private-led innovations, that real development happens. He points out that foreign governments should be using their leverage to create greater space for civil society to form and operate within, instead of selling arms and giving aid to their counter-parts. In fact, interactions should be directed at non-state actors to encourage bottom-up change, rather than going through the state. This won’t produce immediate results, he adds, but it will start to address the inequalities inherent in society.

The argument that strong civic engagement is key to “Making Society Work” is popular, but I see it raising two concerns. Firstly, it is based on the assumption that civil society is inherently progressive, which it is not. The collective citizen action in the pursuit of common societal interests can manifest itself with wide variety, and I’m sure there are many civil society organisations operating in the fractured chaos of the Levant that many of us would not consider conducive to progress. What’s more, there are strong arguments that high levels of citizen engagement, in the absence of strong political infrastructure, can produce results that are quite contrary to democratic principles, which Sheri Berman showed us in the case of the collapse of the Weimar Republic and the rise of Nazism.

There is also a question of national sovereignty. To what extent is bypassing national governments, and establishing a direct channel of dialogue and aid with sub-national civil society actors, likely to produce the opposite of the desired effect, and destabilise society? Bottom-up change through civic engagement certainly offers the innovation and legitimacy needed to build their own conceptions of the good society,  but foreign meddling in this process – however good the intentions – runs the risk for producing that small spark that is needed to light the fuse. And as we have witnessed too often in recent years, it can only take a very small spark to detonate a long, brutal and far-reaching crisis.

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Read Timur's answers on the Politics of Inequality Roundtables here.