The result of the November election of the US president has crucial importance for the future of several countries including Israel, Saudi Arabia, and Iran, with different nuances pertaining to each country. In the case of Iran, contrary to the other two countries, the result of Donald Trump’s victory is disgusting, as he has openly denied the profits of the Joint Comprehensive Plan of Action (JCPOA) from the outset of his election campaign.
If Hillary Clinton were elected, she would have followed Barack Obama’s political legacy in many ways, including the policies that brought about his breakthrough in US–Iranian relations after the 1979 revolution. We could refer to many pieces of evidence, especially from M. Landler’s convincing work entitled Alter Egos (2016). President Obama’s unprecedented challenge in this regard was to change relations with Iran such that there is less emnity. Nowadays it seems very difficult to expect that this rare historical chance at a stronger US-Iran relationship will eventually materialize.
In this very difficult situation, Japan should not hesitate to make every effort to convince the Trump Administration that it is crucial for the US to maintain diplomatic relations with Iran to keep the Middle East from entering a more catastrophic situation characterised by greater warfare. Japan is an important player in this situation given its uniqueness in having an alliance with the US while at the same time being trusted by Iran.
With its geopolitical implications, Israel’s presence in the Middle East is conspicuous. Over the last two decades, Israel has rapidly expanded its sphere of influence to other parts of the world through economic transactions. Its dramatic development has been supported by its economic globalisation and high-tech industry. Israel currently belongs with the developed economies as a member state of the OECD, with a per-capita income of US$ 35,000, and is often referred to as a “success story” that other countries can draw lessons from for their own economic development.
Part One attempts to analyse the factors, mainly related to economic policies, which contributed to the paradigm shift in Israel’s development strategy from the Zionist socialistic ideology to the neoliberal globalising policy orientation. The turning point was the economic reform introduced in 1985, which enabled the Bank of Israel to play an independent and leading role in monetary and fiscal policies against the rampant hyperinflation at the time. However, it should be noted that the reform package was a co-product of Israel and the US administration, supported by financial assistance attached to the reform. For the US, an economically stabilized Israel was an essential strategic asset against the Soviet Union. Since then, various reforms were introduced gradually, such as liberalisation of the labour market, privatisation, liberalisation of the financial market, and capital transfers. However, the voluminous favourable grant from the US was essential in absorbing balance of payment constraints and various social tensions through the transition period. Therefore, Israel’s transition to a neoliberal globalised economy was not a model that could be easily imported by other developing countries in the region.
The rapid decline in Saudi Arabia’s oil revenue has forced its economy into depression. While the government maintained its expenditure at a high level in 2014 and 2015 to prevent a decline, the economy gradually ran into depression. The government issued a treasury bond to domestic banks in July 2015 to finance its deficit and prevent a rapid decrease in the foreign reserves of the Saudi Arabian Monetary Agency (SAMA, the central bank). The government continued its issuance.
The government realised that the oil prices would not recover to their earlier high levels of more than $100 per barrel. Therefore, towards the end of 2015, it took certain steps to reform its financial structure, cutting its energy subsidies and trying to increase its revenue. During the same time, Mohammad bin Salman, the deputy crown prince, started conceiving fundamental financial and economic reforms. On April 25, he announced ‘Vision 2030’. On May 7, he restructured the ministries and reshuffled the cabinet, creating a super ministry, i.e. the Ministry of Energy, Industry, and Mineral Resources. The super ministry with a non-royal minister will be the key ministry to implement the reforms.
The vision expressed an idea of reforms. The details of reforms were not announced in the vision. The Saudi Arabian government had tried to reform its economy and financial structure in some decades. However, it never obtained the desired results, which shows the difficulties encountered in implementing reforms. The idea of reforms showed in ‘Vision 2030’ seems to have several difficulties to implement.
On June 6, the Saudi Arabian cabinet approved the National Transformation Program (NTP) 2020, a detailed plan for the next five years, pertaining to the overall ‘Vision 2030’. Notably, NTP has made no mention of the IPO of Saudi Aramco. Obtaining a good result within five years seems difficult. Nevertheless, the implementation of NTP may contribute towards strengthening the power of the deputy crown prince.