Although Egypt has seen improved political stability and public order under the Sisi administration, the economy remains stagnant. The average economic growth rate during the first three years of Sisi’s presidency was 4.5 percent. More recently, Egyptians have suffered the highest inflation rates in decades due to the devaluation of the currency in November 2016. Will the bold economic reforms of 2016 lead to sustained economic growth for Egypt? This article argues the probability of reduced long-term economic growth prospects under the Sisi regime’s governance and economic policies.
The Sisi administration has pursued a policy of social stability by restoring authoritarianism. The government has restricted citizens’ freedom of assembly, association, and expression through newly legislated undemocratic laws. As for the economic policy, its three main pillars include stabilizing the macro-economy, upgrading the social security program, and implementing ambitious infrastructure projects. While these policies are based on the standard market economy model, the military is now playing a critical role in economic activity more than ever before. That is, the Sisi regime has tried to control economic as well as political activities in an autocratic manner. Excessive military intervention in economic activity deters fair market competition, and, hence, innovation. As a result, Egypt cannot be expected to achieve sustained economic growth under the Sisi regime.
The number of U.S. soldiers in Afghanistan and Iraq had been reduced greatly under Barak Obama’s rebalancing strategy in Asia. During the same period, the number of U.S. soldiers in GCC states has been also reduced. There had been 35,953 U.S. soldiers in GCC states in 2011. This number was reduced to 16,311 in 2016, less than half of what it had been in 2011. The main reason for the drop was the reduction in the number of U.S. soldiers on U.S. military bases in GCC states who engaged and supported U.S. operations in Afghanistan and Iraq. While the number of U.S. soldiers was reduced, the U.S. maintained its military capability to ensure security for the GCC states, even strengthening its military power on U.S. bases in the UAE and Bahrain.
Washington has strong interests in fighting terrorism in the Middle East: providing security for Israel, and securing a stable supply of crude oil to the United States and other Western countries. As the U.S. military presence in the Gulf region has contributed greatly to securing those interests, Washington intends to maintain its military presence in the Gulf region.
Russia interfered in Syria in September 2015. However, Russia does not have military interests in the Gulf region, but economic interests such as arms sales and oil concessions. Russian influence without a military presence in the Gulf region is thereby limited.
This study aims to investigate the effect of introducing the value-added tax (VAT), which is expected to be implemented in January 2018, on the economy and government finance of the UAE in the future. For this purpose, we use previous studies on the introduction of VAT in the developing countries as a reference. Analysing the experience of the developing countries in which VAT was already phased in will be beneficial to anticipate the future of the UAE economy after the new tax introduction. At the same time, characteristics such as the dependence of government finance on oil revenue, the fiscal structure which consists of seven emirates and the federal government, and Abu Dhabi’s grip on the other emirates, will make the impact more complicated.
As a result of consideration, we first conclude that even if new taxes such as VAT are introduced in the UAE, tax revenue share is expected to be low in the UAE fiscal structure; thus, a significant increase in tax revenue will not be immediately expected. Second, if government revenues increase due to the new tax introduction, government expenditure may be easily expanded. Third, the introduction of VAT can cause inflation in the UAE, unless the government provides tax exemption for basic necessities. Finally, the introduction of new taxes will help to allocate a budget to the education and social welfare sectors in the less developed northern Emirates to eliminate regional income inequalities.
Since the 1990s, Israel’s industrial development has entered a new phase owing to active engagement in Information and Communications Technology- related ventures. In the first decade of the 21st century, Israel succeeded in presenting her image as a “startup” nation, attracting worldwide attention. Israel’s economy, which was highly industrialized, tried to adapt itself to economic and financial globalization. In 2010, Israel was accepted as a full member of the Organisation for Economic Co-operation and Development. The collapse of Lehman Brothers in September 2008 brought to the fore not only the instability of the global financial system as a whole but also the latent weak potential of economic growth, especially in developed countries that lacked innovative, leading industries. In this framework, microlevel initiatives in Israel carried out using active venture capital to explore new niches and new, innovative, high-tech fields attracted the attention of various countries. These fields include the wider areas of software development in ICT—such as big data analysis, cyber security, nanotechnology, artificial intelligence, and the Internet of Things—in addition to biotechnology and the pharmaceutical industry. It is important to note that Israeli industrial development has been influenced not only by economic necessity but also by national security needs. This latter priority guided the selection and concentration of resources within Israel’s limited national budget and investment capacity.
Academic research and development also contributed to improvement in the technological aspect of the military industry. Technological know-how spillover from the military industry contributed to some extent to an emerging, domestic, microlevel high-tech industry. The military operations engaged in by the Israel Defense Forces in conflict zones in the Middle East, including operations in occupied territories, provided an opportunity to enhance the quality and practicability of weapons produced. The increasing volume of military grants from the US also supported the military industry in overcoming difficult financial phases. Therefore, Israel’s model of a “start-up” nation is not applicable directly to other nations, as the model was not neutral, owing to the state’s guidance and intervention on security issues. Although the new neoliberal macroeconomic circumstance is favorable to the “start-up” of new ventures, the indirect support by the state through various policies also contributed to the building of a positive environment for them. New markets for Israeli weapons and high-tech gadgets such as drones are expanding rapidly, particularly in huge emerging markets such as India and China. Although the export potential of military equipment is immense, it obliges Israel to be involved in delicate and complex international political relations among the importing countries. This is a new challenge in this unstable and risky world, as high-tech and military equipment always bears political implications beyond economic interests.
During the Oil Nationalization Movement of the early 1950s, Iran’s oil was boycotted by the British and major oil companies, which brought a lot of financial hardship to the government of Prime Minister Mossadegh. A few medium-scale oil companies tried to buy and transport it to the market, including Japanese Idemitsu Kosan. It was a very risky but highly profitable deal for them, because Iran gave large discounts to the buyers. However, after Mossadegh’s downfall and the establishment of the Zahedi government, the deal faced problems. Iran could not or would not easily accept the discounted rate requested by Idemitsu.
In approximately 1954, the Japanese government intervened to support Idemitsu, including by writing letters to the Foreign Ministry. Below is one of those letters, which has been translated from Farsi to Japanese, that was sent to Dr. Ardalan, the Foreign Minister of Iran, in September 1956. In the letter, Japan demanded that the Iranians keep their obligations and promises and offered a long-term oil deal with special conditions. In the article, I describe the background and details of the deal, explain the Japanese government’s position regarding the Idemitsu deal, and shed some light on Japan’s energy diplomacy.