Article: "Juncker’s Delusion: Recommendations for Gulf Policymakers" ( أوهام «يونكر»: توصيات لمنفذي الرؤى الخليجية )

نُشر في صحيفة الحياة
English version below

تحوّلت المفاوضات بين الاتحاد الأوروبي والمملكة المتحدة حول خروجها من التكتل الإقليمي – «البريكسيت» – إلى صراع سياسي، لاسيما للطرف الأوروبي، الذي يسعى لإرسال رسالة لأعضائه عبر طريقة تعامله مع المملكة المتحدة: أية دولة تخرج من الاتحاد الأوروبي ستندم على ذلك. ولكن جون-كلود يونكر، رئيس المفوضية الأوروبية، أرسل لا شعورياً رسالة صارمة لدول الخليج العربي: اغتنموا فرصة تقليص دور الحكومة في الاقتصاد، وعززوا دور رواد الأعمال على حساب المؤسسات الحكومية، لكي لا تندموا على سلبيات التضخم البيروقراطي.ـ

المزيد

Negotiations between the European Union and the UK over its withdrawal from the regional bloc – dubbed “Brexit” – have transformed into a political duel, especially on the European side, which is trying to send a message to its members via its treatment of the UK: any country that leaves the EU will regret it. However, Jean-Claude Juncker, the president of the European Commission (EC), inadvertently sent a sobering message to the Arabian Gulf states: seize the opportunity to roll back the government’s role in the economy, and strengthen the role of entrepreneurs at the expense of government organizations, to avoid regrets over the costs of bureaucratic expansion.

Naturally, Jucker didn’t literally say that, and he would surely refuse such an interpretation of his words; what did he actually say, and what does it have to do with the Gulf countries’ economic visions? To correctly understand his speech, we must first understand the history of the EU, and the nature of the UK-EU feud.

The repugnant wars fought between European states created a desire for a new political order, with the aim of avoiding future, intra-European conflict. The EU was launched on this basis, initially as the European Coal and Steel Community in 1952, which then transformed into a free trade area, a customs union, a single market, and a monetary union in 1999.

Managing the European economic integration project required the establishment of an executive bureaucracy—the EC—and endowing the organization with significant powers, reflected in a sizeable budget (over 100 billion euros), a large workforce (33,000 employees), and the capacity to force member countries to adhere to European laws, backed by the ability to impose fines upon those failing to comply.

The EC succeeded in its most important assignment, which is the avoidance of an intra-European war. Today, no European citizen thinks of armed conflict with any other European, regardless of the cultural differences that exist.

However, this success came with a significant, unintended cost: the creation of a “bureaucratic beast” that cannot be contained, growing day upon day, with one goal: increasing its powers, and the resources under its control. The EC is afflicted with the same “inflation disease” that all bureaucratic organizations unencumbered by market pressure suffer from: the impossibility of diagnosing any underperformance on its part as being the result of its size, power, or resources; and the persistent belief that solving any problem starts with giving it more powers and resources.

Ask yourself this: can you recall any minister claiming that their ministry needs to decrease its resources to improve its performance? Or surrendering some of its powers in an attempt to perform its mission for effectively? In contrast, in the private sector, especially in highly competitive sectors, we regularly see firms concluding that they have overexpanded, and accordingly planning to scale back the volume of resources under their control, and their powers in general, as a way of improving their performance.

Excessive expansion on the EC’s powers is one of the key reasons for the UK’s decision to exit the EU, as the EC imposes laws and regulations that damage the UK economy, basically as a way of cementing its influence. Confirmation of its affliction with the “inflation disease” was recently provided by Juncker’s reaction to the Brexit crisis, in his last speech to the EU, wherein he launched his new vision: increasing the powers of the central EU institutions at the expense of the member governments, and plans for fiscal and political union.

Put short, bureaucrats have—as usual—concluded that, in spite of the clear role that bureaucratic inflation has played in the prevailing crisis, the solution is more bureaucratic inflation! Is there any scenario that would compel Juncker to recommend a diminution in his powers? I sincerely doubt it…

What does this have to do with the Gulf countries?

The link is that Gulf governmental organizations suffer from the same flaw: they have become excessively large, employing people who do not enhance productivity. Instead, they create pointless bureaucratic procedures that stifle the private sector, similar to the EC. The Gulf visions indicate that the leaders are aware of this phenomenon, as they all seek to diminish the government’s role in the economy, and to eliminate the damaging red tape that has accumulated over the past 50 years.

Naturally, these organizations will resist a policy of economic liberalization designed to curtail their powers. Their opposition could make leaders hesitate, and fatigue among reformers may even bring about a reversal of the policies.

However policymakers must make use of Juncker’s example as a sign of how bureaucratic organizations think, thereby assisting them in building an accurate and objective view of the optimal structure of the Gulf economies. In particular, Juncker’s statements confirm the need to employ independent sources for determining the powers and resources that should be given to government organizations, as well as the need to avoid relying exclusively on what those organizations themselves recommend. In virtually all cases, the head of any governmental organizations will assert to the country’s leaders that improving citizens’ standard of living starts with giving their organization more powers and resources, so that they can put their projects into action.

Yet the time has come to permanently empower the private sector, as it—and not bureaucrats—has the ability to solve the challenges faced by the Gulf countries.