The recent discoveries of significant new natural gas resources in the Eastern Mediterranean provokes obvious questions about public policy. Primary among these are how the new resources might be exploited and shared among the governments and ultimately the peoples of the region.
So far, this has given rise to the creation in July 2019 of the Eastern Mediterranean Natural Gas Forum (EMGF) with member states Egypt, Jordan, Israel, Cyprus, Greece, and Italy. It is assumed by some that this forum might lay the grounds for regional economic cooperation, perhaps leading to the eventual creation of the proposed Eastern Mediterranean Prosperity Zone. While this is a noble aim, it may prove difficult to attain in practice. Obstacles arise on a number of different levels, the first and most obvious is the intra-regional rivalries between the various states involved, highlighted by the exclusion of both Turkey and the northern territory of Cyprus—despite the inclusion of Israel and the Palestinian Authority—from the EMFG.
A second major constraint to making progress on natural gas discoveries is the restraint generated by the global legal rules governing trade, debt, investment, and “development”.
The prospects of national or regional development in the so-called “developing world” (an interesting misnomer for a large collection of countries systematically precluded from development) must be assessed in light of this global/legal architecture which regulates international trade and finance. This architecture is manifested primarily in the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO), and consequently needs to be analyzed through the lens of these institutions’ histories and actions. This process of analysis involves a fundamental reconsideration of public international law (PIL) and its constitution within an ongoing colonial project. In short, PIL and colonialism were and continue to be deeply entangled. This provides a constraint of which policy professionals cannot afford to remain ignorant.
Even if we take for granted that the new natural gas discoveries in the Eastern Mediterranean will provide resource windfalls to the states concerned, we cannot also assume that those states will have a free hand in deciding how to utilize that windfall.
The natural gas field named Leviathan, with the capacity of 509 billion cubic meters, was discovered in 2010 in Israeli waters. The Aphrodite gas field with natural gas reserves of 198 billion cubic meters was discovered by the Republic of Cyprus’ in 2011. In 2015, the Zohr field, which has 850 billion cubic meters of natural gas and contains the largest natural gas reserves in this basin, was discovered within Egypt’s maritime waters.
It obviously would be preferable from a policy perspective if the proceeds from these new resources could be used to promote regional economic integration and national development. States in the developing world are, after all, notoriously bereft of industrial infrastructure, leaving them to be largely exporters of unprocessed raw materials, and importers of processed and manufactured goods. Under these conditions, the terms of trade are inexorably biased against such countries as the price of raw materials remains static while the price of processed and manufactured goods increases. In other words, any nation that wishes to develop toward the economic prosperity we associate with the so-called “Global North” must develop its national manufacturing base in order to realize the true value of its resources. It is in the processing of natural resources that true economic value is added.
This is precisely what is being proposed in the transformation of the EMGF from a forum for discussion into a regional cooperation mechanism. Those proposing such an institutional evolution—which would allow for cooperation, and a greater possibility of regional stability—are also almost certainly correct that the concomitant pooling of resources could finance the development and nurturing of national, or even regional, industrial and productive capital. However, the role of the global financial architecture has been constructed precisely to preclude the development of such indigenous refining, and value generating, capacities.
As cynical as this may sound, the so-called “developed world” simply cannot afford, and will not allow, the so-called “developing world” to prosper. This brings us to the looming ecological crisis. The developed world consumes at a rate which would destroy the Earth if universalized. Consequently, the Global North prevents others from developing—in order to curtail consumption in the underdeveloped world—to create an artificial surplus of resources for its own use.
The consumption patterns of the Global North rely on cheap and unfettered access to the resources of the Global South.
Put differently, the developed countries, who like to present themselves as the “international community,” are in fact nothing more than plunderers. Their greatest trick is to make this invisible to others, and instead present the under-developed states as responsible for their own predicament. This is where the “development industry” comes into play, but to understand its true role, we must take a short historical (de)tour. The history of development has been played out in three acts: the colonial era; the era of decolonization and development; and the present neo-colonial era.
Colonialism and (Active) Underdevelopment
Colonialism shaped not only PIL, but the international order: economic, political, cultural, civilizational, developmental, and racial. In the colonial era, the European states unapologetically plundered the resources of their colonies. The colonial powers, in British Governor General of Nigeria Lord Frederick Lugard’s words, accepted both “moral obligations to the subject races” and “material obligations” so as to “to ensure the development of natural resources for the mutual benefit of the people and of mankind in general”.
The history of European development starts with the Spanish “discovery” of the Americas and the subsequent pillaging of those continents. From 1503 to 1800, almost 100 million kilograms of silver were looted, along with gold, sugar, and so many other resources. This had transformational effects in Europe, financing both the industrial revolution and other colonial projects and conquests. For context, the plundered silver alone would be worth “$165 trillion today, more than double the world’s total GDP in 2015,” according to anthropologist Jason Hickel. Britain alone would plunder another $45 trillion from India, as well as decimate the indigenous American population and the Indian and Chinese economies.
States are not naturally underdeveloped; they are actively de-developed; i.e. crippled. Prior to British colonialism, India and China accounted for 62 percent of global trade (GDP as we would call it today).
After a century or so of active underdevelopment, their combined share of global GDP fell to 10 percent. This was not accidental: India and China were de-developed in order to finance British and subsequent European industrial development. Contemporaneously, the European share of Global GDP rose to 60 percent by 1916. Similar, though less spectacular, processes of underdevelopment continue to structure and facilitate the contemporary global order. Wealth (overdevelopment) is the concentration of resources; poverty (underdevelopment) is the absence of resources. As Susan Marks explains, the conditions which create extreme poverty “benefit some groups of people, even as they massively disadvantage others”. Poverty is a by-product of the creation of wealth: overdevelopment entails underdevelopment.
A Post-Colonial Order
The colonial world order was created and maintained through violence and plunder; this violence still shapes the world today, but now, greater efforts are made to hide (rather than justify) this plunder. Development forms part of that façade. A discrete discourse of development was cultivated in the 1910s to “solve” the “problem of non-European claims” to rights, land, and resources, by ensuring that those “claims were deferred into the future … because [the non-Europeans] were in need of ‘development’,” writes Timothy Mitchell in his book Carbon Democracy.
Mitchell explains that development’s role in relation with the non-West “would be to manage the difference between extraordinary levels of affluence for some and modest levels of living for the vast majority of the world, rather than to offer effective means of addressing those differences”. Development discourse strives to hide the roots and causes of both underdevelopment and overdevelopment: poverty and wealth. This forced inequality rarely fooled the colonized peoples, however.
The wars of national liberation which drove the decolonization era facilitated a (briefly successful) developmentalist experiment. Here, the former colonies mimicked the domestic economic policies of their colonizers: state-led development, nationalizing key resources and industries, industrialization under protectionism, import substitution, and tight controls on foreign capital flows. And these policies worked for a while. As Hickel demonstrates, income and wealth gaps between the developed and undeveloped states fell for the first, and only, time in modern history. Luis Eslava states that the South experienced during this period from roughly 1960 to 1980, “the fastest economic and productivity growth rates in history.”
But development for the South runs counter to the interests of the North, whose states and corporations rely on cheap labor and resources from their former colonies. The South’s growing political power was starting to erode the foundations of the world economic system that Europe and the United States had come to rely on. It could not go unchallenged. The imperial powers responded, forming the G7 in 1975, in order “to counter the rise of developmentalism… and to prevent global South countries from working together to increase the prices of raw materials,” writes Hickel.
Europe and America had become addicted to these materials, and would not give up that system. As such, they did all that they could to undermine developmentalism. A new strategy to reassert control over their former colonies was gifted to them by the debt crisis of the early 1980s. The Global North leveraged this crisis to shift the locus of global decision-making to the IMF, the World Bank, and ultimately the WTO—all institutions in which the G7 nations continue to dominate.
“They did this by repurposing the International Monetary Fund… to act as a global debt enforcer,” according to Hickel. The IMF, and then the World Bank, refinanced the loans the underdeveloped states took out during the developmentalist hiatus, but they did so conditionally, forcing these states into not only debt peonage, but also to be beholden to the economically incompetent demands of the infamous structural adjustment programs (SAPs), otherwise known as IMF loan conditionalities.
Our Neo-colonial Present
“In the early 1980s, the G7’s goal was to use the World Bank and the IMF to cripple the South’s economic revolution and re-establish Western access to its resources and markets. On this point, they certainly didn’t fail,” notes Hickel.
Neo-colonialism was an ingenious strategy, masking the resumption of imperial control behind a façade of consent.
SAPs make national decisions appear voluntary, yet function to transfer “de facto control over economic policy in developing countries… to technocrats in Washington, and bankers in New York and London.” This government by remote control is never in the interests of those governed, and has done extensive damage to the lives of people in affected countries and their well-being.
The WTO completes the unholy trinity of the contemporary global economic order. Joining the WTO is technically optional, but in fact obligatory for economies SAPped into a total dependency on exports and foreign investment (the so-called “integration into the global market”). The WTO entrenches and expands the SAP policies, which have destroyed so many economies and lives. SAPs become self-sustaining, destroying the economies of “developing states”, and rendering them totally dependent on foreign investment and loans to be repaid through export earnings from unprocessed resources and underpriced labor.
This has culminated in the imposition of a “development policy” structured by the twin imperatives of attracting direct foreign investment and expanding the export sector. The imposed reforms take on a predictable pattern: import tariffs and measures to protect local industry are decimated; the economy is opened to foreign investment, generally on preferential terms (low royalty mineral extraction, tax holidays, export-processing zones, and so on); labor standards and minimum wages are curtailed, and national industries are privatized.
Developing countries are deprived of control as well as income. With no scope to develop indigenous refining capacities for export purposes, the developing states are fated to remain raw commodity producers. The development industry remains beholden to the discredited delights of neoliberal economic thinking. It is possible that this reflects a blind ideological commitment, such that forty years of uninterrupted failure proves only that the neoliberal model has not yet been imposed fully enough, and that more of the same medicine will, eventually, cure the disease. It is equally possible, if not more likely, to posit that the neo-liberal model is not failing at all.
Genuine economic development would require developing countries to foster capital-intensive industry. Yet, this can only be done through state investment (like that potentially facilitated by the proposed Eastern Mediterranean Prosperity Zone) and protection from open competition, until they are strong enough to compete successfully. This was the model adopted by the United States and the European states, and more recently by China.
However, this model is denied—in the name of fair competition—to the underdeveloped countries. The international finance institutions and the WTO insist that poor countries liberalize their industries as quickly as possible, claiming this exposure to competition will drive them to develop their most “globally competitive” industries like sweatshops and mines. It is argued that protectionism and government support generate dependency, inefficiency, and laziness. New companies are forced to compete before they are able, or, more often, are simply abandoned on the drawing board.
South Korean economist Ha-Joon Chang offers a simple analogy. As parents, we invest in, and protect, our children, allowing them to maximize their human capital. Applying neoliberal logic, we could say that parents merely subsidize their children’s idle existence, protecting them from the fair competition of the market. Consequently, we ought, or indeed are compelled, to withdraw these unfair subsidies, kick our kids out in order to make them become productive, self-reliant, and efficient. But if we drive a child “into the labor market at the age of six,” Chang writes, “he may become a savvy shoeshine boy or even a prosperous hawker, but he will never become a brain surgeon or a nuclear physicist—that would require at least another dozen years of… protection and investment”.
State investment, and protection from market forces, is the only way that poor countries have a shot at becoming anything more than the national equivalent of a shoeshine boy. Consequently, the young industries of poorer countries are sure to collapse in the face of more powerful competition from the North, and will be forced to fall back once again on exporting raw materials or agricultural goods with little value added; certainly not a recipe for development.
It is, however, a recipe for maintaining the neocolonial status quo, hidden behind claims of equality and technocracy. The logic embedded in the heart of PIL is extractivist: to remove resources from the colonized world, and transport them, legally cleansed, to the colonizing states. This requires maintaining the (formerly) colonized states in a position of servitude: as repositories of cheap labor and raw materials.
How the EMGF Comes into Play
Burdened as they are, with old loans and conditionalities, and bound by WTO membership to liberalize their economies, all the countries of the EMGF are not in a position to develop indigenous refinement sectors. Nor under their trade and investment agreements would they be legally entitled to offer any such nascent sector the protection and subsidy needed to survive and prosper.
Because of the imbalance in the systematic enrichment of some through the systematic impoverishment of others, problems arise for the “zone of prosperity” proposed by policymakers excited by the potential of the recent natural gas discoveries in the Eastern Mediterranean Sea.
While these newly discovered resources may bring additional revenue streams to several states, PIL is structured to prevent this revenue from being used for either regional economic cooperation or meaningful national development.
It is a mistake to assume that the states involved would have a free hand in deciding how to deploy this resource windfall.
Cyprus, Greece, and Italy will be bound by EU law on state aid and unilateral external relations. The other proposed participants face similar restrictions flowing from their membership in the WTO, and in most cases the structural adjustment conditionalities imposed under their “voluntarily assumed” loans from the IMF or World Bank.
By and large, these conditions will preclude investment in domestic industries, or the type of national protectionism which, history teaches us, is needed so that the peoples of poor nations can survive and flourish. Consequently, the new natural gas discoveries must be evaluated in light of the structural impediments to any proposed regional development plan. Policy prescribers must take more seriously the constraints that PIL imposes on national (and regional) policymakers. Indeed, the whole project must be reconsidered in the context of the international community’s stubborn aversion to development.
Affluent consumer societies have become used to a market supply of natural resources and free access to cheap markets and they will not give those up lightly. As such, genuine development in the South would necessarily undermine the prosperity of the North.
This contradiction is made all the more acute by the ongoing environmental catastrophe driven by global warming. This warming itself is largely fueled by our continued dependency on fossil fuels such as liquid natural gas. One positive outcome of the global shutdown forced by the current COVID-19 pandemic has been a reduction in fossil fuel consumption, which, even in such a brief time, has brought significant positive effects for the environment. However, it remains, at best, extremely unclear whether this reduced consumption of fossil fuels will lead to a lasting shift toward the carbon neutral economy necessary to ensure human survival in the medium term. The unfolding environmental crisis ought to be taken seriously by policy professionals, policymakers, governments, and the leaders of industry. However, it lies beyond the scope of this brief analysis.
A Paralyzing Dilemma
We have a world divided between those who have rights and development and those who do not have rights and development; and we have adhered to this peculiar Catch-22 discourse that says in order to have development you must have human rights, but you cannot expect to have human rights if you are not already developed. What is required instead is intervention, tutelage: the technocratic correction provided by the international finance institutions. Once again, those who have must intervene on those who have not. Human rights law, and “law and development”, are simply the latest iteration of the colonial divide.
The struggle of the developing world to alter the global economic structures which they had, correctly, identified as the cause of their “immiseration and enduring poverty” was defeated in the late 1970s. It is important to emphasize, as Jessica Whyte does in her incisive book ‘The Morals of the Market’, that the international human rights movement played a key role in securing that injustice. Indeed, it could be argued that the movement truly found its identity in the campaign against economic sovereignty for the developing world, as it rallied around its dogmatic insistence that “justice could be achieved by demanding that states comply with human rights”, and so “no need existed to change international economic structures.”
In relation to the EMGF, and certainly another more ambitious regional co-operation plan, the entrenched economic injustice of the PIL will play out as a re-inscription of the civilized/uncivilized divide. Such an imagined plan will be forced to fail (if it can ever start), but Israel and Cyprus will be exonerated, and the failure pinned squarely on their underdeveloped “backward” partners—Egypt, Greece, Italy, Jordan, and the Palestinian Authority. And, anyway, don’t those states have debts to repay before selfishly lavishing money on their own infrastructures?
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