hos 4
M iddle East
M iddle East
site of the w orld's earliest
civilizations and the birthplace of three great
religions--Judaism ,
Christianity, & Islam
area com prises
m ountains,deserts, fertile
plains irrigated by grand rivers, and
seacoasts.
Clim atically, the M
iddle East ranges from
the tem perate
M editerranean coast, to the
extrem e
heatof the arid
desertareas, to snow y
m ountains.
Countries in the M iddle East
Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuw
ait, Lebanon, O m
an, Palestine, Q atar, Saudi
Arabia, the Syrian Arab Republic, Turkey, the U nited
Arab Em irates &
Yem en.
Trade routes
• Trade routes betw
een m edieval Europe and A
sia passed through the M iddle East >
earned m onopoly profits from
the trade of A sian spices and luxury goods w
ith Europe
• In the early m
odern period these m onopoly profits flow
ed first to the pockets of Portuguese, and then D
utch, and finally to the British and French
• M
edieval plague & M
ongol invasion hit the M iddle Eastern econom
ies
Caravan trade
• M
ain caravan routes w ithin the O
ttom an Em
pire (route w ent East -W
est in southern and northern A
natolia), connected Syria and M esopotam
ia, and from there led to Persia-
Central A sia and in som
e periods even to China.
• Bedouin tribes required dues that could be as large as three tim
es the norm al transport
cost.
• Trade goods com
prised textiles and spices from India and South A
sia in exchange for European m
anufactures, A frican ivory, silk, ostrich feathers and sim
ilar item s
• Black slaves from
A frica w
ere traded northw ard, and w
hite slaves from Russia and
Balkans w ere traded Southw
ard.
Industrial production
• In contrast to w
estern Europe, w here pro-industrial production w
as in the countryside, industrial production in the M
iddle East w as m
ostly concentrated in the cities
• Textile production w
as the m ost im
portant industry, com plem
ented by the food processing, furniture and specialized industries
• M
ilitary interest of the O ttom
an Em pire > Turkish arm
am ent producers and ship builders
could produce goods at sim ilar levels of quality those produced by Europeans
Form ation of Em
pires
• During the m
edieval period, the technology of the M
iddle East w as superior to that of Europe &
know ledge
w as flow
ing from the form
er to latter including m edical
know ledge> but in 18
thc things reversed → M
iddle Eastern governm
ents and fam ilies underinvested in
education.
• O
ttom an Em
pire m assively extended in the 15
thc tow
ard the Balkan and South-Eastern Europe, in 16 thc
tow ards East and N
orth Africa •
During the 19 thcentury, the O
ttom an Em
pire gradually decreased its influence and becam
e the “sick m an of
Europe” → the countries both in Europe and M
iddle East began to fight for independence > M
iddle East becam
e the object of colonial influences from W
estern European pow
ers
deindustrialization in M iddle East
• D
uring the 18 th
c, the O ttom
an Em pire w
as com pletely self sufficient in textile products &
exported carpet, silk and textiles.
• Raw
Cotton prices increased substantially> change in term s of trade tem
pted the M iddle
East to specialize in this area of production. → W
hen the term s of trade for these goods
declined again during the 1930s, there already w as a degree of path-dependence, w
hich kept m
iddle eastern econom ies in the cash-crop.
W hy deindustrialization?
Favorable developm ent of export prices for M
iddle Eastern cash crops like cotton lured the region into deindustrialization. Other m
ain factors:
1. institutional developm
ents related w ith industrialization interacted w
ith traditional law
s of the region (interest-credit)
2. hum
an capital and skills w ere lacking for industrialization
3. O
pening of the O ttom
an econom y to im
ports 4.
The system of production and taxation did not encourage developm
ent. 5. D
uring the tw entieth century, oil revenue becam
e im portant > after that the
econom ic history of the region becam
e a struggle for oil
M inorities in Trade &
Finance
• Som
e m inorities w
ere considered to be predeterm ined for trade and finance in the
O ttom
an Em pire> G
reeks, Jew s, A
rm enians, Christian A
rabs becam e active in trade sector
and finance… .. G
alata bankers dom inated O
ttom an financial developm
ent… .. A
rm enians
and G reeks w
ere also active in internal trade, industry, Crafts and professions…
>m otivation of talented A
rab, Iranian and Turkish m ajorities to invest in trading skills
developed late, partly because the m inorities had a low
social reputation in their eyes and im
itating their profession w as not desirable.
Reindustrialization attem pts
• Skyes-Picot Agreem
ent in 1916 divided a part of M iddle Eastern region –
w hich w
as previously part of O
ttom an Em
pire-betw een England (Palestine, Iraq, Jordan) and France (Syria, Lebanon).
• Form
er O ttom
an territory of Palestine becam e a British m
andate in 1920 & 1922, the League of
N ations decided that in this territory, a ‘national hom
e’ for Jew s should be established…
..
• strong im
m igration of Jew
s… . Their population share rose from
9% in 1919 to 32%
in 1947. Given that the British M
andate aim ed at restricting land purchases of previously Arab-ow
ned land by Jew
ish im m
igrants, the Jew ish population group w
as initially m ore urban and had a higher share in
industrial occupations than the Arab m ajority.
Deficit in Education 1. Governm
ents spend little public funds on education. Extrem e w
as Yem en, w
here children received alm
ost no schooling
• Low
level of num eracy and school education m
ade it very difficult to develop a class of entrepreneurs→
function of entrepreneurs w as, therefore, taken over by the state.
2. Another reason w
as the am ount of oil revenues> in 1908, oil w
as discovered in the M
iddle East… .. changed the landscape of its econom
ies→ U
p to 1940, M iddle Eastern
and north A frican oil production w
as still below 5%
of w orld production…
. Then exploded to 26 %
in 1960, reaching a m axim
um of 42%
in 1975. •
Iranian governm ent decided to give a concession to a British com
pany. O ther countries
also gave concession to European and A m
erican firm s.
Present Econom y of the Region
• econom
y of the
M iddle East
is very diverse, w ith nationaleconom
ies ranging from
hydrocarbon- exporting rentiers to centralized econom
ies & free-m
arket econom
ies
• A
griculture: although only about 15% of the
land is suitable for farm
ing, agriculture rem
ains the region's m
ost im portant econom
ic activity.
• poorest country in this region is A
fghanistan, w hich alw
ays had a very low education &
developm ent
• OPEC
(Organization of Petroleum Exporting Countries)O
PEC ’s cartel policy during the A
rab-Israel conflict of 1973 &
later in the 1970s generated a flood of revenues for the oil states, Iran, Iraq, Kuw ait,
Saudi A rabia, Q
atar, U nited A
rab Em irates, Egypt, Libya, A
lgeria, Bahrain and O m
an.
Gulf Cooperation Council
Bahrain, Kuw ait, O
m an,
Q atar, Saudi Arabia &
U
nited Arab Em irates.
Established in 1981
Free services
• H
ealth Services
• Education
• Study abroad
• Services Subsidized ( electricity, w
ater and fuel)
• N
o tax
Oil prices falling
Iran •
O fficial Nam
e: Islam ic Republic of Iran (1935)
• Capital: Tehran
• O
fficial Language: Farsi •
Capital: Tehran •
Persian, Azeri,Kurdish, Lur, Baloch, Arab, Turkm en and Turkic tribes
• Iran is divided into five regions w
ith thirty-one provinces. The five adm
inistrative regions are Tehran, Isfahan, Tabriz, Kerm anshah &
M
ashhad. •
M uslim
(official) 99.4% (Shia 90-95%
, Sunni 5-10% ), other (includes
Zoroastrian,Jew ish
and Christian) 0.3%
, unspecified 0.4% (2011 est.)
• Iran is a founding m
em ber of the UN, ECO, O
IC (O rganization of
Islam ic Cooperation), and O
PEC
Tim eline
1908
The British discovered large oil reserves in Iran and form ed
the Anglo Persian oil com pany
1924
Reza Shah Pahlavi seized control of the country and began to m
odernize it
1941
Iran rem ained neutral during W
W II but Reza Shah leaned in
sym pathy tow
ards Germ any. By 1940, nearly half of all
Iranian im ports cam
e from Germ
any and 42% of all Iranian
exports w ent there. leading to occupation by the British and
the Soviets forcing Reza Shah Pahlavi out of pow er leaving
his son M oham
m ad Reza Shah Pahlavi to succeed the throne.
1951
M oham
m ed M
osaddeq attem pted to nationalize the British-
ow ned oil industry. The shah opposed and rem
oved him
from pow
er, but M osaddeq regained pow
er and forced the shah to flee Iran.
Tim eline
1953
1953-The shah returned to Iran w hen the CIA helped
overthrow M
oham m
ad M osaddeq
1963
1963-The shah im plem
ented “The W hite Revolution”
an aggressive cam paign of social and econom
ic w
esternization that w as m
et w ith a lot of opposition
1978
.1978-Iranians begin rioting to protest the shah’s authoritarian rule. In response, he enforced m
artial law .
1979
Shah fled Iran w hile Ayatollah Khom
eini returned from
France, w here he w
as exiled N
ovem ber 4
th Islam ic students storm
ed the U.S. Em
bassy in Tehran, taking 52 Am ericans hostage and
dem anded that the shah return from
receiving m edical
treatm ent in the U
S to face trial in Iran
Tim eline
1980
A United States backed Iraq invaded Iran starting a w
ar that lasts 8 years over territory.
1989
Ayatollah Khom eini died and Ali
Kham enei becom
es successor as the new
national religious leader.
1995
The United States placed oil and trade sanctions on Iran, accusing the country of sponsoring terrorism
, com m
itting hum an
rights abuses, etc.
2007
The United States announces new
econom ic sanctions against
Iran targeted to im pact the
country’s m ilitary and nuclear
program .
2009
Iran adm its that it’s building a
uranium enrichm
ent plant but insists it is for peaceful purposes only
2010
UN Security Council im poses
fourth round of sanctions against Iran over its nuclear program
.
Tim eline
2015
W orld pow
ers reach a deal w ith Iran on lim
iting Iranian nuclear activity in return for lifting of econom
ic sanctions and the return of 150 billion dollars of frozen funds.
2018
President Trum p announces the US w
ithdraw al from
the 2015 international deal on Iran's nuclear program
. Iran w arns
that it w ill begin increasing its uranium
enrichm ent capacity
if the deal collapses as a result of the US m ove.
2021
Biden adm inistration, a new
deal w ould have to be linked to
restraints on Iran’s m issile abilities and its support for
terrorist groups, as w ell as on its aid to the Syrian
governm ent.”
20… .
Israel
Israel •
Size-20,770-22,072 sq
m i
• Population-about
9.4 m
illion
• land
offers little
in the
w ay
ofnatural resources
on w
hich to
develop either
agriculture /
industry
• Silicon
w adi-
the area
ofIsraelw ith
the high
concentration ofhigh
technology com
panies
• The
m ilitary
technology industry
has been
one ofthe
country’s leading
export sectors→
com m
ercialinnovations beginning
in the
1970s w
ere based
on m
ilitary related
R& D
.
• Im
m igration
Betw een
1990 and
2000,eight hundred
thousand citizens
ofthe form
er Sov
iet U
nion im
m igrated
to Israel,m
any ofthem
w ere
highly educated
• highest
num ber
ofengineers per
capita in
the w
orld— 140
per 10,000
em ployee
Tim eline of Israel’s History from
1948-Present
• 1948-1949:Israel declares independence. First A
rab-Israeli w ar takes place. Thousands
of Palestinians fled or w ere driven from
their hom es (around 750,000). A
rm istice
agreem ents leave Israel w
it m ore land. Jordan annexes W
est Bank and eastern Jerusalem
. Egypt occupies G aza.
• 1949-1960s:A
pproxim ately one m
illion Jew ish refugees and 250,000 H
olocaust survivors settle in Israel.
• 1948-1977:Center-left dom
inates coalition governm ents. Prom
otes a self-sufficient, agrarian and secular Jew
ish dem ocracy w
ith a non-aligned foreign policy.
• 1956-1957: Israel partners w
ith Britain and France to invade Egypt in order to reopen the Suez canal to Israeli shipping and end arm
ed incursions by Palestinians from Sinai.
Israeli shipping allow ed due to U
N buffer force set up in Sinai and G
aza.
Tim eline (cont.)
• 1967: Six-day w
ar– Israel launches pre-em
ptive attack on Egypt w ith Jordan and Syria joining the
w ar w
hich lasts six days.
• 1977: Cam
p David Accord-- Anw
ar Sadat, Egyptian president, visits Jerusalem and begins talks to
have Israel w ithdraw
from Sinai and include Israel in the accords of 1978. Accords have Israel
expand Palestinian self-governm ent in W
est Bank/Gaza. •
1982: Israel invades Lebanon to expel PLO leadership. M
assacre of Palestinians by Christian phalangist allies w
here defense m inister, Ariel Sharon, is held responsible. M
ass protests and anti- w
ar m ovem
ent.
• 1985:a team
of skilled econom ists, led by M
ichael Bruno, put together an econom ic stabilization
plan that w ent into effect June 1985.
• 1993: Prim
e M inister Rabin and PLO
leader Yasser Arafat sign O slo Declaration
• 1995: Rabin is shot dead by Jew
ish extrem ist. Shim
on Perez takes over.
Tim eline (cont.)
• 2002: Operation Defensive Shield on W
est Bank is launched by Israeli arm
y. Barrier in and around W est
Bank starts being built. Palestinians see it as a tool to grab land. (Ruled illegal in 2004)
• 2006:Second Lebanon w
ar
• 2007: Annapolis conference establishes “tw
o-state solution”
• 2009: Right-w
ing parties w in elections. Benjam
in Netanyahu form
s governm ent.
• 2010: Relations w
ith Turkey w orsen as som
e Turkish activists are killed .
• 2011:Protests over cost of living and housing prices.
• 2016: Israel and Turkey begin talks to norm
alize relations
• 2016: U
S agrees to a m ilitary aid package w
orth $38bn over the next 10 years
• 2017:
Trum p recognizes Jerusalem
as capital of Israel. He also recognizes Israeli sovereignty over the Golan Heights (seize from
Syria in 1967 and then annexed). Internationally, sovereignty is not recognized.
• 2019: Benjam
in N etanyahu is charged w
ith bribery, fraud, and breach of trust in three cases.
• 2020: Benjam
in N etanyahu and Benny Gantz (centrist
alliance leader running in opposition) unite to tackle the pandem
ic. UAE establishes diplom atic relations
w ith Israel.
• 4.9%
ofIsrael's totalG
D P
is spent
on R&
D (U
S 2.84% )
• H
igh tech is m ajor driver
of econom y
Turkey (Turkiye)
• In Turkey during the tim
e of M ustafa
Kem al A
tatürk in the first half of 20 th
c, m
any reform s w
ere initiated in different fields such as politics, econom
ics and culture…
.abolishing the sultanate & e
caliphate system converting the republic
of Turkey into a secular state.
Turkiye (cont.)
• Turkey has played a key role in Europe's m
igrant crisis, having taken in m ore than tw
o m illion
Syrian refugees, com pared w
ith its ow n population of around 80 m
illion.
• A N
ATO m
em ber since 1952, one of the biggest m
em bers of the N
ATO alliance
• Istanbul is the largest city and industrial and com
m ercial hub w
ith m ore than 15 m
illion people.
• Turkey w
itnessed m ilitary coups in 1960, 1971 and 1980.
• The Islam
ic-rooted Justice and Developm ent Party (AKP) cam
e to pow er in N
ovem ber 2002. Its
leader Erdogan w as prim
e m inister from
2003 until 2014, w hen he becam
e the first Turkish president directly elected by the people.
• Since 1984, the outlaw
ed Kurdistan W orkers' Party (PKK) has led an arm
ed rebellion in the Kurdish-m
ajority southeast
References •
https://asiasociety.org/education/iran-20th-century
• https://w
w w .nytim
es.com /2021/04/02/w
orld/europe/us-iran-nuclear-deal.htm l
• https://w
w w .bbc.com
/new s/w
orld-m iddle-east-14542438
• https://w
w w .thoughtco.com
/is-it-iranian-or-persian-3555178
• https://historycooperative.org/history-of-iran/
• https://w
w w .ganintegrity.com
/portal/country-profiles/iran/
• https://gulfif.org/unem
ploym ent-crisis-in-iraq-and-iran-a-chronic-dilem
m a-for-state-and-society/
• https://w
w w .statista.com
/statistics/1033856/iran-gdp-grow th/
• https://w
w w .bbc.com
/new s/w orld-m
iddle-east-29123668
• https://w
w w .brookings.edu/blog/m
arkaz/2016/08/01/five-years-after-the-social-protests-in-israel-w hat-has-changed/
• https://w
w w .nordeatrade.com
/en/explore-new -m arket/israel/econom
ical-context
• https://w
w w .brookings.edu/blog/m
arkaz/2016/09/30/how -shim
on-peres-saved-the-israeli-econom y/
• https://country.eiu.com
/israel
• https://w
w w .oecd-ilibrary.org/sites/af8f331e-en/index.htm
l?item Id=/content/com
ponent/af8f331e-en#section-d1e2138
• https://w
w w .britannica.com
/place/Israel/Industry
• https://eh.net/encyclopedia/a-brief-econom
ic-history-of-m odern-israel/
• https://w
w w .jew ishvirtuallibrary.org/israel-studies-an-anthology-israel-s-econom
y