Economic Interdependency and Conflict

Economic interdependence among Arab countries has intensified since the mid 1990s. Such date coincided with the establishment of the World Trade Organization (WTO), and the proliferation of the preferential trade agreements (PTAs) worldwide in a second wave (after the first wave that took place in the 1950s and 1960s). Arab countries have embarked on the Pan Arab Free Trade Area (PAFTA), as well as engagement in new sub regional trade agreements (e.g. Agadir), or deepening the existing ones (e.g. the GCC). Moreover, Arab countries have signed several PTAs with non Arab countries including developed partners (e.g. the EU, the US, and Canada) as well as developing countries (e.g. COMESA, Tripartite, and AfCFTA). The move towards increased economic interdependence has been part of the globalization move (with intensified trade and investment relationships) around the world that was reinforced by the international organizations as the World Bank and the WTO, which have been promoting free trade. The academic literature at that time pointed out to the positive spillover effects of such increased economic interdependence and its potential effect in curtailing and preventing regional conflicts (Barbieri, 1996).  

The frictions arising between different Arab countries among each other (e.g. Qatar with other GCC members, Qatar and Egypt) or between Arab countries and non Arab countries (e.g. Egypt and Turkey or Egypt and Ethiopia) raises questions on the ability of such PTAs to prevent or lessen conflicts. The question that then arises is why didn’t increased economic interdependence prevent or lessen such frictions and potential conflicts? Are we missing something here, as that there is no relationship at least in terms of the effect of increased economic interdependence on conflicts? Or it is in the design of the PTAs which were shallow and not deep enough and hence did not provide their necessary effect in terms of increasing economic interdependence to start with, and providing the intense type of cooperation among the different parties. Or such PTAs lacked the necessary conflict management mechanisms that could have played a role in lessening the increasing frictions.

ERF acknowledges the generous financial contribution of the Ford Foundation (FF).