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Abstract
Although borderland regions of the Middle East and North Africa represent active sights of economic and social exchange, they remain peripheral to the analysis of the region’s political economy. Conventional accounts of cross-border informal trade tend to emphasize its illegality based on existing economic regulations, overlooking the deep political foundations of such trade. This article posits new arguments on the political economy significance of cross-border informal trade in the Middle East, highlighting its relevance for studying processes of state formation, durability of authoritarian regimes, conflict, informal institutions and the inter-dependence between domestic and external political economy domains. Our analysis underscores the need for a more holistic understanding of border economies that moves the field away from a security-centered view that treats such trade as mainly a law and order issue.
Acknowledgements
The authors would like to thank Grace Fussell for her assistance with maps in this paper, and three anonymous referees for their constructive suggestions that greatly improved the paper. This work was sponsored by the Economic Research Forum (ERF) and has benefited from both financial and intellectual support. The contents and recommendations do not necessarily reflect ERF’s views.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 By some estimates, the IS has been making between $1 and $1.4 million per day from oil smuggling through the two fields, Ajeel and Hamrin-2, making cross-border informality a central security issue. http://www.chathamhouse.org/expert/comment/15203
2 Some examples in the policy literature here include Timmis (Citation2017), Hanlon and Herbert (Citation2015) and International Crisis Group (Citation2013).
3 We define MENA to include Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Syria, Tunisia, Turkey, the United Arab Emirates and Yemen. In engaging with some of the literature on the region, we at times refer to the region’s Arab countries or states, which we define as the same group without Iran, Turkey and Israel.
4 Although informal trade does not feature in their analysis.
5 A 2013 study on Tunisia found that informal cross-border trade was equivalent to more than half of its official trade with Libya, and more than its entire official trade with Algeria (Ayadi et al., Citation2013). In Iran, the size of smuggling in 2007 was estimated to lie in the broad range of 6–25% of total trade (Farzanegan, Citation2007). A recent study for the Algeria-Mali corridor suggests that formal trade pales in comparison to the thriving informal trade across the border. For Algeria, the formal cross-border trade between the two countries was equivalent to only 1.2% of the informal trade (Bensassi et al., Citation2015).
6 On Northern Mali, this point is eloquently made by Scheele (Citation2012).
7 A particularly colorful example of this trade was uncovered early in 2016, when customs officials stopped a shipment of 48,000 cans of Heineken beer disguised as Pepsi cans.
8 In a security council statement in 2012, UN Secretary General Ban Ki-Moon said of the flows of goods through porous borders: ‘Such illicit flows undermine State sovereignty. They are threats to peace and security’ (SC/10624, 25 April 2012).
9 Although in the empirical context of sub-Saharan Africa, Meagher (Citation2014) also provides an excellent introduction into changing discourses and framings of smuggling in academic and policy literatures.
10 The list of failed state indicators drawn up by Rotberg’s lists ‘smuggling’ alongside ‘civil wars characterised by enduring violence’, or ‘cessation of functioning legislatures’ (2010, pp. 5–9). Similarly, in Schneckener’s work on the subject (2004), smuggling features as one of the main ‘risk areas’.
11 This mirrors the trend in Africa where falling trade barriers were actually associated with robust informal trading activity (Meagher, Citation2003).
12 See Gallien (Citation2018), Assaad (Citation2014).
13 See Joffé (Citation2002) for a detailed elaboration of the Algerian case.
14 See, for example, Boone (Citation1994), Titeca (Citation2012), Raeymaekers (Citation2014).
15 As Hanlon and Herbert (Citation2015, p. 40) note: ‘Corruption was pervasive in the Ben Ali security apparatus, involving entire networks of customs agents, police officers, and senior officials. During that time, the lion’s share of the proceeds from bribes and other illicit activities – as much as 80% – went to Ben Ali and his immediate family’.
16 See Freund, Nucifora, & Rijkers (Citation2014), Eibl and Malik (Citation2016).
17 See Haddad (Citation2012) for a detailed discussion on this.
18 See Boughzala and Hamdi (Citation2014), Verme, Milanović, Al-Shawarby, Tawila, and Gadallah (Citation2014), Hibou (Citation2011), Anderson (Citation1987).
19 ‘In the Libya-Tunisia corridor, informal trade is one of the largest employers in the region analyzed, if not the largest. Majority of those involved in the trade are local residents. Most are young men, with primary or secondary education and four dependents on average. Their income puts most of them under the Tunisian national poverty threshold’ (Ayadi et al., Citation2013).
20 See Hüsken (Citation2018), Ellis (Citation2018).
21 For a detailed treatment on the subject, see Khan (Citation2010).
22 The ISIS in Syria, Iraq, and Libya is reported to have derived its revenues from control over informal economy, especially the smuggling of oil and consumption goods.
23 See Gallien (Citationin press) for an extensive discussion of these two case studies and their ability to challenge mainstream conceptions of informal institutions in political economy.
24 On the transfer of business models between formal and informal economic spheres, see also (Meagher, Citation2018).
25 It can also provide important ‘reality-checks’ to more economistic approaches, and new strategies for data collection and comparison.
Additional information
Notes on contributors
Adeel Malik
Adeel Malik is Associate Professor at the University of Oxford’s Department of International Development and holds the Globe Fellowship in Economies of Muslim Societies at the Oxford Centre for Islamic Studies. He teaches and researches on issues of Middle Eastern political economy. He recently co-edited a volume on Crony Capitalism in the Middle East: Business and Politics from Liberalization to the Arab Spring (OUP 2019).
Max Gallien
Max Gallien is a PhD candidate in International Development at the London School of Economics and Political Science. He specialises in the politics of informal and illicit economies, smuggling and the political economy of North Africa.