The region’s rich are certainly getting richer, to the delight of the purveyors of luxury goods. As the jewelers of Paris and the watchmakers of Geneva will testify, the influx of rich Arabs into Western Europe each year turns the summer season into boom time; and the wealthy don’t care too much about the exchange rate of the euro, sterling, or the Swiss franc.
London in particular has long been the Mecca, as it were, of Middle East shoppers. However, in the globalized 21st century, if you can’t go to Regent Street, it will come to you — the latest example of this being the launch in Amman of a branch of the up-market UK toy store, Hamleys. Choosing the Jordanian capital for a first- ever outlet outside Europe, Hamleys opened in Amman in mid- June to considerable fanfare. This would have been hard to imagine a decade ago, when the price of oil was closer to ten dollars a barrel, but with hordes of Gulf Arabs and prosperous Jordanian expats now descending on Amman every summer, the British toy retailer will be doing a brisk business over the next few months. Come winter, however, Amman goes back to being just another capital of a middle- income developing country. No matter: as summer comes around again in 2009, affluent Arab consumers will return, a pattern also replicated in Beirut and Damascus.
Some of this petro-largesse trickles down to the poor, and a considerable swathe of the local population ends up benefiting for one financial quarter, in what has become the Arab Levant’s annual summer boom. However, this should be a complement to business during the rest of the year, not a substitute for nine months of relative slump. Capital cities — and societies as a whole — cannot depend for their livelihood on such a pattern of business, which is potentially unstable in the absence of solid infrastructures and high standards. Faced with shoddy service or rickety infrastructure Gulf Arabs, and to a lesser extent Levantine expatriates, will eventually head elsewhere. There is no shortage of convenient leisure destinations; places from Malaysia to Morocco — and Turkey nearer by — have become magnets for tourists, many of them from GCC states. So the hoteliers and boutique owners of Lebanon, Syria, and Jordan, not to mention policymakers, had better get their acts together to keep their customers.
The other problem with these sub-regional summer booms is what economists call the demonstration effect. Put simply, when a Jordanian living on the equivalent of a few hundred dollars a month sees lots of richer people around him between June and September spending that amount in an hour, envy sets in. In an ideal world, the poorer Jordanian would work harder and make enough to buy the luxuries he sees around him. In fact, with an attitude left over from the bad old days of the late 20th century, he often begs, borrows, or steals to acquire these things before he has managed to be more productive, thus leading to lower savings and a pattern of buying that is wasteful.
Waste was not a big problem back in the 1970s, when newly prosperous Arab states like Jordan created a pseudo- welfare state, subsidizing such basic items as bread or sugar. From the 1990s, that changed, but a shift in the way people perceive work and productivity has not yet happened. For many in the region, the old oil boom brought with it poor attitudes to work, and conspicuous consumption; the new regional prosperity of the past half- decade threatens to do the same, except that the state is no longer there to cushion things through subsidies of basics like food or electricity. That is because Jordan and the rest of the non-oil Arab economy has had over the past decade or so to cope with changing the roles of the public and private sectors by reducing handouts.
Such a process is difficult, but the alternative is to go back to old patterns of waste and sloth. Mindsets that saw poorer Jordanians and others in the Levant sponging off the state may now be converting into similar attitudes towards the affluent. That in turn is promoted by the pressure to consume. I am not saying “Hamleys go home” since my young children would never stand for it; neither in a free market do I want to ban the sale in Beirut of Zegna ties. However, a closer look by regional policymakers at the rest of the economy would be good. Summer shopping and tourism are fine, but cannot alone spearhead sustainable growth. In fact, they could end up creating new problems.
Riad al Khouri is visiting scholar at the Carnegie Middle East Center, Beirut; and senior fellow of the William Davidson Institute, the University of Michigan