The Political Economy of Wasta: Use and Abuse of Social Capital Networking
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The Political Economy of Wasta: Use and Abuse of Social Capital Networking Mohamed A. Ramady Editor The Political Economy of Wasta: Use and Abuse of Social Capital Networking Editor Mohamed A. Ramady Finance and Economics King Fahd University Dhahran , Saudi Arabia ISBN 978-3-319-22200-4 ISBN 978-3-319-22201-1 (eBook) DOI 10.1007/978-3-319-22201-1 Library of Congress Control Number: 2015954665 Springer Cham Heidelberg New York Dordrecht London © Springer International Publishing Switzerland 2016 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. 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Over view To accept a benefi t is to sell one’s freedom Proverb Introduction The issue of wasta is like the proverbial elephant in the room—everyone knows it exists but avoids mentioning the fact due to the sensitivity of the subject. The term wasta is used all over the Middle East and stems from the Arabic root for “middle” or “medium”. It indicates that there is a middleman or “connection” between some- body who wants a job, a license or government service and somebody who is in a position to provide it. Wasta describes the phenomenon of using “connections” to fi nd jobs and obtain government services, licenses or degrees that would otherwise be out of reach or would take a long time or effort to obtain. Although the effects of wasta may also be positive, they are usually considered as negative and affect decision-making on all levels of Middle Eastern societies and other societies who use social capital networking in a negative manner. The use of wasta causes inequality and ineffi ciency when people without the necessary skills get jobs or are even promoted in case their inability becomes obvious. Although wasta is not identical to corruption, a Western perspective would clearly regard it as an abuse of power to meet private ends. However, in traditional societies, to help members of the tribe, family or region seems to have become regarded as normal. Wasta is often deplored but mostly in an anecdotic manner when used by others. One frequently fi nds that those people who complain about wasta do not hesitate to use their own. Wasta social network concept of interpersonal connections is often rooted in family and kinship ties and is highlighted in many cultures and religions, for example, in the Islamic Ummah which stresses the universality of family para- digms of social order, trust, favours and its relevance for business practice. This vii viii Overview gives rise to a comparative perspective on social network concepts across other cultures and regions of the world such as ubuntu , guanxi , harambee , piston , jeitinho , svyazi , “ big man ” and naoberschop . The volume brings together contributors from a wide variety of academics and those with professional working experience in the Middle East, Europe and Asia in the private and public sectors with fi rsthand knowledge on the workings of wasta . Wasta has its advantages and can also be viewed in its innocence and optimality, with a strong sense of how commitments made are bound by honour as well as mutual obligation. In more atomised societies where relationships are essentially transactional amongst alienated parties, connections can be unidimensional and enforceable only through litigation. Notions of honour and equity tend to be either entirely absent or be superfi cially masqueraded, as the world rushes to a globally litigious basis for all relationships in the name of equity. Rather than bribes, wasta relies on reciprocity. This and other aspects make it diffi cult to measure wasta , which may account for the rather good performance of the Gulf Cooperation Council (GCC) states in widely used corruption rankings like the Corruption Perceptions Index (CPI). The good ratings seem to contradict qualitative assess- ments that regard wasta as widespread and pervasive in the GCC. In many coun- tries, the phenomenon is often linked to oil wealth and the fact that some governments can afford the ineffi ciency resulting from wasta while others cannot. Furthermore, wasta relies heavily on tribal affi liations and is very likely to strengthen them to the detriment of the emergence of a national identity. The volume discusses the phenomenon of wasta from various perspectives: conceptual, social, economic and political with regard also to its effects on education and the labour market where they are particularly harmful and obvious. In other societies, the use of social net- working is an accepted form of social capital which binds certain class of people together to achieve their ends. As a result, people get jobs not because of their merits or qualifi cations but because of their connections, family or tribal ties. In about the same vein, people with wasta have better and quicker access to government services than those without. Although money and bribes may at times be involved, they go beyond the key concept of wasta . By its very nature, wasta is an area of grey or even black information and there- fore—like corruption—hard to assess. The Corruption Perceptions Index ( CPI ), published annually by Transparency International ( TI ), is, as the name indicates, a rating based on the perception of corruption, and this perception may vary strongly according to what the observer is used to and to which layers of society he or she has access. In some societies, corruption is openly discussed in the media while it is taboo in others—at least when powerful people are concerned. Furthermore, one will frequently fi nd that people (all over the world) blame wasta for all kinds of economic ills but do not hesitate to make use of their own connections when needed. “Corruption” can be briefl y defi ned as “the abuse of entrusted power for private gain”. Given that the “connection” expects to benefi t from a service in return or will use his or her infl uence for family members, a Western perspective on wasta will probably consider this as a form of corruption, while it is widely perceived as some- thing “natural” and not criminal in most Middle Eastern societies, as this volume Overview ix will explore. Perceptions of corruption and cross-country surveys based on perceptions and media have therefore several fl aws that are, however, well known. According to the CPI, the GCC states rank amongst the upper (supposedly less cor- ruption ridden) 70 countries out of a rated 175, indicating that only a modest level of corruption is perceived. In 2013, the UAE reached rank 26, which is just below Austria, while Kuwait ranked 69 found itself one rank below Italy. The other GCC countries are in between, with Qatar being ranked just behind the UAE and Bahrain, Oman and Saudi Arabia achieving similar but slightly better results than Kuwait. The same more or less holds true for the related aggregate indicator “Control of Corruption” (World Bank Governance Indicators). Here, the GCC states mostly received positive ratings (above 0), which indicate a rather good control of corrup- tion. At times, however, Kuwait and Saudi Arabia were assigned ratings below 0. Qatar and the UAE, on the other hand, have reached values above 1 and have even approached the ranks obtained by the USA, although they are still far away from the Scandinavian states which rank above 2. For all GCC states and for the UAE and Qatar in particular, we have to assume that a high percentage of the observers are expatriates. Whether wasta affects the recruitment and realm of expatriate labour to the same degree as the recruitment and working place of locals is unclear but is explored in more detail in Pushki and Jones’ contribution in this volume. Wasta can be found in many spheres of life whether in education, employment, project awards and business management structures. The GCC countries have announced initiatives to combat corruption at the national level by promoting trans- parency in project awards to rationalise national spending and are publicly naming and shaming offi cials and contractors who have used wasta and infl uence to obtain projects. In April 2015, Saudi Arabia, the Arab world’s largest economy, announced that all government projects and purchase contracts amounting to SR100 million ($26.7 million) can only be awarded with the approval of the Council of Ministers. The previous limit was SR 300 million ($80 million). While this might have been necessitated by government expenditure rationalisation following the 50 % drop in oil prices from $100 to $ 55–60 p/b, the intention of the Saudi government was clear: that even “small” projects (by Saudi standards) could now be scrutinised to avoid “hidden costs” and corruption.