Middle East Unit
Three
Government &
Economics
A nation’s type of government refers to how that state’s executive,
legislative, and judicial organs are organized.
All nations need some sort of government to avoid anarchy.
Democratic governments are those that permit the nation’s citizens to
manage their government either directly or through elected
representatives.
This is opposed to authoritarian governments
that limit or prohibit the direct participation
of its citizens.
COMMUNISM
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a theory advocating elimination of private property.
a system in which goods are owned in common and
are available to all as needed.
Typically a one party system in which all political
power rest with the party (i.e. China).
Theocracy
A form of government in which God or a
deity is recognized as the supreme civil ruler.
Often religious institutional representatives
(i.e.: a church), replaces or is mixed into the
civilian government. Can be an Oligarchy,
Representative Democracy, and even a
Monarchy.
Unitary government system – the central government holds
nearly all of the power.
Local governments such as state or county systems may have
some power at certain times, but they are basically under the control
of the central government.
Central government has the power to change the way state or
county governments operate or abolish them altogether.
Some unitary governments have elected officials who, once
elected, may make and enforce laws without taking the opinions of
those at lower levels of government into consideration.
In a monarchy (area ruled by a king or emperor), the ruler and his
advisors make most of the
decisions – this is an example
of a unitary government
Saudi Arabia is a monarchy
and is an example of a unitary
government
Blue Countries are Unitary
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Federal government system – a political system in which
power is shared among different levels of government.
The states have some powers that the federal government
does not have such as the right to collect property taxes and
determine sales taxes.
The national government (or central government) also has
some powers that the state does not, such as the right to
declare war and make treaties with foreign countries
In the Middle East, Israel is an
example of a Federal government
A confederation government system is one in which the local
governments hold all of the power and the central government depends
on the local governments for its existence
The central government has only as much power as the local
governments are willing to give
The United Nations is a good example of a confederation
The United Nations can only offer advice and assistance when the
member nations agree to cooperate
This organization is a regional group organized to help the member
countries cooperate on economic
matters, encourage cultural exchanges,
and to help keep peace and stability in
the region
In the Middle East, the Organization
of Petroleum Exporting Countries
(OPEC) is an example of a Confederation
government
An autocratic government is one in which the ruler has absolute power
to do whatever he wishes and make and enforce whatever laws he
chooses
Individuals who live under autocratic governments do not have any
rights to choose leaders or vote on which laws are made and put into
practice
Some autocratic governments may allow the people rights in certain
areas like managing local affairs, but the central governments keeps
control of all the most important aspects of the country’s life
People usually have little or no power to
use against the government if they disagree
with decisions that government or ruler has
made
A monarchy such as Saudi Arabia, where
the king has ultimate power, is one example
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An oligarchy means “government by the few.”
In this form of government, a political party or other small
group takes over a government and makes all of the major
decisions.
The people of the country have little choice but to go along
with the decisions they make
This sort of government can be very similar to an autocratic
government.
Iran could be described as an
oligarchy, because a small group of
religious and political leaders makes
many of the important decisions
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In a democratic government system, the people play a much greater
role in decided who the rulers are and what decisions are made
Democracy comes from the Greek word “demos,” which means
“people.”
In this form of government, a great deal of power is left in the hands
of the people
People who live in a democracy generally recognize that there must be
some rules to organize society, but the goal is to leave as much
individual freedom as possible.
Decisions are often made by a majority of
votes, but there are also laws in place to protect
individual rights.
In the Middle East, Israel is a good example
of a democracy
Those organizing the new government of Iraq
are hoping to establish a democratic system
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In a parliamentary form of democratic
government, the people vote for those who
represent the political party they feel best
represents their views of how the government
should operate.
The legislature they elect, parliament, makes
and carries out (enforces) the laws for the country.
The leader of a parliamentary form of government is usually chosen
by the party that winds the majority of representatives in the
legislature.
This leader is often called a prime minister or premier and is
recognized as the head of the government.
The prime minister leads the executive branch of the government and
must answer directly to the legislature for the actions and policies
recommended.
In many parliamentary governments, a head of state (president or
king/queen) serves as ceremonial leader
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The actual work of the parliament is led by the prime
minister, who represents the leading political party in the
country.
He or she rules with the help of a cabinet, or group of
advisors.
A prime minister may be votes out of office if the party he
or she leads lose power
In the Middle East, Israel has a parliamentary government
Its citizens elect representative to the national parliament
called the Knesset.
The political party that gets the most votes in the Knesset
gets to choose the Prime Minister
A presidential form of democratic government has a president, or chief
executive, that is chosen separately from the legislature
The legislature passes the laws, and it is the duty of the president to
see that the laws are enforced
The president holed power separately from the legislature, but he does
not have the power to dismiss the legislature or force them to make
particular laws
The president is the official head of the government
The legislature does not have the power to dismiss the president,
except in extreme cases when the president has broken a law
The president is BOTH the lead of state and the head of the
government
Iran
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In 1979, the Islamic, or Iranian, revolution
overthrew the monarchy that had ruled Iran for centuries.
Today, Iran is a theocratic republic.
This means that the government is based on religious
principals (Islam) and the wishes of its people.
The head of state is the Supreme Leader, who is always
an ayatollah, or recognized religious authority.
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The Supreme Leader is chosen by the Assembly
of Experts and holds the position for life.
The assembly consists of 86 religious scholars.
The people elect the assembly and the
president by popular vote.
The president governs based on the religious
guidance of the ayatollah.
The supreme leader has final say over many of the
president’s decisions.
The president can serve two terms of four years each.
Iran’s legislature is called the Consultative assembly.
Citizens 16 and older can vote for the 290 members of the
Assembly.
Israel
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Israel has a representative parliamentary democracy.
The head of state is the president, who actually does
not have much power.
The Israeli prime minister is the head of the
government.
The legislature elects the president.
The president then chooses the head of the largest
political party to be the prime minister.
The prime minister must organize a coalition to
govern.
A coalition is a group of several different political
parties that have to cooperate in order to make
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This type of government is known as a coalition
government.
The Israeli legislature is called the Knesset.
The Knesset holds most of the power in the Israeli
government.
Israelis eighteen and older elect these officials by popular
vote.
While most of Israel’s Jewish citizens see themselves as
secular, meaning they do not feel the country’s laws should
be based solely on religious beliefs, many Israeli laws are
influenced by the Orthodox Jews, those who want
government policy to be made according to religious law
These people represent about 25 percent of the Israeli
population.
Saudi Arabia
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Saudi Arabia's government is one of the few absolute
monarchies in the world today.
The government is a monarchy governed by Islamic Shari’a
Law.(law based on the Quran)
In 2004, however, the Saudi government began allowing
men who are 21 and older to vote for half of their local
officials.
Men can also vote for one-third of the members of the
legislature.
The king has a cabinet called the Council of Ministers.
The Council mostly consists of members of the royal
family.
The Saudi legislature is called the Consultative Council.
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Saudi Arabia is ruled by a hereditary monarchy, which means the
government is led by a king who comes from a family that has ruled
the country for several generations.
The King of Saudi Arabia has been a member of the al-Saud family
since the 1920’s.
The king and his advisors, many of whom are his family members or
influential business and religions leaders in the country, make the laws
There is no written constitution, and the king rules for life
The people of Saudi Arabia do not choose the king
When a king dies, the Saudi family announces who the next king will
be from among their male family members
Conservative religious leaders also have a great
deal of influence in decisions made by the
monarchy
Religion and Southwest Asian Governments
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In the United States and many western nations, religion and
politics tend to be separate.
In much of the Middle East, however, religion and politics
are often mixed.
Countries like Iran based their systems of gov’t on religion.
Religion is important even in countries that don’t base their
governments on religion.
Many political parties in the Middle East are religious
Many parties represent different branches of Islam.
Since the majority of the people in the region are Muslim,
religion also influences the way people vote
Israel is a democratic state, but it was founded as a Jewish
homeland.
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Every society must deal with providing goods and services for its
people
Each society must also develop an economic system that can decide
how to use the limited resources of that society as well.
Three basic questions must be answered:
 1) What goods and services will be produced?
 2) How will goods and services be produced?
 3) Who uses the goods and services that are produced?
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In a traditional economy, most of the economic decisions
are made based on custom and on the habit of how such
decisions were made in the past.
Goods and services are exchanged instead of using cash as a
payment in a traditional economy
This is known as bartering
As areas become more urbanized, however, bartering gives
way to cash as payment.
In the Middle East, traditional
economies can still be found in rural
areas of many countries in this region
No country today can be described as
having a traditional economy
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A command economy is one in which government
planning groups make most of the economic decisions for
the workers
This group decides which goods and services should be
produces, as well as prices for the goods and wages paid to
the workers
No individual could decided to start a new business
The government decided what and where to produce the
goods.
The government decides what jobs the workers do and
where the goods produced would be sold
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The third basic type of economic system is a market economy.
In a market economy, economic decisions are made by individuals
who decide what to produce and what to buy
Other names for a market economy are capitalism, free enterprise,
or laissez-faire (French phrase that means to allow them to do as they
please)
Individuals who want to begin their own business may do so - they
take economic risk as they invest in their new business
If new businesses are successful, the people who organized and
funded it will be successful and make a profit
If the business fail, the investors will lose money
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Today, no countries in the world have economic systems
that are purely traditional, purely command, or purely
market systems
India is a good example of a mixed economy in Asia
The government makes some decisions about agriculture
and industry, but free enterprise and entrepreneurship are
very common.
Nearly all countries today have mixed economies – they
have characteristics of a free market and free enterprise as
well as some government planning and control
Not every country can produce all of the
goods and
services it needs
Because of this, countries specialize in producing those goods and
services they can provide best and most efficiently
They look for others who may need these goods and services so they
can sell their products
The money earned by such sales then allows the purchase of goods
and services the first county is unable to produce
In international trade, no country can be completely self-sufficient
(produce all the goods and services it needs)
Specialization creates a way to build a profitable economy and to
earn money to buy items that cannot be made locally
•Some countries in Southwest Asia are very rich in oil and natural gas,
but they lack farmland and the ability to produce enough food
•Saudi Arabia is able to specialize in the production of oil and natural gas
and sell these products at great profit on the world market
•The money earned in this trade can then be used to purchase food and
the technology needed to make their agriculture system more efficient
•Israel has little in the way of oil wealth, but they have become leaders in
agricultural technology even though they have a limited supply of land
suitable for farming
•They can sell this technology to earn the money to supplement their
limited production of food
Israeli Desert cabbage
Trade barriers are anything that slows down or prevents one country
from exchanging goods with another
Some trade barriers are put in place to protect local industries from
lower priced goods made in other countries
Other times trade barriers are created due to political problems between
countries
Trade is stopped until the political issues are settled
A tariff is a tax placed on goods when they are brought into (imported)
from one country to another country
The purpose of a tariff is usually to make the imported item more
expensive than a similar item made locally
This sort of a tariff is called a protective tariff because it protect local
manufacturers from competition coming from cheaper goods made in
other countries
A quota is a different way of limiting the amount of foreign goods that
can come into a country
A quota sets s specific amount or number of a particular product that
can be imported or acquired in a given period of time
A third type of trade barrier is called an embargo
An embargo is when one country announces that it will no longer trade
with another country in order to isolate the country and cause problems
with that country’s economy
Embargoes usually come about when two countries are having political
disputes
Embargos often cause problems for all countries involved
The US currently has embargos against Cuba, Iran, & North Korea
An example is when OPEC launched an oil embargo in 1973 against
nations that supported Israel in the Yom Kippur War
$Most of the countries in Asia have their own type of currency (money).
$In order for them to pay for goods as they trade with each other, they
have to establish a system of changing from one type of currency to
another
$This system is know as an exchange rate
$They also have to be able to exchange their currencies with those used
by other countries around the world
Human capital means the knowledge and skills that
make it possible for workers to earn a living producing
goods or services
The more skills and education workers have, the
better they are able to work without mistakes and to
learn new jobs as technology changes
Companies that invest in better training and education for their
workers generally earn more profits
Good companies also try to make sure working conditions are safe and
efficient, so their workers can do their jobs without risk
Companies that have invested in human capital through training and
education are most likely to have profitable businesses and more
satisfied workers than companies that do not make these investments
Countries where training and education are easily available often have
higher production levels of goods and services, therefore higher gross
domestic product, than countries that do not offer these opportunities
Israel has wide access to education and an economy that depends on
technology industries to make up for the country’s lack of natural
resources
Many Israelis work in industries related to medical technology,
agricultural technology, mining, and electronics
They also have highly developed service industries (businesses that
supply the needs of the rest of the working population)
Israeli GDP is very high because they have invested heavily in their
human capital
Saudi Arabia’s main industry is as an exporter of oil (petroleum)
The technology involved in the oil industry is complicated and
requires well-trained and educated labor force
Saudi Arabia also has enormous building projects which require
investment in human capital
By contrast, some Saudi citizens still practice traditional economic
activities such as farming and herding animals
Because oil is such an important part of the world’s economy, the
Capital goods (the factories, machines, and technology that people use
to make products to sell) are important to economic growth.
Advanced technology and the organization of this technology into
factories where many workers can work together increases production
and makes the production more efficient
Producing more goods for sale in a quicker and more efficient way
leads to economic growth and greater profit
This greater profit leads to a higher GDP
Middle Eastern countries have invested heavily in
Capital Goods in such areas as oil production,
communications, and the
defense industry.
Distribution of natural resources throughout Asia plays a
major part in determining the type of work people do and how
comfortable they are able to live
A natural resource is something that is found in the
environment that people need
Water, trees, rich soil, minerals, and oil are all examples of
natural resources
One of the most valuable resources in this part of the world
is rich farmland
Literacy, or the ability to read and write, has a big effect on the
standard of living of a country
Those who cannot read or write have a very difficult time finding
decent jobs
Lack of education also prevents many young people from becoming
the engineers, doctors, scientist, or entrepreneurs that modern economies
need in order to bring improvements to their countries
In many parts of the world, education is only available to those who
can afford to pay for it themselves
In those countries, the literacy rate is often quite low
Countries that have stronger economies usually make money available
so that anyone who wants an education can go to school
One way to measure the standard of living is the Gross Domestic
Product, or GDP
The GDP is the value of all goods and services produced within a
country in a given year and converted into US dollars for comparison
When divided into a value per capita (or per person), it can be used as
a measure of the living conditions in a country
The higher the GDP value, the better the living conditions in the
country
Part 4 - Middle East Economics
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There are many different types of economic systems
in the Middle East.
Many countries have mixed economies with different
levels of government control.
Some countries are less developed than others in the
region.
Middle Eastern countries have thrived on producing
exports to other countries.
Cash crops have included grain, silk, and cotton.
For the last sixty years, the region’s main export has
been oil.
The region imports much of its food and other
essential products.
Oil
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Oil is one of the most important and valuable natural resources in the
Middle East
Oil and Natural gas are called fossil fuels, which mean they were
created when plants and animals that lived centuries ago decayed
underground
Oil and natural gas are also considered non-renewable natural
resources, meaning they cannot be replaced once they are taken out of
the ground
Most of the world's industrial nations depend on a steady supply of oil
and natural gas
The US has to import nearly half of all the oil it uses, almost 18
million barrels every day
Many countries of the Middle East have become very rich over the
past 50 years as the world demand for oil and gas has increased
Over half of the world’s known oil reserves come from the Middle
Israel
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Israel has a mixed economy that is also technologically
advanced.
The Israeli government and private Israeli companies own and
control the economy.
Israel does not have many natural resources.
Israel has to import grain, oil, military technologies, and many
other goods.
The country is a producer of high-tech equipment, electronics,
biomedical industries, and cut diamonds.
The service industry accounts for much of Israel’s economy –
areas such as insurance, banking, retail, and tourism account
for over half of it.
Israel relies heavily on US economic and military aid.
Saudi Arabia
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Saudi Arabia also has a mixed
economy but leans toward
government control..
Saudi Arabia’s main export is oil.
The oil industry has made the
Saudi royal family quite wealthy.
In fact, several members of the
royal family are among the
wealthiest people in the world.
Oil accounts for well over half if
the country’s economy.
Oil funds the country’s
education, defense,
transportation, health,
and housing.
The government is trying to encourage more private businesses to
boost the economy and decrease the countries dependence on oil.
Iran
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Iran has great oil wealth, like Saudi Arabia, through there is
also a more mixed economy that has grown in spite of
government attempts to keep tighter control
Iran’s command economy
has not been very efficient
in recent years
Even though there is oil
wealth, many Iranians do
not share in the money as
much of it goes toward the
military
Turkey
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The government of Turkey controls
the country’s economy.
Turkey’s economy, however, is not
entirely a command economy.
A large part of the country’s economy
is based on farming.
The Turkish government has had
disputes with other
use of natural
the Euphrates
Clothing and textiles are the countries
industries.
The service industry makes up about
half of Turkey’s economy, as it
does Israel's economy.
many
countries over its
resources, such as
River.
major
Economic Growth
Israel
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Economic growth has been difficult
to achieve for many Middle
Eastern countries.
War is a major threat to the region’s
economies.
For example, both war and a large number of immigrants present
challenges to the Israeli economy.
The Israeli government has taken control of certain economic
activities in order to address these problems.
The Israeli government controls most activities related to
agriculture.
This helps the nation’s economy because the county’s natural
resources are so limited.
Saudi Arabia
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Some gulf countries invest
money to make their
economies more diverse.
In the last few decades, Saudi
Arabia has begun
encouraging the
development of industries other
than oil in order to make its
economy stronger.
In 1976, the Saudi government crated the Saudi Basic Industries
Corporation.
The SBIC invests in capital goods.
These capital goods have made the country a steady producer of steel,
industrial gasses, plastics, and petrochemicals.
Iran
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Wars can also influence a country’s economy by influencing what
the country decides to produce.
Iran’s war with Iraq led Iran to put more money into its military
industries.
The number of people without jobs is Iran is high.
The country provides less protection for its human capital than other
countries do.
For example, Iran does
not have private
labor unions to
protect workers.
It is a mixed economy
on the side of
government
control of oil and
major industries.
The 1973 Oil Crisis
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Some trade barriers are political.
Sometimes governments limit trade with other countries because
they disagree with the actions or policies of those countries.
This is a trade barrier designed to purposefully hurt the economy
of another country.
The 1973 oil crisis is one example of such a trade barrier.
The 1973 oil crises began on October 17, 1973.
OPEC announced that its member nations would no longer ship oil
to countries that had aided Israel in its recent war with Egypt.
Those countries included the US and many in Europe.
OPEC raised the price of oil 70%.
As a result, the price of gasoline in the US quadrupled over
several months.
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These actions had a large impact on industrialized nations
because of their growing dependence on oil and gas.
Western countries had been used to cheap and plentiful oil
resources before the crisis.
Oil consumption had doubled in the US.
At the time, the US was using about 1/3rd of the world’s
energy.
The crisis caused the value of the US dollar to drop.
It also had a widespread negative impact on
the world economy.
OPEC started shipping oil to Western
nations again in 1974.
Western economies began to get stronger again.
Now that you are an expert on the Middle East, can you
describe why the cartographer made changes to this map?