Embracing the new Washington consensus
21 June 2023
Commentary
Edmund O'Sullivan
Former editor of MEED
Speaking at a Brookings Institute conference in Washington DC in May, US national security adviser Jake Sullivan set out America’s international economic priorities under President Joe Biden.
Deep trade liberalisation had failed, as had prioritising growth over its form. The merits of global economic integration had been overstated. Regressive tax cuts, lower public investment, corporate concentration and weaker unions had failed America’s middle class — and the world.
Sullivan declared that Biden had restored “an economic mentality that champions building …and a foreign policy for the middle class”.
His new industrial policy will mobilise public and private investment worth $3.5tn over the next decade.
The consequences will be significant. The Congressional Budget Office forecast in February that the US budget deficit in the 10 years starting this July will total $20tn.That is an average of more than 6 per cent of GDP for the period as a whole, and twice the level once deemed to be the sustainable maximum.
The Washington Consensus – neoliberal ideas that for 40 years prioritised fiscal discipline, privatisation and international trade liberalisation – is officially dead. And Biden’s new one rejects everything that the old one championed.
The IMF now offers a toolkit for Middle East nations to manage fiscal risk
For most Middle East nations, this has not come a moment too soon. A report by the Washington-based IMF published in June painted a grim picture of the economic prospects that low-income Middle East nations face.
They experience large macroeconomic shocks that cause debt to increase by an average of 12 per cent of GDP every eight years. The region is more vulnerable than other parts of the world to commodity price, exchange rate and interest rate fluctuations. Governments are exposed to risks incurred by state-owned enterprises, troubled banks, public-private partnerships and power purchasing agreements that underpin electricity sector privatisations.
These problems are compounded by natural and climate disasters and health crises such as the Covid-19 pandemic.
Risk management
Echoing the new Washington Consensus, the IMF no longer issues calls for tough fiscal action and threats of financial punishment if it is not forthcoming. Instead, it now offers a toolkit for Middle East nations to measure and manage fiscal risk.
The majority of the countries in the region – and at least half its population, who live in or near poverty – will be relieved that economic shock doctrines are a thing of the past.
Sullivan said the new approach was needed to counter China’s growing influence, particularly in the global south. He is right, but it will take more than words to make that happen.
Connect with Edmund O’Sullivan on Twitter
More from Edmund O’Sullivan:
> Trump, Turkiye and the trouble ahead
> A century of errors for the Middle East
> The pros and cons of the biometrics boom
> Learn from history or be doomed to repeat it
> In memory of Abdullah Jonathan Wallace
> Energy challenges cloud 2023 outlook
> Wobbling technology teaches digital caution
> Gulf stands to benefit from global turmoil
> Europe’s plans will change world energy
> Geopolitics takes over oil agenda
Register for MEED's guest program now to access this article.
Exclusive from Meed
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Qatar seeks to establish new industrial area in Mesaieed16 July 2026
Qatar’s Ministry of Commerce & Industry and state enterprise QatarEnergy have signed an agreement to cooperate on evaluating and allocating hydrocarbon-derived resources to support the establishment of a new medium industries area in Mesaieed Industrial City.
Under the terms of reference signed between the parties, QatarEnergy will implement a governance mechanism for the allocation of hydrocarbon-derived feedstock to qualifying industrial investment opportunities for the proposed new medium industries area in Mesaieed Industrial City.
“The agreed terms of reference stipulate the evaluation and allocation of hydrocarbon-derived resources, natural gas, power and related natural resources to downstream derivative industrial investment opportunities,” QatarEnergy said in a statement.
“It will also ensure the optimal use of national resources and enhance the added value of the industrial sector by establishing a joint governance framework to evaluate and allocate resources required by qualified industrial investment opportunities,” it added.
QatarEnergy currently operates crude oil refining facilities, including natural gas liquids units, as well as petrochemical production complexes and other units in the hydrocarbon value chain, in Mesaieed Industrial City, situated around 45 kilometres south of Doha.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17688383/main.jpg -
Bahri signs deal for two offshore vessels with Dubai shipyard16 July 2026
Bahri Logistics, a division of Saudi Arabia’s national shipping company Bahri, has placed an order for the construction of two advanced offshore support vessels with Dubai-based Grandweld Shipyard.
Grandweld will custom-build the two vessels to meet Bahri’s operational requirements for offshore activities at Ras Tanura port in Saudi Arabia, one of the world’s busiest oil and gas bunkering and export hubs.
The vessels will be built at Grandweld’s shipyard in Dubai Maritime City and are expected to be delivered in August, following a 12-month building period.
The vessels will feature the latest navigation and safety technologies. They are designed to perform multiple offshore support functions, including vessel clearance, crew changes and emergency response, while adhering to international maritime standards.
The newbuild agreement with Grandweld aligns with Bahri’s broader strategy “to modernise its fleet, enhance technical capabilities, and adopt more energy-efficient and environmentally responsible designs”.
“Through continued investments in technology, infrastructure and fleet diversification, Bahri Logistics aims to deliver smarter, more sustainable logistics solutions that contribute to the Saudi Green Initiative and the kingdom’s long-term economic diversification goals,” the Saudi Stock Exchange-listed (Tadawul) company said in a statement.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17687877/main.jpg -
Egypt intensifies efforts to create petroleum stockpile16 July 2026
Egypt is intensifying its efforts to secure and maintain a sufficient strategic stockpile of petroleum products, according to a statement from the country’s cabinet and its Ministry of Petroleum & Mineral Resources.
The Egyptian government is closely monitoring regional developments and their potential repercussions on the energy sector, according to the statement.
Egyptian Prime Minister Mostafa Madbouly said that the government is implementing flexible plans and looking at alternative scenarios so that it can respond quickly to emergencies while ensuring the uninterrupted supply of fuel to citizens and key industrial sectors.
Egypt is intensifying its efforts to build up strategic stockpiles amid heightened uncertainty about future global oil and gas supplies.
Since the US and Israel attacked Iran on 28 February, there has been significant disruption to shipping through the Strait of Hormuz, which is a key transit route for oil and gas exports from the Middle East.
On top of this, the regional war has involved multiple direct attacks on refineries in the GCC, increasing uncertainty about the future availability of refined products.
Aside from Motafa Madbouly, the meeting was also attended by Hassan Abdullah, who is governor of the Central Bank, Minister of Finance Ahmed Koguk and Minister of Petroleum and Minerals Karim Badawi.
During the meeting, Badawi gave a presentation on the available quantities of different petroleum products and explained the details of the procedures currently being implemented to increase the strategic stock of petroleum products.
A review of the coordination framework and joint work between the Ministry of Finance and the Central Bank also took place during the meeting.
This was in order to ensure the management of financial tools needed to strengthen the country’s strategic inventory, according to the statement.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17685719/main.jpg -
Tunisia orders $86m of trainsets from Chinese supplier16 July 2026
Tunisian public transport operator Transtu has finalised an $86m agreement with China’s CRRC Nanjing Puzhen.
CRRC will supply 18 new electric trainsets for the capital’s northern suburban rail network, which links Tunis to La Goulette and La Marsa.
Each new trainset will be air-conditioned and capable of carrying up to 400 passengers, including 90 seated riders, with a top speed of 100 km/h. Once operational, the trains are expected to run at six-minute intervals during rush hour and every 12 minutes during off-peak hours.
The deal forms part of a broader fleet renewal effort by Transtu, which has struggled in recent years with operational setbacks that have taken a toll on the quality of public transport across Greater Tunis.
The acquisition is designed to boost capacity on the heavily used line as ridership continues to grow, while also enhancing safety standards and overall service quality.
Funding for the project comes jointly from the European Bank for Reconstruction & Development and the European Investment Bank.
Beyond the trainsets, the contract includes five years of maintenance coverage, a supply of spare parts and maintenance equipment, and an underfloor wheel lathe aimed at improving long-term fleet reliability.
This latest investment fits into Tunisia’s larger railway modernisation strategy, under which the government plans to invest $12bn by 2040 to expand and upgrade the country’s rail infrastructure.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17683957/main.jpg -
PIF developer tenders 365-metre Mecca residential tower16 July 2026
Rua Al-Haram Al-Makki has tendered the main construction package for the Ajyad residential tower, a 365-metre high-rise development in Mecca’s central area, close to the grand mosque.
The bid submission deadline is 30 September.
Rua Al-Haram Al-Makki Company was established in October 2017 and is a wholly owned subsidiary of Saudi Arabia’s Public Investment Fund.
The project team includes US-based Marriott International as residential operator, Hanmi Global Saudi as project management consultant, Saudi Diyar Consultants as construction supervision consultant, and PLP Architecture as lead design consultant and construction-stage design guardian.
The tower rises 84 floors with four basement levels. It comprises a total of 212 units, including 82 three-bedroom apartments, 85 four-bedroom units, 29 penthouses and 16 duplex villas.
The scheme has a gross floor area of 209,231 square metres (sq m) and a built-up area of 242,976 sq m.
The site is currently being cleared by a demolition contractor, with the existing mat foundation and retaining walls to be handed over to the main contractor, who will build the new superstructure on the retained raft.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17683664/main.jpg