Covert Regime Change Operations in the Middle East

Regime change has been a popular policy instrument in the Middle East since the United States’ 1953 intervention in Iran, and has been advocated by many in the foreign policy community. Its advocates argue that the regime in question is corrupt and harming its citizens, and that a new government would be more friendly to American interests. However, there is considerable scholarly consensus that the resulting democratization and economic growth rarely follow the course proponents have in mind. In fact, most covert regime change operations yield no clear successes, several catastrophic failures, and a track record that is replete with costs and unintended consequences far beyond the initial short-term benefits.

To study the effects of covert regime change, we design a sequential global game in which atomistic citizens try to undermine a non-democratic regime by means of riots. The regime’s resilience to these riots depends on both its strength and the discontent of its citizens. Our model shows that a riot can be triggered only when the share of active citizens exceeds the regime’s resistance threshold. This threshold increases with the participation rate q, which is shaped by a citizen’s individual preferences and incentives, and is therefore harder to achieve at higher q.

Our analysis of historical data on the effects of coups and assassinations on foreign investment reveals that, while a sudden change in rulers almost always increases market volatility, the overall effect is not negative. Specifically, we find that markets react positively to coups and assassinations when they are expected to lead to a pro-business regime shift.