Long Live the King? Explaining the survival of the Gulf rentier monarchies during the Arab Spring

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survival of the Gulf rentier monarchies

during the Arab Spring

Reem Ahmed S2483505

Supervisor: Drs. E Aykaç

University of Groningen

Master’s Degree Programme in International Relations: International Security

17 February 2015

Word Count: 24,642

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List of Abbreviations

BDF Bahrain Defence Force

BSTI Bertelsmann Stiftung Transparency Index GCC Gulf Cooperation Council

GDP Gross Domestic Product

GICDF Gaddafi International Charity and Development Foundation LIA Libyan Investment Authority

LSE London School of Economics NATO North Atlantic Treaty Organisation NTC National Transitional Council RCC Revolutionary Command Council SABIC Saudi Basic Industries

SAMA Saudi Central Bank SWF Sovereign Wealth Funds UAE United Arab Emirates UN United Nations

UNSC United Nations Security Council US United States

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1. Introduction

In December 2010, Tunisian street vendor Mohamed Bouazizi tragically self-immolated out of frustration and anger towards Zine El Abidine Ben Ali’s authoritarian rule. This act was arguably the catalyst that provoked mass protests across the region and what became known as the “Arab Spring”. Consequently, this led to the fall of Presidential autocrats in Tunisia, Egypt, Yemen, and Libya with President Bashar Al Assad of Syria still hanging on by a thread and embroiled in a bloody civil war four years on. The Arab autocratic monarchies however have curiously fared better than their equally oppressive republican counterparts. With the exception of Bahrain, the turmoil and protestations in the Kingdoms of Jordan, Morocco, Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Oman, and Qatar pale in comparison to the uprisings in the republics.

The outcomes of the Arab Spring have provided an opportunity to reflect on various theoretical approaches concerning regimes and survival, especially given the resilience of the Arab monarchies during this period of regional instability and the neat divide between the fates of the different regime types (Beck 2014). The Arab Spring was a fight against autocracy, a characteristic applicable to all countries in the region, regardless of regime style (Yom and Gause 2012). Therefore, why did some countries encounter “revolutionary” change, whilst other leaders survived with only minor bruising? More specifically, why did the monarchies survive?

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2 economy approach1

Hazem Beblawi and Giacomo Luciani (1987) were amongst the first scholars to apply rentier state theory to the oil exporting Gulf monarchies. The key assumption is that the nature in which a state receives its income directly affects its political behaviour. Rentier states are thus defined as those countries that receive a substantial amount of their Gross Domestic Product (GDP) through external rent – be it in the form of export income or vast sums of foreign aid (Beblawi 1987 p.50; Luciani 1990 p.70). As the money accrues directly to the state, the government plays a predominantly distributive role. Distribution of public goods and welfare are facilitated by high external rent wealth, and thus it is assumed that the citizenry are politically subdued as there is no need for taxation and consequently representation is not expected (Beblawi 1987 pp.54-6). The buying of political consent is what Michael Ross (2001) termed the “rentier” effect (p.332). Ross developed the theory further by introducing the concepts of the “repression” and “modernisation” effects. In the former, the idea is that states use their economic largesse to fund large loyal armies to depose of any threat to the regime. For the latter, as a purely distributive country, the state is unable to modernise and thus class development is impeded (Ibid pp.332-7). Ultimately, rentier states are believed to be durable because they are able to buy off their populations, repress them with loyal forces, and encumber class development that has the potential to lead to mobilisation.

. This paper will utilise this particular slant, thereby examining the explanatory power of rentier state theory. Furthermore, in the context of this paper, given the fact that the majority of uprisings during the Arab Spring were born out of socio-economic grievances, it is apt to analyse regime resilience through this lens.

Whilst rentier state theory held its grounding fairly well during the Arab Spring, two glaring inconsistencies are hard to ignore - Libya and Bahrain. If one is to take classical rentier theory at face value, Libyan ruler, Mu’ammar Gaddafi would have survived, and the ruling Al Khalifa family of Bahrain would not have faced near-revolution at all. Nonetheless, Bahrain did eventually weather the storm, and has thus sustained the ongoing phenomenon of resilient monarchies in the Arab world. This ultimately leads to the main research question – to what extent did rentierism contribute to the endurance of the Gulf monarchies during the Arab Spring? As high rent wealth clearly does not guarantee regime survival, the hypothesis guiding this paper is the belief that Gulf monarchies have utilised their rent wealth in specific strategic ways

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3 thereby safeguarding their regimes. The Gulf monarchies refer the six countries that make up the political and economic union of the Gulf Cooperation Council (GCC): Bahrain, Saudi Arabia, UAE, Kuwait, Oman, and Qatar.

This hypothesis is based upon recent revisions of the theory, which consider that rentierism does not necessarily determine a country’s fate, but it rather creates favourable conditions that support its survival. Thus, human agency plays an important role within this structure shaping different outcomes. In this paper, human agency, or simply “agency”, refers to the actions and choices of individual figures; namely those in the political elite. According to the revisionists, the durability of rentier states is largely influenced by the pre-rent historical context, and the state’s willingness to adapt its rentier economy to the forces of modernisation and globalisation (Beck 2014; Brynen et al. 2012; Herb 1999; Hertog 2010; Gray 2011; Davidson 2012; Kamrava 2012). In terms of historical experience, classical rentier theory generally overlooks the pre-oil context of rentier states. However, this is an important variable, because each rentier state has a different historical background that influenced state building processes and wealth distribution. Rent wealth played a pivotal role because it enabled state building and alliance formation at a fast pace and this often had consequences for the future of the regimes. Moreover, revisionists such as Christopher Davidson (2012) and Matthew Gray (2011) have differentiated between “traditional” rentiers and “late” rentiers. The authors both argue that the Gulf monarchies are now late rentiers, as they have defied the modernisation effect and they are acclimatising their economies to the global markets to safeguard their survival. This conservative approach towards accepting globalisation includes diversifying rents away from oil, allowing controlled privatisation, as well as extending the ruling bargain and rentier effect to the wider region and the Western world. Thus, late rentiers use their rent wealth in strategically innovative ways that help to prolong their rule.

This paper is divided into two parts. The first section will review existing literature on monarchical survival as well as provide the overall theoretical framework guiding this paper. The second section consists of three main case studies Bahrain, Saudi Arabia, and Libya.

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4 this, Bahrain survived. Thus prompting the question of how Bahrain utilised its rentier wealth in strategically innovative ways that contributed to its survival.

Saudi Arabia, on the other hand, only experienced minor protests and the ruling Al Sauds were left relatively stable. Therefore, it is important to assess why the kingdom fared better than Bahrain and Libya. Furthermore, Saudi Arabia’s role in the region is especially significant given its large population size and vast amounts of oil reserves.

Finally, the use of Libya is intended to strengthen the argument that rentierism does not determine stability and to highlight that agency is crucial as there is indeed a difference in the way Gulf monarchies utilise their rent wealth. Libya is a republic that was overthrown during the Arab Spring despite the fact that it is a wealthy rentier state. Thus, this mutual variable that Libya shares with Bahrain and Saudi Arabia serves as a useful comparison point. Furthermore, within the existing literature, there have been little to no attempts to compare Libya and the Gulf monarchies in detail through the lens of rentier theory2

Each case study considers a number of sub-questions guided by the proposed theoretical framework. Firstly, the pre-rent historical context is examined, namely the events leading up to independence, or in Saudi Arabia’s case, the creation of the state. The historical context is intended to determine how these events coupled with the sudden influx of rent revenue influenced state building and patronage patterns

. This comparison is additionally set to emphasise the topic of the phenomenon of monarchical survival in the wider context of rentier theory.

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Secondly, late rentier policies are assessed in the context of each case. Namely, the extent of the efforts each country made in terms of diversifying rents away from oil, introducing state-controlled capitalism, and extending the ruling bargain to the region and the Western world. Further, have these attempts been successful, and what were the effects in the context of the Arab Spring?

. Consequently, how did the state building processes and patronage patterns influence events during the Arab Spring?

2_{Herb (1999) compared the failure of the Sanusi monarchy to the success of the Gulf monarchies. Other}

more recent work has briefly compared Libya to the monarchies, see for example: Beck (2014); Beck and Hüser (2012); Yom and Gause (2012)

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2. Theoretical Framework

The aim of this chapter is to detail the rationale for selecting a modified rentier theory approach. This section opens with a brief overview of the existing literature on monarchical survival in the Middle East. Due to the various shortcomings and flaws evident in these accounts, attention turns to the more credible explanatory value of political economic reasoning. Subsequently, this chapter outlines the central tenets of classical rentier theory, accompanied by some revisions proposed by recent scholars.

2.1 Explaining monarchical survival

Literature on the phenomenon of monarchical survival in the Arab world pre-dates the Arab Spring4. This is largely because these regimes were defying the predictions of modernisation theory. In Samuel Huntington’s (1968) seminal “King’s Dilemma” chapter in Political Order in Changing Societies, he described the future of traditional monarchies as “bleak”, as the forces of modernisation posed a direct challenge to their rule. If monarchs are to suppress modernisation, they will likely face mass revolt; on the other hand, if they open up to modern features, the rulers put themselves in danger of surrendering power to the ultimate product of modernisation – the middle class (pp.177-191). However, Huntington’s predictions did not come to fruition in the modern era, and thus the endurance of monarchies in the Arab region prompted much curiosity. However, the topic gained even more currency following the 2011 uprisings because not one of the eight monarchies in the Arab world experienced regime change unlike their republican counterparts in Libya, Tunisia, Egypt, and Yemen. Academics in think tanks such as the Brookings Institute, Carnegie Endowment, Chatham House, and GIGA Hamburg5

4_{See for example: Anderson (1991) (2000); Herb (1999); Hudson (1977); Gause (2000); Lucas (2004)} thus started to question why monarchies were apparently better equipped to deal with the threat of regime change despite the great wave of protests across the region. Within the existing literature, the debate is varied and scholars such as Bernard Lewis (2000) attribute survival to Islamic legitimacy (pp.15-17). However, as André Bank, Thomas Richter, and Anna Sunik (2013) correctly point out, not all monarchies in the Middle East claim Islamic legitimacy; for example, Kuwait, Qatar, and the UAE (fn. 5). Relatedly, in a study of Middle Eastern monarchs conducted by the

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6 Carnegie Endowment, a similarly cultural approach was taken. The authors assumed that monarchical endurance is conceivable as citizens view kings and emirs as legitimate rulers due to Islamic values, tribalism and inherent attitudes in Middle Eastern society (Ottaway and Muasher 2011). Despite the ethnocentric assumptions of a cultural approach, this reasoning loses value when one looks back towards the history of the Middle East and the pan-Arab movement, which overthrew many Arab monarchies during the 1950s and 60s (Yom and Gause 2012 pp. 76-7). These fallen monarchies had also claimed cultural legitimacy based on religious and tribal grounds.

The insular cultural approach does not hold much weight with recent scholarship on the Middle East. This has resulted in a shift towards considering the impact economic factors such as oil wealth have on the durability of the state, most notably in the form of rentier theory. Rentier theory has received varied reactions over the years, and a number of revisionists have offered a myriad of methodological perspectives to improve the explanatory power of the theory. The Arab Spring has provided a valuable opportunity for scholars6

2.2 Classical rentier theory

to scrutinise various theoretical approaches concerning regimes and survival, and rentier theory, in particular, has emerged with just a few anomalies to answer for.

The concept of rentierism can be traced back to the 1860s, when Karl Marx discussed the idea of a renting class that reaps its profits from renting out property, rather than from traditional forms of production (Beblawi 1987 p.50; Davidson 2012 p.6). Into the twentieth century, economists used the term “rentier” for developed states who loaned money to their less developed counterparts (Ross 2001 p.7, Davidson 2012 p.6). In 1970, however, Hossein Mahdavy reformulated the fundamental concept of the rentier state, as it is known today, in his chapter The Patterns and Problems of Economic Development in Rentier States. By using the case of oil rich Iran, Mahdavy (1970) defined rentier states as “those that receive on a regular basis, substantial amounts of external rent”; the origins of rent derive from foreign investors such as individuals or governments (p.428). The key notion here is that rent money originates externally and not internally through production. Mahdavy’s basic concept of rentierism struck interest in Beblawi and Luciani, who compiled two edited books related to rentier theory in

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7 1987 and 1990 with the aim of developing Mahdavy’s initial groundwork further. Although Luciani (1990) specifically postulates that rentier states are not necessarily oil-exporting countries as any form of substantial external rent - including foreign aid - is incorporated in the standard definition, the Arab oil states in particular received special attention from the authors (p.70). This is due in large part to the fact that from the 1970s, the Arab countries started to nationalise their oil and these states began making headway in the international economy by displaying exceptional growth in a very short time span (Beblawi 1987 p.50; Brynen et al. 2012 p.195). Beblawi (1987) believed that the effect that the newfound, nationalised oil wealth was having on the political and economic behaviour of the Arab oil exporting states was so profound that this warranted further theoretical exploration (p.50). Thus substantiating the fundamental assumption of rentier theory - the manner in which a state attains its economic wealth directly correlates to political behaviour.

Beblawi and Luciani stipulate that to qualify as a rentier state, the external revenue should be enough to sustain the domestic economy without the need to rely on taxation or any form of productivity. The authors further determine two complementary conditions for a rentier state; firstly, the rent is external, and secondly, it flows directly to the state. As the government of the rentier state is the principal recipient of rent money, it plays a key role in distributing this rent (Beblawi 1987 pp.51-2; Luciani 1990 p.71). Beblawi (1987) states, that the distributive role that the government plays “is a fact of paramount importance, cutting across the whole social fabric of the economy affecting the role of state and society” (p.52). In other words, in a rentier economy the government is assumed to be unconstrained from society, thus affecting the power balance. This assumption derives from the historical development of democracy, where there is believed to be a strong link between taxation and representation7

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See for example, Bates and Lien (1985). The authors argue that governments that seek revenues by taxation should implement citizens’ preferences in return (p.53)

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8 the “ultimate employer in the economy” (Beblawi 1987 pp.54-6). In addition, it is often the case that a member of the ruling elite that holds public office also simultaneously heads a private enterprise. Therefore, those in public office have access to millions of dollars in the form of tenders and contracts, which in turn can be used for private gain (Ibid p.56). Beblawi posits that this custom varies from one oil state to the other, with Saudi Arabia being the most glaring common example (Ibid p.56).

Considering these observations and especially given the Arab world’s lack of democratisation, a link has been made between high rent wealth and an absence of democracy. Most notably, Michael Ross carried out an empirical study in 2001, seeking to determine whether Oil Hinders Democracy. Whilst this paper is not concerned with the effect of rentier wealth on democracy per se, Ross’s research sheds valuable light on what he believed to be the causation factors regarding the durability of rentier regimes. Ross (2001) outlines three interrelated effects of the rentier state: “rentier”, “repression”, and “modernisation” (pp.332-7). The “rentier” effect refers to the idea that governments use rent revenue to “relieve social pressures that might otherwise lead to demands for greater accountability” (Ibid p.332). This is closely related to Luciani and Beblawi’s assumption that high external revenue lessens the need to tax citizens and therefore the government can use rentier wealth for the provision of public goods and in effect, buy off the population. The citizenry remain satisfied provided the government keep up their end of the ruling bargain (Ibid pp.332-3). Ross exemplifies that other authoritarian regimes may employ similar tactics, however, rentier states have greater means to maintain “fiscal pacification” (Ibid pp.334). With high rent money at the government’s disposal, it is possible to invest in strong internal security, which in turn refers to Ross’s idea of the “repression” effect. A well-financed and loyal security network allows the government to identify and repress those citizens who dare to voice democratic concerns (Ibid pp.335-6). The priority to invest a lot of money in internal security is highly conspicuous in the Middle East where defence budgets are ranked amongst the highest in the world8

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See for example World Bank (2014) which recorded the following percentage of GDP on military expenditure in 2013: Saudi Arabia 9%, Bahrain 3.8%, Oman 11.5%

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9 lack of urbanisation and industrialisation. This stems from the belief that limited levels of productivity ultimately stagnate the development of an autonomous middle class or proletariat, thus preventing social mobilisation and calls for democratisation which Huntington predicted (Ibid pp.336-7). The namesake of this effect derives from modernisation theory, in which Seymour Martin Lipset (1959) notably posits that features of economic development, such as industrialisation, urbanisation, and wealth, are directly correlated with the advance of political democracy (p.80). However, in a rentier state, great wealth flows in externally without the need to develop the production sector. Thus, industrialisation and urbanisation are evaded. In short, classical rentier theory assumes that high external rent encumbers class development, breaks the taxation-representation linkage, and enables the purchase of both political acquiescence and security (Brynen et al. 2012, p.198).

2.3 Criticism and revisions

The classical form of rentier theory confronted considerable challenges in the face of declining oil prices in both bust periods of the 1980s and post-2008. This is because, according to the central tenets of the theory, one would assume that reduced state revenue would negatively affect the state’s spending power resulting in the deterioration of the ruling bargain and thus an end to authoritarian rule (Brynen et al. 2012 pp.198-9; Luciani 1988). Declines in revenue did not bring about democratisation in these states however, leading critics to assess rentier theory further and identify the pitfalls. Moreover, in light of the Arab Spring in 2011, it is clear that societies in rentier states have the ability to mobilise and voice opinion against the government contra to the classical belief that the rentier population remain silent (Brynen et al. 2012 p.199). This in turn leads to the principal charge against classical rentier theory, which postulates that the assumptions reached are far too simplistic and do not account for the diverse political nature of all the different rentier states9

The revisionists of rentier theory do not aim to discredit classical rentierism, rather they seek to retain the broad principles such as the “rentier” and “repression” . In other words, classical rentier theory tends to hold a “one-size-fits-all” assumption, which loses credibility when one recognises that rentier states have faced a myriad of different political challenges and successes in spite of or due to their rent wealth.

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10 effects, whilst ensuring contempoary relevance through examing the political context (Gray 2011 p.9). Wider dynamics include the role of human agency, historical experience, and responses to globalisation and modernisation. These revisions warrant a more nuanced approach to rentier theory, which consider these new changes.

2.3.1 The role of agency

A recurrent theme that underpins the revisions relates to the importance of human agency, elite decisions and rational choice10. For example, Steffen Hertog (2007) argues that rentier approaches tend to be “structurally overdetermined” and thus in turn downplay the importance of individual actors (pp.539-541). Therefore, according to Hertog, it is more useful to focus on the interplay between personal politics and the structural features that emerge in a rentier state (Ibid p.541). Specifically, how political elites utilise rent wealth, rather than rent wealth determining a particular path11. Earlier work by Michael Herb (1999) offers an extensive analysis of the utility of oil money during the state building process in his book, All in the Family: absolutism, revolution, and democracy in the Middle Eastern monarchies. Comparing in detail the case studies of the six GCC dynastic monarchies to the overthrown monarchies of Libya and Afghanistan, Herb argues that the large dynasties12

10_{See for example: Herb (1999); Hertog (2007); Kamrava (2012); Yom and Gause (2012)}

and royal networks that exist in the Gulf monarchical regimes set the groundwork for successful and durable rule. The basis of Herb’s theory relies on rationalist assumptions and strategic planning of the rulers. Thus, rulers used oil money strategically to buy loyalty cementing and embedding themselves in a secure network of protection (pp.2-4, 7-10). Herb reasons that oil revenues often facilitated the rise of these durable dynastic monarchies in the Gulf as this wealth sped up the process of expansion and allowed for autonomous state building. However, the important issue here is that creation of these dynasties and networks relied on elite decisions and the will of the leader as not all oil producing states followed this strategy. Monarchies such as the Sanusi monarchy in Libya, who did not employ such a tactic ultimately failed (Ibid p.11). Sean L. Yom and F. Gregory Gause (2012) correspondingly stress that political actors in the Arab monarchies have employed a

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This approach bears resemblance to Anthony Giddens’ (1984) theory of “structuration”. Giddens argues that structure and agency are mutually dependent and whilst structures can hinder agents’ actions, at the same time, these rules and laws can also facilitate certain actions.

12_{Herb (1999) defines dynastic monarchies as those in which “members of the ruling families monopolise}

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11 stratgic approach, which has safegaurded their regimes (pp.75-6). Thus according to the authors, there is no innate feature that has guaranteed the security of these states, but rather the regimes survive due to favourable conditions coupled with shrewd political decision-making. For Yom and Gause, these factors relate to successfully mobilised and loyal cross-cutting coaltions, rentier wealth, and good foreign relations with powerful states such as the United States (Ibid pp.75-6).

2.3.2 The historical context: effects on distribution of wealth and state building

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12 many political outcomes and decisions. As Peter Moore (2004) posits: “Rents are thus important variables insofar as they expand political and economic strategies for rulers and arrive at specific junctures of ongoing socio-political development” (p.9). Consequently, analysis of rentier states and their durability needs to incorporate the pre-rent state-society dynamic to gain a better understanding of post-pre-rent political order and relationships.

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2.3.3 Late rentierism

Taking these revisions further, both Davidson (2012) and Gray (2011) introduced the concept of late rentierism. Whilst Gray (2011) acknowledges that classical rentier theory held validity in such states from the 1950s-80s, he believes that due to the significant changes that have occurred in the Middle East, this phase of rentier theory has passed its shelf life, particularly regarding the Gulf monarchies (p.9). It is important to acknowledge that Gray and Davidson still accept the fundamental characteristics of rentierism as these states undoubtedly derive the majority of their income from external revenue, maintain their neo-patrimonial distributive nature, and remain far away from the realms of Western-style democracy (Ibid pp.23-5). The rentier and repressive effects noted by Ross (2001) remain paramount, however the modernisation effect is put under scrutiny, as contrary to this assumption, Gray (2011) believes that the Gulf states especially have opened up to modernisation and development, whilst successfully maintaining control of the economy (p.9). In a similar manner, Davidson (2012) posits that the most durable regimes are those who have in fact viewed modernisation and globalisation as an advantage, rather than a threat (pp.8-9). Thus implying that rentier states that have not followed this path risk instability.

In Gray’s (2011) article, A theory of “Late Rentierism” in the Arab States of the Gulf, he sets out seven specific features of late rentierism. For the purpose of this paper, and to incorporate Davidson’s (2012) contributions to the concept, these features are elucidated within three main points: renewing the ruling bargain domestically; buying and consolidating support and power regionally; purchasing support internationally - namely from the West. The central assumption here is that late rentier states are successfully using the rentier and repression effects in new and innovative ways to adapt to the modernising world. This is because rentier states can no longer afford to suppress modernisation in the age of globalisation, social networking and the rise of social actors. To maintain control, the late rentier state must be responsive to basic societal needs, safeguard its security within the region, and demonstrate progress to the Western world (Gray 2011 pp.23-7).

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14 expected more from their degrees than positions in the bureaucracy. Therefore, a few key sectors of the economy beyond oil and gas have been handed over to the private sector, with the state retaining a majority of the shares. In this state capitalist structure, the government generally endorses key private sector actors who are associated with the ruling elite. For example, these tend to be firms owned by members of the royal family, merchant families, well-connected individuals, and occasionally foreign businesses. By favouring businesses that are supportive of the state, the government is further able to entrench their support network with powerful and wealthy partners and appease the growing educated middle class, whilst maintaining control of the private sector (Gray 2011 p. 33). This not only relates back to the patronage and hierarchical system of classical rentier theory, but also incorporates Herb’s (1999) argument of the structural significance of Gulf monarchies and strategic coalitions that the ruling elite formed to maintain power. Late rentiers have a business-friendly policy; however, they tend to ensure that these initiatives do not encroach upon state controlled aspects of the economy and therefore mitigate the risk of challenging state authoritarianism (Gray 2011 p.33). Relatedly, this opening up to globalisation and development leads to diversification of rents in a period of dwindling oil resources, which in turn secures more money for governments to preserve the rentier bargain with their citizenry (Davidson 2012 pp.7-8, Gray 2011 pp.26-7). Finally, to placate the citizenry, late rentier states prudently embrace some modernising technologies such as the Internet and global television. However, civil society actors, the media and private sector remain under state control and those that fall out of line will face repressive measures (Gray 2011 p.26).

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15 On the global level, late rentiers engage in using soft power13

The value of late rentierism is that it incorporates evolving political, strategic and economic factors, without straying too far away from the conceptual basis of rentier theory. Furthermore, the concept of late rentierism reiterates the importance of agency as the rulers of these states are actively looking at ways to strategically utilise funds to safeguard their regimes (Gray pp.21-2). It is also important to note that “traditional rentiers” still exist - such as Iran and Iraq - that have not successfully entered a phase of late rentierism (Ibid p.2). This in turn helps one to distinguish between different types of rentier states, and determine why some of these states prove to be more durable.

and foreign investment initiatives to gain support from influential powers, such as the United States (US) and Britain (Gray 2011 pp.35-6). Rent wealth is used to great effect and arguably, the rentier effect of mass spending is extended to the wider world in exchange for support. In terms of soft power, money can be used to buy football clubs, funding for cultural events, and sponsorship for research centres (Davidson 2012 pp.90-2). To encourage foreign investment and contracts, late rentier states have taken vigilant steps to enter the global economy. For example, Saudi Arabia attained World Trade Organisation (WTO) membership in 2005, and the UAE has welcomed Western-style tourism (Gray 2011 pp.25-6). These strategies have a number of benefits for the late rentier state: raised global awareness, a veneer of benevolence, and the purchase of rhetorical and physical support from the world’s most powerful countries (Ibid pp.33-4).

2.4 Summary

Concisely this paper proposes two key revisions to consider when applying rentier theory to the analysis of regime survival. Firstly, the pre-oil socio-political context should be examined as this influenced two major outcomes that would form the new rentier state and subsequently affect regime durability; wealth distribution and state building. Second, the notion of late rentierism is valuable because it considers the global and economic changes that have occurred in the decades since Beblawi and Luciani first brought classical rentier theory into wide currency in the late 1980s. By acknowledging the need for rentier states to renew the domestic social contract and strategically buy support on the international stage, it helps one to assess states’ survival strategies in the modern world.

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3. Methodology

Using the case studies of Bahrain, Saudi Arabia, and Libya, the aim of this paper is prove the main hypothesis that the Gulf monarchies utilise their rent wealth more advantageously. Significantly, all three cases initially reacted to the Arab Spring uprisings with typical rentier state mechanisms – a mixture of social spending and repression. Furthermore, the differing histories in conjunction with the arrival of rent wealth, as well as the three states’ approaches to globalisation have had a crucial impact on the future trajectories in both rentier monarchies and the Libyan republic.

Bahrain is the one Gulf monarchy that faced strong opposition during the Arab Spring, which could have potentially overthrown the regime. Thus, it is important to examine this case and ascertain what sets it apart from its GCC counterparts. Bahrain is small like most of the other GCC countries, with a population size of just over one million. Conversely, the most distinguishable factor is that Bahrain is the most oil poor of the Gulf monarchies. In 2012, petroleum production accounted for 87% of government revenues, and only 19% of GDP. Bahrain has thus made strong efforts to diversify its economy away from oil, and has looked towards aluminium, finance, and construction. However, the island is still considered a rentier state as it receives a significant amount of foreign aid from its wealthier neighbour, Saudi Arabia (CIA World Fact Book 2014a).

Saudi Arabia is the largest of the Gulf monarchies with a population size of over 27 million (CIA World Fact Book 2014b). This has enforced more strain on the ruling Al Sauds regarding distribution of wealth. Regardless, Saudi Arabia’s substantial oil wealth positions the kingdom as one of the world’s largest petroleum exporters. Petroleum alone accounts for 45% of GDP, and 90% of export earnings (Ibid). Saudi Arabia did face some unrest during the Arab Spring; however, the effects were minimal, and not comparable to the unrest in Libya and Bahrain. Moreover, Saudi Arabia’s role in the region is of major significance regarding the events of the Arab Spring.

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18 regime stability, no detailed attempt has been made to compare Libya to the Gulf monarchies. Nonetheless, as a seasoned expert on Libya, Diederik Vandewalle (1998; 2012) has conducted extensive field research in the country and has recognised that under Mu’ammar Gaddafi, Libya was an example of an “extreme” rentier state, where the historical context profoundly influenced its leadership (Vandewalle 1998 p.178). The official figures confirm Libya’s rentier status as the energy sector engenders 95% of export earnings, 80% of GDP, and 99% of government income. With high rent wealth and a relatively small population size of just over 6 million inhabitants, Libya has one of the highest per capita GDPs in Africa (CIA World Fact Book 2014c).

Including all GCC countries within the analysis would be ideal; however, it is beyond the scope of this paper. Therefore, Bahrain and Saudi Arabia were selected as representative examples for the Gulf monarchies as they embody critical characteristics that lie at either end of the spectrum. Bahrain suffers from dwindling oil wealth, whereas Saudi Arabia is extremely wealthy, yet has a significantly larger population than the rest of the GCC countries. Thus, these are the two countries in the Gulf, where there is a slight strain on adequate distribution of rentier wealth. Additionally, Bahrain was under British protectorate like many of the other Gulf monarchies, and achieved its independence around the same time. However, the key difference here is that the British exercised far more liberty in Bahrain during the state building process than in their other protectorates. Saudi Arabia on the other hand, was not a product of colonialism and the kingdom achieved independence almost four decades prior to the smaller Gulf emirates. Thus, Bahrain and Saudi Arabia depict two very different cases of Gulf rentier monarchies and therefore given the limits of this paper, these two case studies serve as an appropriate representation of the GCC countries.

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19 the government. Moreover, powerful, efficient and loyal state institutions are an essential component regarding regime durability, as they are often useful in times of crisis. The arrival of oil rents accelerated the state building process, and granted the rulers autonomy to construct institutions as they wished. However, these early state building choices greatly influenced how each country was able to deal with the events of the Arab Spring in terms of institutional capacity and support.

Subsequently, it is important to assess whether the case country can be considered a late rentier state, and what effects this has had on its stability. To evaluate this, domestic economic activity is examined in all three cases, with a particular focus on whether the states have an effective state capitalist structure that placates the middle class. Relatedly, this paper will determine whether the states in question have successfully been able to diversify their economies away from oil to ensure long-term rentier wealth that can uphold the ruling bargain. In addition to buying support domestically, this paper examines how each case country has attempted to purchase support and security from its regional neighbours and the Western world. For Bahrain and Saudi Arabia, the regional alliances are concentrated within the Gulf monarchies in the form of the GCC. Libya on the other hand geographically sits between the Arab League and the African Union. These regional powers as well as Western forces such as the North Atlantic Treaty Organisation (NATO) all played an important role during the Arab Spring, which affected the fate of all three cases. Therefore, it is vital to examine these relationships to determine the extent to which rent wealth fuels and maintains these alliances. Efforts to adapt the economy in the face of globalisation are key indicators of the case study’s progress into late rentierism. Thus, the underlying conjecture in this regard, is that those states that have successfully entered late rentierism tend to be more stable. Within all these factors, the importance of elite decision-making is stressed, as it plays a crucial role regarding the outcome of the utilisation of rent wealth on the domestic, regional, and international level.

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4. The Gulf: Explaining the Survival of Bahrain and Saudi Arabia

The aim of this chapter is to explain the outcomes of the Arab Spring in Bahrain and Saudi Arabia through the lens of modified rentier theory. More specifically, this chapter compares the historical context of both countries and the effect that the sudden arrival of rent wealth had on the state building process. Additionally special attention is paid to the Sunni-Shia divide in both countries as this historic division has had an impact on wealth distribution in the two kingdoms. The majority of protesters during the Arab Spring in Bahrain and Saudi Arabia comprised of Shia citizens, thus suggesting that the rentier ruling bargain has failed to appease this portion of society. The final part assesses Bahrain and Saudi Arabia’s late rentier policies and the subsequent effect these strategies had on survival during the Arab Spring. Namely, whether the two Gulf monarchies were able to renew the domestic ruling bargain, and use patronage power regionally and in the West to buy loyalty and secure their regimes. As such, this chapter will attempt to explain why Bahrain faced mass opposition, yet ultimately survived, and how Saudi Arabia managed to secure stability in the face of region-wide unrest.

4.1 The Arab Spring in the Gulf 4.1.1 Bahrain on the brink of revolution

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21 tactics simply led to further radicalisation and anger from the protesters. Seven deaths were reported between 14-17February, but despite the heavy force from the Bahraini security services, the protesters managed to gain control of Pearl Square and they began to camp there (International Crisis Group 2011a p.6). In the weeks that the protestors were camping there, their demands increased. These demands included the release of political prisoners, investigation of the seven protestors that died, an objective media, resignation of the government, a call for an elected government and constitutional assembly, and amendment of the electoral system to ensure fair representation (Gulf Daily News 2011). These demands reflected socio-political aims rather than any sectarian features (International Crisis Group 2011a p.6).

To quell the protests, the kingdom mainly resorted to the repression effect. Primarily, the Bahraini government used their own security forces against the protestors. Given the levels of previous unrest, Bahrain has invested a lot of money in their military with the purchase of modern weapons and first-class training. Sunnis from abroad make up a large portion of the security force, and the receipt of attractive state benefits as well as Bahraini citizenship has made them particularly loyal (Beck and Hüser 2012 p.14). Moreover, as events at the Pearl Roundabout escalated and demands had become stronger calling for an all-out revolution, GCC forces led by Saudi Arabia and the UAE entered the country on 14 March to help defeat the threat (BBC 2011; International Crisis Group 2011a pp.7-8; Matthiesen 2013 pp.50-1). The GCC also helped Bahrain administer the rentier effect, by pledging an aid package worth $10 billion. The aim of this was to silence protestors by promising greater generation of jobs and more housing projects (Murphy 2011).

4.1.2 The Arab Spring in Saudi Arabia

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pp.635-22 7). This was the largest social movement the kingdom had ever witnessed, however compared to Bahrain; mobilisation was far less threatening to Saudi regime stability.

To silence protestors, Saudi Arabia also made use of the rentier and repression effects. In February and March 2011, King Abdullah addressed the nation and announced that the government was to spend nearly $130 billion on their citizens, with the creation of 60,000 jobs in the security forces, and the promise to build five hundred thousand homes. The king also issued bonuses for government employees, and introduced unemployment benefits (Gause 2011 p.6; Ennis and Momani 2013 p.1135; Matthiesen 2012 p.636; The Guardian 2011). The deployment of the government’s politically reliable security forces also helped quell any active protests. Their displayed willingness to arrest and shoot protestors deterred large-scale uprisings, and in Riyadh, their heavy presence discouraged the planned “Day of Rage” on 11 March (Gause 2011 pp.6-7).

Whilst at varying levels, both Bahrain and Saudi Arabia faced unrest during the Arab Spring that required attention. The reaction from the Bahraini and Saudi governments as well as the rest of the GCC helped secure some form of stability.

4.2 Historical context

4.2.1 Bahrain: from British protectorate to independent Emirate

The Al Khalifa family seized the Bahrain archipelago from the Persian Empire in 1783. In a bid to secure its vulnerable size and position, the ruling family enlisted protection from traditionally large powers such as the Ottoman Empire and from 1830, the Al Khalifas entered a treaty with Britain, who would remain Bahrain’s protectorate until the country’s independence in August 1973 (Davidson 2012 p.20; Kinninmont 2011 p.32). Even though Bahrain was officially under British protectorate rule, this relationship further intensified during the 1920s when Britain appropriated tighter control regarding the governing mechanisms of Bahrain. This was partly to do with Britain’s influence in the region and its tenacious aspiration to prevent any rival powers from exerting influence, as well as the dispositions of individual British advisors (Davidson 2012 p.23; Kinninmont 2011 pp.32-3).

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23 split three-ways between the ruler, Sir Charles Belgrave’s14

4.2.2 Bahrain: oil and state building

administration, and an oil reserve fund. Oil slowly began to transform the relationship between the Al Khalifas and the merchants, because previously the financial power of the latter allowed them to check the power of the ruler. However, the Al Khalifa were becoming more wealthy due to the increasing oil revenues accruing to them and they no longer had to rely solely on taxation from the merchants (Davidson 2012 pp.24-5; Kinninmont 2011 pp.34-5). By the 1950s as Arab nationalism was spreading through all parts of the Middle East, and the powerful Belgrave was increasingly irking Bahrain’s population, it started to become clear to the British that their time on the island and the rest of the Gulf was drawing to a close. In 1956, in response to the British occupation of the Suez Canal, an Arab nationalist opposition group called the Committee of National Unity staged rallies and demonstrations against the government. This opposition group had a united goal against colonialism, and comprised of different classes, regions, and religious sects in Bahraini society. In 1968, the British had announced that they would withdraw from all its territories east of Suez by 1971 (Joyce 2012 pp.19-27; Kinninmont 2011 pp.36-7).

To appease the merchants and in an attempt to substantiate Al Khalifa rule, the Emir at the time of independence, Isa ibn Salman Al Khalifa, drafted a constitution and built a parliament with an all-male electorate. The first elections were held in 1973, however political parties were banned and the prime minister was unelected as another member of the royal family, Khalifa bin Salman Al Khalifa secured the post. Nonetheless, this experiment was short-lived and Emir Isa dissolved the parliament after two years. This was because the royal family were unwilling to listen to contestations to their decision-making, and they found themselves faced with an uncontrollable assembly. The challenges voiced included complaints regarding the Al Khalifa’s vast ownership of Bahraini territory and their subsequent failure to implement land reform, as well as concerns over US military presence in the form of the Fifth Fleet, which had swiftly replaced the British bases soon after their departure. Furthermore, parliamentarians called for government accountability and demanded that the royal family lift lid on public expenses in light of the 1970s oil boom. Since 1975, reinstating parliament has

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24 been a rallying issue for many protestors in Bahrain (Bahry 2000 p.130; Davidson 2012 p.32; Kinninmont 2011 pp.37-8).

Bahrain’s historical context in terms of state building differs pointedly in comparison to other rentier states in the region. This is because the ruling family had little autonomy during the state formation process and it is clear that the British had a tight hold on the reigns. Herb (1999) argues that Britain’s role had a profound effect on Bahrain’s state formation. Unlike in other Gulf monarchies where the emergence of dynasties and clientelist appointments coincided with the rise of the oil state, in Bahrain, the British were responsible for state building and they ran it for several decades before the Al Khalifa were able to consolidate rule and appoint their own ministers (p.130). For example, in 1923 the British deliberately installed the weak Sheikh Hamad bin Issa Al Khalifa as ruler to gain control of Bahraini administration (Herb 1999 pp.129-30; Kinninmont 2011 p.33). Sheikh Hamad was unsupported by the rest of the Al Khalifa family, and viewed simply as a British puppet. As a result of this appointment, the British were able to modernise the Bahraini administration in line with their interests, whilst effectively decreasing the autonomy of the Al Khalifa in their different fiefdoms. Although some of the Al Khalifa were distributed through important posts in ministries and the police force (Herb 1999 p.130; Kinninmont 2011 pp.33-4).

Therefore, the Al Khalifas were unable to secure their hold on power and build institutions along clientelist lines in the early phase of oil income. This is especially evident given the unease that Emir Isa felt at the time of independence and the subsequent decision to form a parliament in an effort to legitimise his rule. This lack of autonomy during the early years of the oil period and state building holds the first clue to why Bahrain faced mass protests during the Arab Spring.

4.2.3 The creation of Saudi Arabia

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25 consolidated power during the eighteenth century, observing the principles of Wahhabism as they increased their influence throughout the Arabian Peninsula spreading Sharia law. After a defeat by the Ottoman sponsored Egyptian army in 1818, the Al Saud dynasty managed to regain power in 1824 in central and eastern Arabia. However, the Al Rashid family from Ha’il successfully challenged this rule again in 1891. Nonetheless, in 1902, Abdul Aziz bin Saud reclaimed Riyadh as the dynasty’s capital and the Al Sauds began their acquisition of the Al Hasa province, and the rest of Najd. Subsequently, the Al Sauds captured the Hejaz province, which was home of the British backed Emir of Mecca, Sharif Hussein (Davidson 2012 p.18; Ulrichsen 2011 p.63). With the support of the Wahhabi establishment, Abdul Aziz bin Saud seized control of the majority of the Arabian Peninsula and in 1932, he united the four provinces, Najd, Hejaz, Al Hasa, and ‘Asir, naming his new Kingdom, Saudi Arabia (Davidson 2012 p.18). As Kristian Coates Ulrichsen (2011) notes, this period of state formation exemplifies the socio-cultural diversity of the newly formed Saudi Arabia and the competing religious, regional, and tribal groups. Especially apparent was the diversity in religion, with the Salafi Najdis, Sunni Hejazis, and the Shia communities in the Eastern province of Al Hasa (p.64). The fragmented society would no doubt have an effect on state building especially with the presence of oil money.

4.2.4 Saudi Arabia: clientelism, state building, and the influx of oil

Abdul Aziz had started early clientelism even before the onset of oil wealth. In order to consolidate his rule and satisfy the different societal groups, the king governed through client-patron lines by incorporating tribal leaders or members of prominent urban clans into his rule. This strategy was intended to co-opt those with pre-existing local influence by respecting the prevailing structures, whilst at the same time establishing the authority of the king. Furthermore, these individuals were generally placed on lower levels of authority. As well as bolstering relationships through government involvement, Abdul Aziz played the role of benevolent king, despite the fact that government wealth was limited at this point. The king would host lavish dinners and present gifts to the leaders of local communities (Hertog 2011, pp.41-3).

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26 1938 and 1946, to $53.6 million in 1948 (Hertog 2010 p.43; Niblock with Malik 2007 p.36). Abdul Aziz was ill equipped institutionally to deal with the great influx of oil revenue, as there was no central bureaucracy capable of distributing the revenue to the tribal, merchant and Bedouin allies (Hertog 2010 p.41; Ulrichsen 2011 pp.64-5). There was also no avenue available to debate national budgets, and Saudi Arabia had neither a national constitution, nor formal mechanisms of political participation (Hertog 2007 p.542). There were a few, albeit underdeveloped structures nonetheless. This included a Ministry of Foreign Affairs, a Ministry of Finance, and a Council of Ministers (Bromley 1994 p.144; Hertog 2010 p.44).

Considerable development and steps towards efficient state building thus began after Abdul Aziz’s death in 1953 (Ulrichsen 2011 p.65). As oil revenues accruing to the government exceeded $100 million by 1953, Abdul Aziz’s second oldest son Faisal realised that these enormous inflows needed to be managed efficiently (Hertog 2010 pp.44-5; Niblock with Malik 2007 p.36). However, his older half-brother and Abdul Aziz’s successor, King Saud, was not as cognisant of this need and he governed much like his father, distributing lavishly along clientelist lines and dismissing advice from the council of ministers. This caused a rivalry between the two brothers, which would greatly affect the state building process (Herb 1999 p.93; Hertog 2010 p.45; Ulrichsen 2011 p.66).

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27 fragmented nature of the pre-oil state with the help of oil wealth, allowed the monarchy to mould their kingdom exactly how they wished. The abdication of Saud further helped Faisal on his modernisation quest and he sought to create a judicial system and reform the public sector. The new king was also more conservative than his brother was when it came to distributing economic largesse (Ulrichsen 2011 p.66). However, Faisal distributed enough to keep his alliances happy.

In regards to the Arab Spring and the durability of the Al Saud regime in general, these alliances have proved to be extremely valuable. For example, Gause (2011) refers to the important role that the patronage networks played in dissuading the mass uprisings in 2011. As early as February, before any activity was even planned, the well-funded religious establishment, the ulema had publically condemned any action against the government. Furthermore, Shia notables loyal to the regime attempted to show those in the Eastern Province that progress was being made on Shia issues as some prisoners had been released as a bargaining chip (Ibid pp.8-9). Thus, the years of institution building and patronage networks that have been funded by rent wealth clearly came to the kingdom’s rescue at its time of need.

4.2.5 Uneven wealth distribution: the Shia opposition

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4.2.6 The Shia in Bahrain

Bahrain is the only country of the Gulf monarchies that consists of a Shia majority ruled by the Sunni Al Khalifa family. Although there are no official figures available, it is believed that the Shia population make up roughly 60-70% of the Bahraini population (Abdulla 2011 p.164; Kinninmont 2011 p.32; Matthiesen 2013 pp.2-3). Before Bahrain achieved independence, there were reported tensions under the surface between Sunnis and Shia, and contesting political narratives exist regarding the early history of Bahrain and the invasion of a Shia dominated territory by the Sunni Al Khalifa family who originated from Qatar. However, hostilities certainly heightened following the 1979 Islamic Revolution in Iran and the calls by Ayatollah Khomeini to export the revolution (Bahry 2000 pp.132-3; Davidson 2012 pp.139-40; Kinninmont 2011 pp.31-2). According to Louay Bahry (2000) and Herb (1999), the Iranian revolution changed the whole dynamic of the opposition movement in Bahrain as religion became politicised. Before the revolution, the Arab nationalist movement was secular as all citizens regardless of class or religion united to oust the British (Bahry 2000 p.131; Herb 1999 p.175).

Tensions heightened between 1994 and 1998, in what became known as the “intifada”. Shia and some Sunni leftists protested on the streets demanding more political participation, less corruption, and equal economic rights. Bahrain was also reeling from the effects of the oil bust period in the 1980s and 90s. Government spending and incomes were significantly reduced and this undoubtedly fuelled even more resentment from the protesters. The government did not take lightly to these actions and many were detained without trial, with around forty activists believed to be missing or dead (Abdulla 2011 p. 164; Bahry 2000 p.131; Brynen et al. 2012 p.80; Kinninmont 2011 pp.39-40). Following Emir Isa’s death in 1999, his son Sheikh Hamad Bin Isa Al Khalifa came to power.

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29 Bahrain 2002 Articles 32, 33, 52). In addition to placing the power directly within the elite network, Mostafa Abdulla (2011) argues that the 2002 constitution also further institutionalised discrimination against the Shia as electoral districts were organised to limit Shia representation (p.164). Toby Matthiesen (2013) similarly maintains that due to their numbers, the Bahraini Shia “would have the potential to overturn the political system both by street protests and democratic means if they were to act as a cohesive group and were allowed adequate representation in a democratic system” (pp.2-3). Therefore, it is clear that in formulating the 2002 constitution, King Hamad was aware of the risks to his rule if he did not institutionally limit Shia representation.

Within rentier theory, employment in the civil service and bureaucratic institutions counts towards the rentier effect of providing a decent form of income along with social benefits. From the slight rise in oil prices in the 2000s and Saudi Arabia’s ongoing financial support, King Hamad benefitted from this by placing his key allies in high government positions, increasing the stipend of Al Khalifa family members, and issuing substantial housing grants to elites and those close to the ruling family (Brynen et al. 2012 p.81). Whilst it is understood that only a minority of Shia work in the higher ranks of government, it is also argued that they are unable to work in certain ministries, and thus fail to benefit from the privileges associated with those positions (Bahry 2000 p.134). Moreover, following the uprisings during the 1990s, the majority of Shia were largely excluded from the Bahrain Defence Force (BDF) in a bid to avoid defections (Abdulla 2011 p.164). In fact, many members of the BDF, the police force, and the National Guard are foreign Sunni immigrants from Pakistan, Syria, Yemen, and Jordan, thus prompting more hostility between the two religious camps (Bahry 2000 p.133).

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30 given to the Sunni merchants (Ibid pp.134-8). It is thus clear to see the socio-economic impact that this has had on the Bahraini Shia community and why, amongst other reasons, they continue to protest on the streets of Bahrain.

It is also worth noting an interesting study by Gengler, who sought to examine empirically whether Bahraini politics functioned under standard rentier assumptions. In 2009, the author conducted a survey of 435 Bahraini citizens with the aim to ascertain the importance of identity and wealth in political orientation. Using a scale of economic satisfaction, Gengler found that political opinions amongst the Shia were not significantly correlated to their level of material content. However, for the Sunni citizens, the level of economic satisfaction did influence their political orientation. For Sunnis, the likelihood of demonstrating against the government when the household economy was recorded as “very good” was 7%, whereas in the “very poor” category, respondents were more likely to take to the streets with a result of 45%. In contrast, the Shia who reported their household income to be “very good” and “very bad” revealed that 48% and 51% of respondents respectively would protest against the government (Gengler 2012; 2013 pp.22-4). Thus, Gengler concludes that Bahraini Shia are frustrated with the government “not because they seek redress for economic grievances, but on principle. Their political orientation stems from dissatisfaction with the system as a whole, in which Shi’i social standing and access to political power is limited on the basis of confessional affiliation” (Gengler 2012, no pagination).

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4.2.7 The Shia in Saudi Arabia

In Saudi Arabia, problems also exist with the Shia population; however, unlike in Bahrain, the Saudi Shia are a minority consisting of 10-15% of the population. The Shia in Saudi Arabia mostly reside in the eastern part of the country, which borders Bahrain and where most of the oil is produced (Matthiesen 2013 p.3; The Economist 2014; Steinberg 2014 p.10). A large part of the issue in Saudi Arabia is that the Wahhabis do not recognise that the Shia practice a legitimate form of Islam and akin to the situation in Bahrain, tensions worsened after the 1979 Islamic revolution in Iran. Furthermore, Saudi Arabia and Iran are the main geopolitical rivals in the Gulf, competing for influence and espousing sectarian rhetoric. In a similar fashion to Bahrain, the Shia of Saudi Arabia have expressed political and economic grievances based on discriminatory lines (Matthiesen 2013 pp.73- 76; Steinberg 2014 p.10).

In a 2012 report on Saudi Arabia by the Bertelsmann Stiftung’s Transformation Index (BTI), which evaluates levels of democracy and economic progress in developing countries, the report found that Saudi Shia faced socioeconomic deprivation. The report goes on to state that there is in “implicit ethnic hierarchy” in the Kingdom, with the ruler favouring the Najd Province, followed by the Hijazis and the Sunnis from the Eastern Province, and subsequently the rest on the bottom of the hierarchy (BTI 2012 p.5). In an interview with a Shia cleric who lived in the Eastern province, Matthiesen (2013) documented that the cleric expressed dissatisfaction with the ruling family and stated that he and the other Shia in the area felt that they did not receive a fair share of the oil income (p.76). Like in Bahrain, Matthiesen also reported that there has never been a Shia minister in Saudi Arabia and that the Shia are mostly prohibited from working in the foreign and security services, the military, the police, and high positions in the oil industry (Ibid p.73).

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32 Sectarian division in Bahrain and Saudi Arabia is part of a multifaceted web of regional and ideological issues that are well beyond the scope of this paper and rentier theory. Nonetheless, socio-economic discrimination is evident and therefore provides useful context to the nature of the 2011 uprisings.

4.3 The success of late rentierism in the Gulf

In light of Bahrain and Saudi Arabia’s survival, it is also important to examine to what extent late rentierism may have contributed to stability. As Gray (2011) and Davidson (2012) have argued, Saudi Arabia and Bahrain, like their GCC counterparts, have entered a stage of late rentierism. This is mostly to do with the efforts to diversify their economies away from traditional oil rent, as well as extending the rentier bargain regionally and globally to buy loyalty from the international community. In terms of survival, these elements have been crucial, as on the one hand, diversifying the economy aims to create more employment opportunities and preserve the domestic social contract of patronage and political acquiescence, whilst economic largesse on the international stage aims to buy protection and loyalty from influential powers. Again, like all elements of rentierism, these actions rely on agency; oil money facilitates these processes, but it is up to the ruler to act upon the opportunities.

4.3.1 Renewing the domestic ruling bargain in Bahrain and Saudi Arabia

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33 Thus, despite Bahrain’s efforts to renew the domestic ruling bargain, rent wealth remains relatively low, enforcing a strain on the relationship between the ruler and the citizenry.

Saudi Arabia has been particularly successful regarding renewing the ruling bargain and implementing a state-capitalist structure. The aim of this practice is to appease business elites that support the regime by allowing administrative autonomy, whilst the royal family owns all or a majority of the shares (Gray 2011, p.33). Hertog (2010) calls these enterprises “islands of efficiency” and argues that they are a product of the autonomy that was afforded to the Al Sauds from oil money. These include the Saudi Central Bank (SAMA), the industrial corporation, Saudi Basic Industries Corporation (SABIC), and the oil company Saudi Aramco. Most of these specialised administrative structures were formed separately from the regular bureaucratic institutions during the 1970s oil boom with technocrats at the forefront and accountable only to the royal family. These structures are considered more efficient in comparison to their bureaucratic counterparts because they were not bred out of clientelism or co-optation. With their more transparent recruitment processes, these institutions were rather set up to attract a new generation of Saudi graduates with Western degrees, as well as expatriate advisors. Like regular bureaucratic bodies, they are only answerable to the Al Saud and are just as much a part of the “hub-and-spoke” system. However, the workers within these institutions receive higher wages, and they have provided a system of stability for the monarchy (Ibid p.17, pp.28-9). For example, the state owns a 70% share of SABIC and the Minister of Industry chairs its board. Therefore, the majority of its undertakings interconnect with governmental strategies (Niblock with Malik 2007 p.26). This is a mutually beneficial relationship as the state remains in control whilst the technocrats are left placated and loyal.

4.3.2 Regional power: the strength of the GCC

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34 Article 4). The GCC adopted a common market in 2008; however, the planned common currency never came into fruition. On the security front, the GCC has a common army called the Peninsula Shield Force, which played an instrumental role crushing the attempted revolution in Bahrain (BBC 2012; Davidson 2012 pp.179-80; Yom and Gause 2012 p.81). In the form of the GCC, the Gulf monarchies have pooled together their wealth and military resources and formed a strong regional power, which aims to protect its members against internal and external threats. Thus, the rentier and repression effects are being used on a mass scale to appease citizens and secure regimes across the Gulf.

In what has been dubbed the Gulf “Marshall Plan”, during the Arab Spring, the GCC pledged billions to Oman and Bahrain, and even extended the offer of $5 billion to Jordan and Morocco (Yom and Gause 2012 p.83-5). The proposition to the smaller non-oil rich kingdoms of Jordan and Morocco highlight a desire from the GCC countries to maintain monarchical rule and legitimacy in the region. Leading this rentier defence strategy is Saudi Arabia, who spearheaded the counterrevolution in the Gulf during the Arab Spring. Brynen et al. (2012) state that Saudi Arabia’s behaviour “suggests the maturation of a new kind of rentier superpower” (p.204). It is thus reasonable to suggest that without the financial and military help of the GCC, the Al Khalifa regime would not have survived.

4.3.3 Buying support from the West

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35 these funds to the Gulf monarchies is threefold. Firstly, they give the appearance of a forward-thinking government that actively engages in conserving energy and wealth. Secondly, it is traditionally believed that SWF may help alleviate problems associated with “resource curse”15

Davidson (2012) argues that the Gulf monarchies have employed a strategy of soft power to enhance their image to Western powers that might be able to offer protection and security in the future. Soft power from the Gulf monarchies comes in the form of strategic investments, and financing universities and cultural institutions (pp.90-8). This conduct is comparable to the domestic patronage networks that exist in Gulf monarchies, which are often reliable in times of crisis, such as the ulema in Saudi Arabia. Gray (2011) additionally believes that these activities form part of a public relations strategy to raise awareness in Western corporate and academic circles of the business-friendly and generous approach of the Gulf (p.36). Davidson illuminates a number of examples of the uses of soft power. Although Bahrain’s contributions are quite humble, they remain significant. For example, in 2007 the SWF Mumtalakat Holding Company invested a 30% stake in Britain’s McLaren Group and by 2011, they increased this to 50%. The island has also hosted the Grand Prix in a bid to improve its image and attract tourists (Davidson 2012 p.93). There is also an incentive to maintain good relations with the US, who is Bahrain’s main guarantor of security. Bahrain is home to the US’s Fifth Fleet and the two countries have a free trade agreement (Kinninmont 2011 p.57). Furthermore, the Crown Prince, Salman bin Hamad bin Isa Al Khalifa donated $3 million to the American University in Washington DC in exchange for naming rights to the atrium next to the School of International Service (Latifi 2011). . Finally, it serves as a useful source of income in the future, should oil reserves diminish (pp.34-5). Therefore, these funds help the Gulf monarchies with their global image as well as ensuring regime durability.

As expected, Saudi Arabia’s efforts have been more extravagant. The kingdom has built mosques across Western Europe and supported cultural events such as World Book Prague, one of the largest book fairs in the world (Davidson 2012 pp.95-8). The Al Sauds have moreover invested a lot of money in Western education and universities. For example, in 2008, Al-Waleed bin Talal Al Saud donated $13 million to build a Centre for Islamic Studies at Cambridge University. The same prince provided similar amounts to Edinburgh University for an Islamic Centre named after him. In the US,

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