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Group Conflict and Political Mobilization in Bahrain and the Arab Gulf

Rethinking the Rentier State

Indiana University Press

Group-Based Political Mobilization in Bahrain and the Arab Gulf

Born of the newfound importance of oil-exporting nations in the 1970s and 1980s, the idea of the "rentier economy" arose in economics as a description of those countries that rely on substantial external rent, the latter defined broadly as a reward for ownership of natural resources, whether strategically located territory, mineral deposits, or, more to present purposes, oil or natural gas reserves. A special category of the rentier economy, a "rentier state," came to describe those economies in which only a few are engaged in the generation of this rent, the archetypal examples of which were, and remain, the oil- and gas-rich monarchies of the Arab Gulf. In rentier states, then, the creation and control over wealth is limited to a small minority of society, that is to say, to "the state," or, in the case of the Gulf regimes, to the ruling family qua state, while the vast majority of residents and citizens play the role either of distributor or consumer.

With such an extreme economic-cum-political imbalance thus written into the very definition of the rentier state, a significant portion of the rentier literature concerns itself with an inherent puzzle: how are these regimes seemingly so durable? That is, why do the citizens or residents of rentier states not simply confiscate the revenue-generating resources from their physical owners? The latter, after all, are hopelessly outnumbered. Yet, far from the gloomy predictions about the post-colonial fates of the Gulf monarchies, more than 40 years after the British withdrawal from its protectorates in 1971, the Arab Gulf states "continue to be ruled by the same families, sometimes the same individuals, under the same traditional forms and within virtually the same borders that had been engineered by the British political agents as they departed." And all this despite having seen three major regional conflicts, several oil crises, the rise and fall of Arab nationalism, the Iranian Revolution, the Arab Spring, and the threat of similar revolutionary episodes across the Gulf. What has enabled—continues to enable—these seemingly anachronistic regimes to survive?

A Hard Bargain: The Classical Origins of the Rentier State

Beginning with the earliest statements of the rentier state framework, theorists have posited that the resource-controlling parties within rentier states can, in short, buy off would-be domestic opponents through judicious economic policy. The form of such policy is at once positive (rent controllers offer citizens a portion of their wealth as public and private goods) and negative (they agree not to expropriate from citizens as they otherwise would like to). In practical terms, these avenues of mass co-optation correspond to two complementary mechanisms by which modern Gulf regimes are said to use their economic hegemony to elicit political acquiescence. First, they employ those who need employment; and, second, they abstain from levying taxes "on the basis," in Vandewalle's oft-repeated formulation, "of the reverse principle of no representation without taxation." Together these incentives foster a rent-induced consensus that "helps explain why the government of an oil-rich country ... can enjoy a degree of stability which is not explicable in terms of its domestic economic or political performance."

"Every citizen" of a rent-based economy, Beblawi insists, "has a legitimate aspiration to be a government employee; in most cases this aspiration is fulfilled." Judging by present public-sector employment rates in the Arab Gulf, it would seem that this idea is as valid today as it was decades ago. In 2009, the National Bank of Kuwait estimated that Gulf citizens working in the public sector "account for 58% of total GCC nationals employed," including 50 percent of Saudis, 84 percent of Kuwaitis, and almost 90 percent of Qataris." Among respondents in my 2009 Bahrain survey, around 43 percent report being employed in the public sector. These already vast proportions, moreover, are on the rise: public sector jobs in the GCC rose at an average of 5.2 percent per year during 2006 and 2007, with Qatar recording a spectacular 33 percent annual growth rate, followed by the UAE and Oman at 5 percent, Kuwait at 4.4 percent, Saudi Arabia at 2.9 percent, and Bahrain at 2.4 percent. More recently, bolstered social welfare spending in response to the Arab uprisings has only pushed these percentages higher. In Oman, for instance, private-sector employment among nationals decreased by 4 percent in 2011 over the previous year. In Kuwait, the number of nationals entering the public sector in 2011 almost doubled, prompting the country's finance minister to warn in March 2012 that public-sector wages now equaled 85 percent of oil royalties.

By establishing an entanglement of bloated government ministries, subsidizing large, state-owned conglomerates, and spending huge sums on disproportionately large and well-equipped militaries, Gulf regimes can sop up a young populace that is easily disaffected, eager to marry and find housing, and generally well educated yet nonetheless ill-equipped for work in the private sector. The upshot is that the latter will be content to live their days as government pensioners and social welfare recipients, careful not to kill the goose that lays the golden egg. For their part, ruling families gain a political ally—at worst a self-interest-maximizing, apolitical animal—and need forfeit only a portion of their rent proceeds to guarantee continued enjoyment of the remainder.

Yet the state's beneficence does not end there. At the same time that it subsidizes citizens via employment, it also agrees not to extract through taxation: the rentier gods both giveth and doth not take away. "The cry of the American Revolution," writes Gause "was 'no taxation without representation.' None of the Gulf governments seems willing to take the political risk that direct taxation entails." As Ayubi aptly summarizes,

The taxation function is thus reversed in the oil state: instead of the usual situation, where the state taxes the citizen in return for services, here the citizen taxes the state—by acquiring a government payment [i.e., a salary]—in return for staying quiet, for not invoking tribal rivalries and for not challenging the ruling family's position.

Here, then, is the ostensive political bargain that has allowed the unforeseen longevity of rentier states, and the Gulf monarchies in particular, since their rise to prominence over the last half-century: ordinary citizens are content to forfeit a role in decision making in exchange for a tax-free, resource-funded welfare state. By this conception, economic satisfaction is the primary variable influencing the extent of popular political interest and expectations of participation in decision making, with other, nonmaterial factors playing no important systematic role at the individual level.

In recent years attempts have been made to update the rentier state paradigm to make it less deterministic and to account for important changes in the structure of both the Gulf state and Gulf society since the theory's original articulation. Still, such revisions have, with very few exceptions, not questioned the fundamental material basis of the citizen-state relationship. The original conception of a state unconstrained by social pressures may have been qualified and moderated, yet the basic rentier formula continues to compute in the popular and scholarly imagination: economic subsidies in exchange for political subsidies. Citizens are overpaid relative to their actual productivity, and in return governments are overpaid in political support relative to their performance.

Studying the Rentier State

If statement of the rentier state hypothesis is straightforward enough, however, the matter of testing it—of evaluating in an objective and scientific manner the extent to which its predicted causal mechanisms in fact operate in actual rentier states—is a far less simple exercise. For extant empirical evaluations of the rentier framework suffer from basic theoretical and methodological limitations such that one might argue the theory has yet to be tested at all. Rather than evaluate the central rentier hypothesis, the proposition that material satisfaction breeds popular political apathy and thus political stability in a particular class of state, contemporary scholars have used instead the macro-level causal mechanisms identified in the foundational rentier literature—resource revenues, government expenditures, and taxation rates—to explain an altogether different phenomenon.

Beblawi and Luciani propose cogently that the rentier hypothesis "helps explain why the government of an oil-rich country ... can enjoy a degree of stability which is not explicable in terms of its domestic economic or political performance." But in place of state stability—the political outcome of principal interest to the early framers—contemporary theorists have inserted their own modern preoccupation with democracy.

Beginning with Ross's landmark 2001 article Does Oil Hinder Democracy?, quantitative tests of the link between resource rents and democracy have dominated the rentier literature. What is more, almost all of these works have utilized exactly the same dependent variable: the ubiquitous Polity IV –10 to 10 scale of regime type. The difficulty with this procedure is twofold. First, there is, as one would expect, little within—or between—country variation in this measure among the Arab Gulf states: Saudi Arabia and Qatar are rated –10 for each year of their existence; the UAE is a perennial –8; modern Oman ranges between –10 and –8; and Bahrain and Kuwait from –10 to –7. At the same time, the fuel rents of the six GCC states exceed the rest of the world by two orders of magnitude: according to Ross's own data from a 2008 paper on oil and gender equality, the mean per capita fuel rents among GCC states is $11,339, compared to $270 for the other 163 countries in the sample. For these two reasons, most of the variation in "democracy" attributed to "oil" should, in truth, be attributed to the Gulf only. In which case we find ourselves in the same position in which we began, namely faced with the question of how to understand the unique political economy of a finite category of states.

A simple plot of these two variables for the full sample of 170 countries clearly reveals the methodological issue underlying attempts to associate resource rents with democracy in the customary manner. Depicted in Figure 1.1 is the relationship between a nation's 2007 Polity IV score and Ross's 2008 fuel rents per capita measure. One will notice, first, that only a small proportion of the countries are identifiable owing to the large cluster of observations hovering at the far end of the x-axis. Of those that do stand out, moreover, six are the Arab Gulf states, shaded in gray for ease of identification; the two other outlying cases are Brunei ("BRN") and to a lesser extent Libya ("LBY").

One sees therefore how, despite standardization of the rents per capita measure, the extreme between-country variation in rent-generation—that is to say, the vast difference separating rentier and non-rentier economies—obscures the true system-level relationship between resource rents and democracy. Indeed, it is evident that the bivariate least-squares regression line describing this relationship, which purports to show an immensely significant negative association between a country's per capita rents and polity score, is almost entirely dictated by the small number of outlying observations consisting of the Arab Gulf states along with Brunei and Libya.

When one omits these eight outliers one finds that the picture, though more in focus, is still far from clear. Figure 1.2 illustrates the results of this exclusion. Although the regression line describing the estimated relationship between fuel rents and regime type remains apparently negative, its slope is no longer statistically distinguishable from zero. In fact, as indicated by the dotted upper and lower bands of the 95 percent confidence interval, one is unable to rule out the possibility even that the true bivariate relationship is positive rather than negative. It might then be said that the most common application of rentier state theory in political science today, as an explanation for the lack of democracy in resource-rich nations, not only errs in its choice of dependent variable, but also, in doing so, paradoxically draws one back to the original task of rentier theorists: understanding the political ramifications of a mode of economy unique to a finite group of nations. At bottom, Figures 1.1 and 1.2 demonstrate how the category "rentier" exists as a class of state of which one either is or is not a member, as per Luciani's dichotomy of allocative versus productive states. The mystery, accordingly, is not whether an additional dollar of oil profits begets some marginal shift toward authoritarianism in Denmark or New Zealand, but whether it indeed is true that in a handful of rentier societies, six of which are the Arab Gulf monarchies, citizenstate relations operate in a qualitatively different manner than they do elsewhere.

This discussion also suggests the more fundamental, theoretical problem affecting extant attempts to demonstrate the empirical validity of the rentier state framework. Simply stated, they fail to test the actual individual-level causal processes that the theory posits. It is, after all, quite explicit in claiming that the reason states with sizable external rents tend to remain stable (yet authoritarian) is because ordinary citizens, when satisfied economically, are content to concede the realm of politics to their benefactors. Rather than evaluate this specific causal hypothesis, however, investigators have sought to link country-level economic variables to country-level political outcomes such as regime type or democratic transition. Yet such studies can, at best, only confirm the existence of these macro-level associations; absent a new theory that ties the latter together directly without recourse to the individual level of analysis, they bring one no closer to knowing whether the rentier model is correct in its account of what underlies these links. For the theory's boldest statement is not what it says about rent-dependent states themselves, but what it assumes about their citizens: that it understands the drivers of popular interest and participation in politics; what it is that inclines ordinary citizens to seek an active role in political life or, alternatively, to shrink from it. These are no small claims.

Of course, the form of previous empirical testing was determined in part by the nature of available data. And such data, owing to numerous practical hurdles, have not been informed by mass surveys of the political attitudes of ordinary Arabs—to say nothing of Gulf Arabs—until very recently, and even then on a limited and sporadic basis. Thus, the failure of prior studies to test the individual-level causal story underlying the rentier framework is not simply a product of theoretical or methodological oversight. However, with the completion in 2014 of the third wave of the Arab Democracy Barometer survey project, as well as contemporaneous WVS surveys in Qatar and Kuwait, further neglect of this inquiry now that such an opportunity exists would represent continuation down a path that is incapable, ultimately, of answering the most elemental questions to which we seek answers: What causes individuals to incline toward, or abstain from, politics in the rentier states—indeed, in the most emblematic and, in practical political terms, the most important of all the rentier states? Is the prevailing explanation correct in identifying material well-being as the key determinant? If so, is this relationship between personal economy and personal political orientation a universal one, or does it obtain only under certain conditions? in certain countries? or for certain types of individuals?

One might therefore dare to say that the theoretical architecture of the rentier state paradigm first described in the 1970s and repeated until today—the wealth-for-silence bargain extended to citizens of rent-based regimes—in fact has never actually been evaluated empirically. For all the studies that have since purported to do so, insofar as these have examined associations between country-level phenomena rather than analyze the link between material well-being and political involvement among individual citizens, like the science of gravity these have tested only the outwardly observable interactions of the rentier state rather than its internal causal processes. And, to be sure, the difference is not inconsequential. Not all states have been equally successful at converting external rents into domestic stability, there being important cross-country variation among the Arab Gulf states that one cannot explain without a clearer understanding of how interceding variables at both the country level and the individual level serve to condition the relationship between politics and economics in rent-dependent societies.

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Excerpted from Group Conflict and Political Mobilization in Bahrain and the Arab Gulf by Justin Gengler. Copyright © 2015 Justin J. Gengler. Excerpted by permission of Indiana University Press.
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