In the aftermath of the Arab Awakening of 2011-12, the relatively stable Gulf Arab principalities have attracted much attention among policy makers and scholars. The book under review, edited by Michael Hudson and Mimi Kirk, contains contributions from several prominent area experts on the distributional dynamics and sociopolitical governance of the Gulf systems, the regional dynamics of the GCC and Iran, and changing U.S.-Gulf relations.
Hudson's introduction gives a short overview of the main political and socioeconomic challenges to the principalities during the past half-century. He mentions that there are two divergent views on their responses to the challenges. In one view, the Gulf Arab states have been largely successful; the glass is at least half full. In the glass-is-half-empty view, danger lurks in the aftermath of the Arab Awakening. Hudson states that the book does not purport to choose sides, but to unravel the many complex facets of Gulf Arab politics and economics.
Marvin Hvidt analyzes the development plans of the Arab Gulf states and concludes that state capitalism is entrenched in these countries. Bahrain and Oman, most vulnerable to future declines in oil revenues, explicitly aim for the private sector to be the main economic driver, but only for the medium to long term. Oman is at present the only country among the six that plans to privatize state-owned firms, while the UAE is the only country that does not aim to increase the role of the private sector.
For Kuwait, Qatar and Saudi Arabia, the state also remains the driver of the economy through its development budget and ownership of firms. The private sector, which depends on the state budget, will continue to operate in niches where the state has decided to abstain — for example, in retail, trade and construction. The strong financial situation of these states has not necessitated significant change to the state-led economic model. Moreover, the government responses to the Arab Awakening have been appeasement by more benefits. Gulf governments are uneasy at the prospect of increasing burdens on their populations.
Steffen Hertog doubts that the distributional bargain of Gulf rentier states can be abandoned. Instead, he argues for a redesigned model that would protect the state's fiscal basis, allow a substantial role for the citizenry in the private sector, and develop a shared interest in growth policies on the part of the local private sector and citizenry. According to Hertog, the rentier nature of GCC economies results in a direct clash between the fiscal interests of the citizens and those of business people. Most citizens and the private sector simply want to maximize patronage and pro-growth policies, respectively. Even fiscally neutral issues of diversification can become bargaining chips in distributional contests.
Hertog therefore suggests the integration of the private sector in a new distributional bargain. He advocates labor-market reforms aimed at increasing the private wage levels of nationals and making expatriate labor more expensive. This would make full-time employment more attractive, and nationals would become more competitive in the private labor market. According to Hertog, this measure should ideally be combined with (1) offering less easy access to guaranteed state employment and (2) drawing on a citizen's income as a least-distortionary rent entitlement. Higher labor costs would be the fiscal equivalent of a tax on a local business or a transfer from business to government. Government expenditure on state employment could shrink, liberating funds for pro-growth investment.
Hertog recognizes the need for a broader pro-employment coalition in society. However, he does not explore the enablers or contraints of incentive systems and psychological contracts, social capital and dominant discourses, and institutional rules and bureaucratic inertia. His creative policy suggestion rests squarely on neoclassical economics and could be made more robust by using the insights of institutional economics.
Marc Valeri argues that internal power politics within the ruling elite in Bahrain and Oman largely explain the manner in which social and economic reforms have been implemented since the Arab Awakening. In Bahrain, the political and economic elites are historically distinct. In Oman, the merchants have been directly involved in political decision making since the 1970s. However, many ministers whose families previously were not in business have become rich, increasing the dependency of both elites on the ruler and the stability of his rule.
In Bahrain, the business elite views itself as a Sunni minority, while the ruling family was the major beneficiary of oil wealth. Members of the private sector had been heavily dependent on the balance of power within the royal family and their good relationship with its more influential individuals. For these internal reasons, both business and political elites have aimed to privilege the status quo since the Arab Awakening.
David. M. Mednicoff and Joanna E. Springer state that in the past few decades, Gulf states have made the rule of law a key theme of their national politics. However, in Arab countries in general, historical experience and interviewee comments indicate a deep tension between the rule of law as a means of boosting state power and as a means of citizen empowerment and individual liberty. The growth of strong coercive institutions, a decreased scope for sharia law, and a hybrid legal system are much less evident in the Gulf states specifically. The Gulf's economic hyperglobalization and the relative dearth of legal and sociopolitical infrastructure prior to the oil boom also mean there are more hybrid legal ideals and locally appropriate best practices.
Nevertheless, Mednicoff and Springer conclude that reforms related to foreign workers in Qatar and the UAE have remained limited whenever they could encroach on the political standing of officials or open up the political system. In this regard, their study could have benefited from the theoretical work done in African studies by Pierre Englebert (2009). Englebert analyses the centrality of "legal command" conferred by the juridical sovereignty of states in neopatrimonial systems. The "rule of law" is overcome by "rule by law" in which power is exercized for public or private gain, rather than as an instrument for limiting the state's arbitrary power.
James C.A. Redman, in a chapter that aligns well with the first section on rentier states, analyses the dynamics of distribution in Kuwait. He reiterates that the classical rentier paradigm wrongly assumes a completely equitable rent distribution by the government or a uniform rent-seeking by the population. Kuwait is a small state with big bureaucracies that employ only a fraction of available nationals. State assets are widely considered to belong to the citizenry. However, there are many ranks of intermediaries standing between citizens and services, and many opportunities for brokerage and influence peddling.
Relationships and connections are central to the intersection of the state, the polity and the body politic. They are also reinforced by norms of mutual favor-providing as a mark of both success and community expectations. However, the pathways through the bureaucracy have many derived intermediaries. They can negotiate the terms of access to resources the government has allocated for redistribution.
Redman discusses the exclusively male Kuwait guestrooms (dawawin), with their closed circuits of information and contacts "to successfully navigate the labyrinthine agencies of the rentier state" (p. 137). Kuwait, like other Gulf countries, therefore enjoys a mode of governance based not on extraction or coercion, but on the circulation of entitlements and privileges. However, agency, relationships and channels of information shape this circulation and allow differential access to those resources.
The book's section on the Gulf and beyond does not include any reference to Iraq. With the benefit of hindsight, this may constitute a significant gap, for current events in Iraq will not leave Gulf Arab governments or their diverse populations untouched. However, Malik R. Dahlan analyses regionalism, discussing the impact of GCC troops in enforcing order in Bahrain, the GCC's geopolitically motivated invitation to Jordan and Morocco to join the GCC, and its active involvement in mediation in Yemen.
In Dahlan's view, the GCC should use the Asia-Pacific Economic Cooperation (APEC) model as a framework to foster regional cooperation, even allowing an open regionalism and membership for countries outside the region, such as China and the United States. Its primary goal should be to enhance economic cooperation among member states in three ways: reduced trade barriers, and even a regionwide free-trade area allowing individuals and companies from member states to do business in other member states, and regional economic collaboration.
Dahlan's perspective, though not new, is still very optimistic. The informal, voluntarist and customized dimensions of APEC, as well as space for private-sector involvement, are indeed suitable for the GCC. However, forms of state capitalism and rivalries between ruling elites in the Gulf states remain the norm. For an economic-cooperation framework to really get off the ground, it would probably first have to address differences in perceived interests and incentive systems in political institutions. Thus, the potential losses in the political and even security domains may in several cases turn out to be at least as important for eventual regional cooperation as economic gains.
Mahmood Sariolghalam states that the key elements of Iran's foreign policy towards Western powers since 1979 have been relatively constant. There is a preference for causes and movements over governments in foreign relations; economic relations are separated from foreign-policy pursuits; and economic interests are subject to ideology in order to maintain domestic security. Although he does not mention it, this aspect could be fruitfully explored by looking at the conduct of the economically strong National Iranian Oil Company (NIOC). In addition, confrontation with Israel and the United States is institutionalized, and strategic enclaves in the Middle East are fostered to limit potential U.S. confrontation.
Sariolghalam assesses the likelihood that the Iranian leadership could emulate China in producing foreign-policy and economic change without transforming the political order. Since the delegitimization of Israel has been the most important source of U.S. opposition to Iran, Sariolghalam sees a revision of their policies as perhaps the key factor in the survival of Iran's political order.
Recently, perhaps due to the Rouhani government's focus on current negotiations, Iran has been less outspokenly anti-Israel about the Gaza conflict than usual. However, an about-face would possibly take much more time and stronger incentives for the multilayered array of actors in Iran. An unanswered question is whether such revisionism alone would be sufficient for those who consider Iran a competitor for regional hegemony.
Nevertheless, Sariolghalam's analysis is perceptive and quite strong on the psychological dimensions often neglected in analyses of Iran: "For the anti-globalization generation now living under the Islamic Republic, there is constant gratification because there are no foreigners telling it what to do" (p. 173). And, "For states that aspire to project uniqueness, conflicts and crises may be strategically valuable and psychologically comforting" (p. 176).
F. Gregory Gause III identifies three phases in U.S. policy in the Gulf since 1940. Commercial energy interests and strategic Cold War interests drove the first phase, which lasted until 1970 and entailed only minimal military involvement. Strategic Cold War, energy-security and regional-security considerations drove the second phase. This policy resulted in the abandonment of private commercial interests by U.S. energy companies and a steady increase in U.S. military forces in the region. The third period, 2001-11, included two policies: a failed attempt by the Bush administration to change the status quo, and an attempt under the Obama administration to return to the second phase of balance-of-power politics. However, the massive protests in Iran in 2009 and the Arab Awakening of 2011-12 have kept the domestic political arrangements of the Gulf states on the broader agenda of regional policy.
Alain Gresh states that smaller states are pursuing their international interests without being bound to one camp. Some Gulf Arab actors hope that the return of Chinese power will allow their countries to offset a U.S. security guarantee seen as having uneven credibility. Gresh discusses this shift with reference to discreet Saudi-Chinese military relations since the Iran-Iraq War. He concludes that, while the United States remains a major actor, its ability to shape the regional environment or individual states has decreased.
Chinese scholar Degang Sun analyses the changing nature of U.S. military bases in the Gulf. He concludes that a redeployment rather than a decrease in power is occurring. U.S. bases and personnel are being distributed more evenly in the region; the number and size of military bases is decreasing; and military deployment is becoming increasingly mobile and interlinked. The redeployment reflects, among other factors, the economic downturn and a shift in strategic focus to the greater Middle East — West Asia, Central Asia and part of South Asia, an "arc of instability." In his view, the redeployment consolidates U.S. security predominance in the Gulf but hijacks GCC countries, exposing them as potential targets if Iran wants to strike back at the United States. The readjustment is bound to increase competition in the region among big powers. It is also worsening anti-Americanism and security dilemmas and may cause mutual misperceptions between the United States and Iran.
Sun does not argue the merits of two mentioned alternatives: a Shii security framework and a Saudi or even broadly Asian security framework. Also of interest is to what extent U.S. civil and military decision makers will consider the Gulf as an arena where they should demonstrate their commitment to allies in need. As in the case of NATO and the standoff with Russia, U.S. conduct in the Gulf will also send a message to its allies in East Asia.