The "Resource Curse" in the Gulf Working Group II

On April 2, 2017, CIRS held the second working group under its research initiative on “The ‘Resource Curse’ in the Gulf.” During the working group, the participants presented their original contributions to the literature on rentier state theory, and covered a variety of related subtopics, including: rents, neopatrimonialism, and entrepreneurial state capitalism in the Gulf; co-optation mechanisms in rentier state theory; imperial origins of the oil curse; the resource curse, gender, and labor nationalization policies in the GCC; and military spending and corruption in rentier states.

Mathew Gray began the discussion with his paper on “Rentierism’s Siblings: On the Linkages between Rents, Neopatrimonialism, and Entrepreneurial State Capitalism in the Persian Gulf Monarchies.” In his article, Gray asserts that the politics of the Gulf have been changing rapidly for the past two decades or more, and continues to do so. The patterns of state and regime control are becoming more complex and sophisticated, and the simple rentier explanation, if it was ever suitable, is long out of date. Thus, Gray highlights the necessity of combining theories of late-stage rentierism with two other concepts, namely neopatrimonialism and entrepreneurial state capitalism, to better explain the political dynamics and arrangements in the GCC. Gray argues that rent is not only a tool of justification and co-optation used by states, but also links closely to neopatrimonialism and entrepreneurial state capitalism. Neopatrimonialism is essential to how state capitalism operates, and to ensuring that the political benefits derived from state capitalism reach the state and the ruling elite. State capitalism also provides a commercial realm within which the regime can create and manage elites, and develop the patron-client relationships that are a salient feature of Gulf politics.

Jessie Moritz led the discussion on her paper that questions the resilience of rentier theory’s hypothesis that the state effectively co-opts the public via rent disbursement, and thus avoids having to either reform or face opposition and dissent. In her paper on “Reformers and the Rentier State: Re-evaluating the Co-optation Mechanism in Rentier State Theory,” Moritz suggests that the argument that the oil and gas-rich GCC have, through their rent-based wealth distributions, effectively bought off society needs some pressing against. In her examination of informal and formal opposition in Qatar, Bahrain, and Oman since 2011, Moritz provides a nuanced analysis of the effectiveness of the rentier “co-optation mechanism” at the sub-national level. Drawing on a series of over 130 semi-structured interviews conducted with Gulf nationals, Moritz uncovers evidence of both rent-seeking behavior as well as open political dissent to state authority among nationals. Even Gulf citizens who contend with heavy material disincentives to challenge state authority do so if there are political motivations for it. Mortiz’s research highlights three underlying forces that can overpower rent-based incentives for political quiescence in the GCC states and propel the public to openly challenge the state: ideology, repression, and inequality.

Desha Girod presented her paper co-authored with Meir Walters on the “Imperial Origins of the Oil Curse.” Girod and Walters’ purpose in writing this paper is to explore why some leaders of oil-rich states invest their rentier earning in socio-economic development while other leaders largely spend this wealth on themselves and their networks of support. The rentier literature suggests that oil is a curse when it is discovered or exploited in countries that have weak institutions at the time of oil discovery or exploitation. However, this causal explanation needs to be tested further, as not all states with weak or nascent institutions at the time of oil discovery distribute hydrocarbon-derived wealth in the same way, as can be seen by the behavior of the GCC states. Other factors may exist at the time of oil discovery which incentivize leaders of states to spend on broad-based development and their populations despite the lack of existence of strong national institutions. In order to understand these dynamic in more detail, Girod and Walters trace the evolution of rent distribution in two oil-rich states in the Arabian Peninsula (Kuwait and Oman) that experienced remarkable development yet, like paradigmatic cases of the oil “curse,” contained weak national institutions at the time of oil discovery. However, unlike the classic cases, the nascent leaders and regimes in Kuwait and Oman lacked a dominant political class with access to coercive institutions capable of marginalizing their rivals. Imperial powers active in the region did not build coercive colonial institutions for extractive purposes because they had historically viewed the region as poor in natural resources. Unlike their behavior in other parts of the Middle East, imperial powers did not need to develop coercive extractive institutions nor an established hegemonic class of local clients to carry out the colonial project. As a result, at the time of independence the GCC rulers had to spend their oil revenues on development as a survival strategy and in order to placate any potential rivals. This paper thus suggests that the oil curse on development is modified by a pre-existing curse of natural resources and colonial extractive intent.

Gail Buttorff shifted the discussions with her paper (co-authored with Nawra al-Lawati and Bozena Welborne): “Cursed No More?: The Resource Curse, Gender, and Labor Nationalization Policies in the GCC.” The authors argue that recent scholarship posits that the resource curse has gendered as well as economic effects on oil-rich economies, entrenching paternalistic relationships that disadvantage women’s entry into the labor force in states such as those of the Middle East. Upon closer examination, however, it appears that oil may not be the most compelling argument to explain Arab women’s low presence in the workforce—especially since we see relatively high levels of women in the labor force within the Gulf Cooperation Council member states. The authors’ analysis suggests that oil-driven development might even boost female labor force participation as a by-product of labor nationalization policies.

Mohammad Reza Farzanegan concluded the working group discussions with his paper on “The Impact of Oil Rents on Military Spending: Does Corruption Matter?” Farzanegan’s study shows that the level of corruption matters in how oil rents affect the military spending of different countries. Using panel data covering the 1984–2014 period of the Middle East and North Africa (MENA) countries (including Gulf Cooperation Council countries), the author argues that the effect of oil rents on military budget depends on the extent of political corruption. Oil wealth boosts military spending when corruption (measured by the re-scaled ICRG index) exceeds a critical score of five (out of six) in the MENA region. The intermediary role of corruption in the military–oil nexus is robust, controlling country and year fixed effects, and a set of control variables that may affect military spending.

These original, empirically grounded contributions have been published as an edited volume and in a CIRS special issue of the Journal of Arabian Studies. 

• Click here for the working group’s agenda
• Click here for the participants biographies
• Read more about this research initiative

Participants and Discussants:

• Zahra Babar, CIRS – Georgetown University in Qatar
• Gail Buttorff, University of Kansas, US
• Mohammad Reza Farzanegan, Philipps-Universität Marburg
• Desha Girod, Georgetown University
• Matthew Gray, Waseda University, Japan
• Islam Hassan, CIRS – Georgetown University in Qatar
• Mehran Kamrava, CIRS – Georgetown University in Qatar
• Anatol Lieven, Georgetown University in Qatar
• Suzi Mirgani, CIRS – Georgetown University in Qatar
• Jessie Moritz, Australian National University
• Gerd Nonneman, Georgetown University in Qatar
• Jackie Starbird, CIRS – Georgetown University in Qatar
• Elizabeth Wanucha, CIRS – Georgetown University in Qatar

Article by Islam Hassan, Research Analyst at CIRS