Since 2014, the hydro-carbon sector, historically known for its repeated cycles of booming price highs and busting price lows, has been experiencing one of its deepest downturns not seen since the 1990s. The repercussions of this downturn on the oil and gas-dependent economies of the Persian Gulf states are considered to be significant. This impact is consequential not only because of the changing economic circumstances of declining revenues and shrinking national budgets, but also because of the potential for leading to social and political instability. Scholars have long suggested that the enduring stability and persistence of authoritarian rule across the Persian Gulf is most likely a result of efforts made by the regional states to ensure the material and financial well-being of their citizens. If conditions were to change drastically and the states are unable to deliver broad social programs, pay hefty public sector salaries, and provide extensive benefits and subsidies, the populations of the Persian Gulf states could perhaps become less compliant.
A robust literature on the Persian Gulf states has focused on the causes, manifestations, and consequences of rentierism, which is assumed to inform almost all aspects of the region’s political and economic behavior. In 2009, CIRS launched a multi-year research project on the topic and in 2012 published the edited volume on The Political Economy of the Persian Gulf. Building on this earlier work, in the 2016-2017 academic year CIRS launched a new research initiative to further explore the “resource curse” in the Persian Gulf region, and in particular to examine the debate over resource curse in the literature against a backdrop of the current oil and gas prices and regional conditions.
There is extensive scholarly disagreement over the very validity of the resource curse thesis, whether applied to the Middle East or elsewhere. The debate centers on questions such as whether or not resource revenues erode possibilities for institutionalized political accountability, undermine long-term economic efficiency, and increase resource misallocation in the economy. Many also question the impact of resource endowments on the evolution of authoritarian systems.
CIRS’s research project aims to examine the relationships between resource revenues and democracy; political and economic arrangements; states’ structural foundations and bureaucracies; policy-making; privatization efforts; occupational specialization, urbanization, and education; national security architecture; economic diversification; labor market demographics; regional and international cooperation; social and cultural changes; gender relations; art production; and identity.
To varying degrees, resource revenues have contributed to the evolution of states of the Persian Gulf region. These revenues have had direct consequences on the development of political structures, economies, bureaucracies, infrastructure, state institutions, regional and international status, societies, and state-society relations.
This research initiative focuses on the veracity of the resource curse thesis explanation for many of the political, social, and dynamics in the region. How applicable is the claim: “oil impedes democracy”? How does the type of government influence political elites’ behavior with regards to resource revenues? Does rent change pre-existing political and economic arrangements, or does it cement them? How do oil revenues impact the structural foundations and state institutions of Persian Gulf states? Is there a correlation between resource revenues and state spending on the military? How do resource exploitation arrangements impact the likelihood of a resource curse? How have resource revenues impacted societies not just economically but also culturally? Have they weakened or strengthened the tribal ties? Have they undermined some of the traditional pillars of Khaleeji identity? Did resource revenues contribute to the globalization of Khaleeji citizens? And, how have resource revenues impacted gender relations across the region?
The research initiative also examines the resource curse thesis in the context of the current downward price cycle. Do, for example, resource-revenues hinder the efficiency of resource-rich countries, or do they help in further developing industrial and/or agricultural sectors? And how are lower prices likely to impact Persian Gulf societies? How are Persian Gulf countries planning for privatizing state-owned assets? And what would this mean to GCC economies? Have policymakers in these states learned from previous cycles of oil and gas boom and bust? How do resource revenues impact regional and international cooperation?
Addressing these and other similar questions will contribute toward filling gaps in the burgeoning literature on the political economy of the Persian Gulf, and particularly in the debate over the validity of the resource curse thesis both in general and in relation to the region. The current downward trend in oil and gas prices has only magnified the multifaceted nature and the far-reaching impact of oil and gas revenues on both regional states and the societies over which they govern. This research initiative addresses an increasingly important but largely understudied topic in Middle Eastern and Persian Gulf studies.
Article by Islam Hassan, Research Analyst at CIRS