Given the multiple commercial and familial linkages between merchants and entrepreneurs on one side, and royals on the other, divisions between ‘business’ and ‘state’ are now arguably more conceptual than actual. Furthermore, family and clan dynamics are often highly influential in shaping interactions between commercial interests and the state – and specifically the ruling family. These interrelationships occur within and between concentric circles of power and influence in the Gulf monarchies, beginning with a small core of political and economic decision-makers and extending outwards to the various layers of society. Through this process, the erosion of the private sector’s autonomy in favour of the interests of the centralized rentier state is further accentuated by the multiple and overlapping clientelistic networks and linkages connecting society and state.
State–business relations in the Gulf are thus characterized by three principal features. First, rent revenues have enabled the state to ensure the dependence of the private sector through mechanisms such as significant stock ownership in major businesses, the awarding of lucrative contracts, and financial reward through membership of multiple corporate boards. Second, family lineage and clan history play important roles in both state–business and business–business ties, drawing groups that may otherwise be excluded closer into the social and economic mainstream – and, more significantly, into the orbit of the state. Third, family and business relationships, sometimes separately and sometimes in conjunction with one another, serve as nodes of contact and interconnection between the inner reaches of the state and other circles of society from the centre outwards. These three features have made the business community heavily dependent on the state for its continued well-being and growth – especially in periods of economic downturn or slowdown.
Key is the significance of family ties and their juxtaposition with prevailing patterns of interaction both within the private sector and between the private sector and the state. The prominence of family ties in state–business and business–business relationships is evident throughout the Gulf. In Abu Dhabi, for example, much as in Qatar, about a dozen business families have been able to link wide-ranging social, economic and political interests with those of the ruling family, and have therefore been favoured over others. Business and merchant elites also have a strong presence on the boards of most state-owned and state-dominated enterprises, perpetuating close links with the state and fostering mutual interests and trust between the state and business elites, as well as underwriting ruler legitimacy. In the UAE, Qatar and Kuwait in particular, this interdependence of interests between ruling family and business elites has frequently been ratified by marriage alliances. A recent illustration is the high-profile marriage, in 2015, between the emir of Kuwait’s grandson and the granddaughter of prominent businessman Jassim al-Khorafi, who was speaker of the parliament from 1999–2011. Such intermarriages with non-royals are much less common in Bahrain, Oman and Saudi Arabia.
The patterns that can be traced in state–business relations in the Gulf are illustrative of the ways in which rentier political economies have evolved in countries where social dynamics have been strengthened in the face of – or indeed because of – the extensive reach of the state and its institutions. Efforts to capture and perpetuate rents have built on and reinforced prevailing social dynamics, one of the most important of which revolves around the extended family. Rentierism has thus helped blur the lines between the state and the private sector, and has encouraged the expansion of the phenomenon of brokerage among privileged locals, who know how to capitalize on their insider knowledge and their access to the innermost circles at which decisions are made.
These factors combine to make the private sector not just a client of the state, but one of its main sources of support. By serving as a critical link between the epicentre of power and successive social strata, the private sector underpins state authority. For its part, by virtue of its intimate and multidimensional ties to the state, the local business community in the GCC has in many ways become an extension of the public sector. At the very least, it has evolved as one of the state’s main clients and one of its strongest social allies.