For the GCC states since 2011, as elsewhere in the Arab world, demands for social and economic reforms have been at the top of the agenda of critics of the incumbent regimes, with a particular focus on job opportunities and proactive measures to curb rising inequalities and to counter alleged corruption among senior officials. While distribution of state wealth – in the form of free healthcare, free education and public-sector jobs for nationals – has been a key pillar of the system’s legitimacy, demands for change among the region’s youth have apparently been fuelled by resentment at an elite that they perceive to be busily safeguarding its privileges, together with a growing disparity between the fortunate few, who benefit greatly from economic spin-offs, and the vast majority, who do so much less, if at all. The increasing personal involvement of ruling family members in business is likely to fuel such frustration. This is likely to extend even to Qatar and the UAE, which have thus far been partially shielded by a more comfortable balance of demand against resources, as these regimes, too, begin to attenuate the extent of their welfare states. Open to debate now is the future loyalty of the wider population to a system that, despite its imperfections, was for many years capable of providing a minimum level of economic security to almost all Gulf nationals, but which latterly has moved towards an increasingly self-interested model of rent capture by a small elite.
At a time of political and economic uncertainty, loyalty to the system still is the most rational choice for the business elites, even if their privileges tend to be squeezed. The current close alliance between business elites and ruling powers reflects the former’s quest to preserve its interests in the wake of the Arab uprisings. This dynamic confirms that the private sector in the Gulf monarchies cannot be seen as a driver of political reform. Rather, the region’s business classes are likely to seek to preserve the political status quo, while utilizing their position as a buttress of the incumbent regimes to push for economic policies that are in line with business interests but that will not necessarily benefit the broader population that is predominantly dependent on the public sector. Offsetting its state dependence would require new sources of rent for the business sector, and, more specifically, new contracts without or with reduced government support. As long as the state controls the flow of oil and gas revenues, it remains the primary awarder of contracts for the infrastructure growth and development through which the business sector thrives.
While there may be a prima facie logic in assuming that increasing the contribution of the private sector to growth will make it more autonomous, this remains purely theoretical and does not take account of the specific structure and practices of the business sector in the Gulf. At least as far as the state’s relationship with the business community is concerned, existing patterns of close ties, clientelism and the business sector’s dependence on the state are unlikely to undergo significant changes, even if the state has fewer resources to distribute.
The growing involvement of royals in business may be considered as a ruler’s response to the problem of how to control his own expanding family.
Even the impact of a new generation of independent young entrepreneurs remains hypothetical. When, in the GCC monarchies, new business actors are not simply created in the interests of an incumbent regime – i.e. through royal patronage – policies promoting entrepreneurship and innovation have tended to function as another vehicle for state patronage. Crystal Ennis, with reference to Oman and Qatar, has noted: ‘Managed in a certain way, [the promotion of entrepreneurship] can prove to have a minimal political cost and still maintain the appearance of addressing major socio-economic problems … If the promotion of entrepreneurship is accomplishing anything, it is slightly extending the boundaries of rent circulation by allowing newer actors to become recipients’;10 in the end, the status quo is perpetuated.
The growing involvement of royals in business may be considered as a ruler’s response to the problem of how to control his own expanding family. More and more individuals and branches of each ruling family understand that their chances of accessing the throne, or even of attaining senior political positions, are vanishingly small. In this context, a ‘safety valve’ may be to incite family members to choose money over political ambition – a bargain comparable to the one that prevailed between rulers and merchants after oil was discovered. However, this strategy may well revive internal tensions within the ruling families themselves, since the economic weight of an individual or a branch of the family is likely also to increase their political weight. Economic assets are political resources that royals involved in business will be tempted to use in order to secure power and influence within the family.
It is also important to consider the conflict between political and economic interests at the highest levels in the Gulf monarchies. Each of the ruling families will increasingly be required to manage competing priorities between the national general interests that they are supposed to promote – through implementing measures to address local youth unemployment, or by means of nationalization policies for jobs in the private sector, etc. – and the particular stakes that some of ruling family members now defend as business actors. This will have an impact on the direction taken through economic policies, since, for example, labour market reforms favouring nationals are usually at odds with policies enhancing incentives for businesses, or those favouring deregulation and privatization. Furthermore it may also fuel divisions between the royals interested in power politics and those motivated by more entrepreneurial interests.
10 Ennis, C. (2015), ‘Between Trend and Necessity: Top-Down Entrepreneurship Promotion in Oman and Qatar’, The Muslim World, 105 (1), pp. 116 and 129.