1. The rentier state

2. Overview The concept of “rent” The original argument about the rentier state Qualifications and refinement: – Identity – Micro-sociology – Economic efficiency – International relations

3. Two conceptions of rent Land rent (RICARDO) => landowner receives rent from peasant without contributing labour or capital (machinery) Rent as “excessive profits” arising from market distortions; rent is what is paid above the price in perfectly free market

4. Perspectives on rent neo-classical economics and rational choice institutionalists have identified rent arising from government-induced market distortions as always detrimental to development Not all rent is economically inefficient rents are ubiquitous We must study the institutional framework of rent creation, appropriation, redistribution

5. Rentier state Definition: – External rent from oil production – Rent controlled by the few (the government) and redistributed – The state thus becomes an “allocation state” (vs. production state/extractive state) Economic effect: – This fosters a “rentier mentality”, in which reward is not related to risk-taking Democracy: – No taxation, no representation Prediction when oil price drops: – Political pressure from population Weak institutions cannot cope with requirement for reform

6. Crude oil exports 2010 (‘000 barrels per day)

7. Hydrocarbons share in state income (%), 2003

8. Crude oil prices 1861-2011, US dollars per barrel, world events

9. History of Saudi Arabia 1902-1932: Conquest of Arabian peninsula 1932-1945: Beginnings of state-building, USA emerged as patron 1950s – 1960s: State-building (ARAMCO) and opposition (Nasserism, labour unrest) 1970s: Oil boom 1980s-1990s: Crisis (Mecca siege, Gulf war) 2001-2014: Second oil boom

10. State society relations beyond political economy At the top: ruling families Identity – Islam – “tribalism” “Society of intermediaries” => “brokerage” as a means of distributing rent to the population – Gatekeepers – Paper pushers – Contract brokers – Trade in visas and expatriate labour – Peddling citizenship to foreigners for business Repression: military expenditure Economic success International relations

11. Military expenditure as a % of GDP, 2009

12. Conclusions Rentier state concept tells us something important about Gulf societies: – State autonomy is greater – Pressures for democracy are lower BUT predictions of political crisis and stagnant economic growth were not quite correct: – Gulf states weathered the 1980s and 1990s when oil prices were low – We need a more refined sociology of rentier states. IR also are important