The Tentative Future of Oil-Exporting Arab Regimes

As the Arab Spring continues, we should wonder if states endowed with oil and natural gas are less prone to uprisings. The Arab Gulf has remained relatively stable. While there is an economic nexus between oil and political stability, oil-rich Arab regimes should learn from those countries in revolt and begin to change their policies to fit the evolving political and social environment.

In the Gulf countries, natives ceded sovereignty of the land to specific family lineages, leaving monarchs to manage public goods and natural resources. These regimes derive legitimacy by bringing members of smaller tribes into government. These power-sharing arrangements shield the regimes from most internal threats of change and corroborate the monarchs' role as both theoretical and effective sovereign. As such, Gulf citizens are less likely to topple their regimes, as long as power-sharing continues.

Similarly, oil-rich Arab states with low extraction costs and high revenues are inclined to pump stimulus packages into their economy and strengthen their social safety nets, deterring large-scale protests. A case-in-point is the Saudi King’s announcement of a $36 billion allocation of social benefits on February 23. He exonerated prisoners of financial crimes, implemented a 15% pay hike for state employees, and increased the cash available for housing loans, all of which quelled threats to his regime.

The population of Saudi Arabia is larger than that of all other Gulf Cooperation Council (GCC) states combined, requiring the Saudi government to spend more. The large population results in a greater challenge to integrate people into a functional economy and to create social-climbing opportunities.

In sharp contrast to Gulf monarchies, where sovereignty is embodied in the monarch, Arab republics such as Egypt and Tunisia vest sovereignty in an institutional framework of the executive, legislative, and judiciary. As these republics fell under military regimes, state institutions were manipulated to consolidate the presidents' power.

Rampant corruption, convoluted policies, deal-cutting, and clientele-based politics of Arab republics formed a network of regime cronies who buttressed the presidents' rule and prevented oil and gas production profits from spreading. Lack of transparency, glaring income disparities, political exploitation, absence of political breathing-space, and the domino effect fuelled the large-scale protests across the Arab world.

Moreover, as the calls for change throughout the Arab world carry similar demands, the driving forces behind each scenario are different. The bargaining political unit in Libya and Yemen may be the tribe; in Egypt, the leaderless streets and some civil-society figures; in other countries, the political horizon is quite foggy. But whether extraction costs of oil and natural gas are high or not, governments should have maintained a transparent system of reporting and invested oil-rents in projects to increase people’s utility.

GCC states and Arab regimes should draw lessons from their Arab counterparts' experiences. These states should gradually introduce systems that allow for better representation through municipal and legislative council elections. While government spending packages are good in the short-run, GCC regimes may overlook societal changes if they do not offer an institutional platform. As a result, they could produce policies incompatible with their evolving political and socioeconomic environment. However, no serious effort towards a constitutional monarchy in the GCC countries is currently a viable option.

Photo Credit: abcdz2000