1 - Introducing the Gulf economies

Summary

The Arab monarchies of the Gulf – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) – seem to present something of a paradox. On the one hand, they have enjoyed enormous economic growth in the modern era, primarily thanks to their impressive hydrocarbon reserves. From small, modest cities as recently as the mid-twentieth century, Dubai, Abu Dhabi, Doha, Riyadh, and others have developed into global metropolises with their citizens enjoying standards of living comparable to those in North America and western Europe. Their economic transformation has been profound, bringing with it new technologies and industries, and accompanying improvements in people’s lifestyles. On the other hand, this dramatic economic change has seemingly had little effect on politics. At first glance, Gulf societies seem conservative, hierarchical and reticent towards many forms of social change. Leaderships have faced occasional unrest, but with the arguable exception of Bahrain in 2011, have not confronted a genuine revolutionary impulse that risked bringing down the incumbent ruling family.

What this paradox in fact illustrates is that the political and economic systems of the Gulf are complex but relatively stable, shaped to a large extent by oil and its socio-political impacts, but not exclusively or overwhelmingly so. As elsewhere, political and social conditions in the Gulf are the result of a large and complex array of factors, not least of all economic ones. Oil and gas revenues certainly play a prominent role in this, providing enormous injections of (albeit unpredictable) state income and reducing pressure on the state to tax its citizens, but at the same time introducing other dilemmas, including a need for economic diversification and the creation of productive jobs outside the energy sector. While the leaderships of these states can at a fundamental level be categorized as authoritarian, other actors have agency as well, including clerics, tribal figures, and members of the business community. Politics does not, therefore, operate on a simple formula, but rather is the product of various channels of communication and negotiation between and within states and societies.

The Gulf states are of global strategic and economic importance, above all due to their oil and gas wealth, as shown in Table 1.1.