Re-negotiating the Social Contract in the GCC: State-Business Relations and Reforms in the Oil-Rentier Gulf Monarchies

1 October 2012 - 31 December 2015

Awarded to: Associate Professor  Marc Valeri

Co-investigators: Professor Gerd Nonneman

Funding awarded to Exeter £ 331,610

Sponsor(s): Economic and Social Research Council (ESRC)

Project webpage(s)

Re-negotiating the Social Contract in the GCC: State-Business Relations and Reforms in the Oil-Rentier Gulf Monarchies

About the project

This project concerns the dynamics and implications of the economic and social transformations in the Gulf Cooperation Council (GCC) states [Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE] over the last decade. The GCC states are of global geopolitical importance (40% of world oil reserves), they are at the heart of the Arab world's economy, and it is here that the Arab world's most significant bourgeoisie has arguably been emerging. It examines the evolution and position of the GCC's business community, its relations with 'state' and regime, and its perceptions of and roles in the reforms attempted in the region. By the same token, it investigates the impact of these reforms on the fortunes, composition and roles of the business community in these polities, including on state-business relations.

The social contract established by the ruling families during the 'rentier' period in the 20th Century - redistributing oil rent through free education, health care, housing, and well-paid government jobs; granting key positions to historically important tribes/families and economic monopolies to nationals; and legally subordinating expatriates to nationals - implied in return the non-interference of nationals and civil society in domestic politics. Fears over future oil revenue, globalisation and population growth & expectation reduced the viability of the oil-rent model of development, and brought an unprecedented awareness by GCC elites of the need to rethink their states' socio-economic structures. While past high oil prices arguably reduced the pressure to diversify, the latest period of high prices has instead coincided with sustained liberalising reforms, including changes in the role of the state, economic diversification policies, labour market reforms, health and educational reforms - all alongside fledgling political reforms. The current raft of reforms, affecting the definition of the welfare model, the structure of economy, and the sociology of business in these states, also have global implications. At the same time they represent a prima facie paradox, and a range of unanswered questions, for Rentier State Theory and the study of political and economic reform. The business elite has had a decisive role in supporting the established socio-political order and shaping political legitimacy, alongside its related economic role - even if these roles underwent important shifts. The nature, extent and implications of the current shift is the central subject of this project, including the role this 'bourgeoisie' might play in a broader socio-political evolution of these systems.

The subject will be approached primarily through the economic reforms and those that relate to it (governance, education and judicial): investigating the reforms themselves, the mutual impact between them and the business community, and what this tells us about changing state-business relations. But the aim is also to interpret what these dynamics tell us about the wider questions of the social contract and the future of political liberalisation vs. authoritarianism. A key hypothesis is that the proximity or distance of these economic elites vis-à-vis the ruling elite decisively affects the orientation, implementation and effectiveness of each state's economic reform policies.

At a wider level, investigating state-business relations in the Gulf monarchies in this critical period of re-negotiation of the social contract throws light on three broader issues: (1) the role of the economic elite in the decision-making process and in the liberalisation/ consolidation of post-colonial authoritarian regimes; (2) the social changes occurring in this region, where new generations, directly affected by these policies, call into question the inherited social model and impose new dynamics in societies usually seen as monolithic and traditional; (3) the dynamics of economic liberalisation processes as studied in other regions and in other social contexts. 

Economic and Social Research Council