How oil has shaped the economies and politics of Middle East and North African countries
Oil has been the major source of revenue and is the main commodity for exportation in the Middle East and North African countries. In these Arab states, oil revenue accrues 90% of the total budget revenue and up to 95% (or at times even more) of the states’ exports (Beblawi 89). The dependence on the commodity is so far-reaching that it has influenced the social political and even economic status of these states.
Oil is a wealth generating commodity and those fortunate enough to be associated with its production possess immense powers, be it political, economic or social. The economies of the Middle East and the North African states are majorly founded on oil and the commodity can be approximated to be the generator of all other activities. The large revenue from oil has stirred the growth and development of the other sectors of the economies thus widening the economic belt of these Arab states.
In political terms, oil has placed political power in the hands of a certain class of people – those who own this natural commodity. They become the distributors or rather the allocators and their core involvement is to allocate revenue to the rest of the population. The political class has brought about a one-sided document in the states’ budget (Beblawi 90). In this state of affairs, the government assures its citizens that it will spend the money and distribute the benefits to the entire population. This is also referred to as an expenditure program (Beblawi 91).
The economic status of these nations does not call for much political participation. The people are virtually exempted from paying levy or taxes and as they say in these state, ‘there is no representation without taxation,’ as opposed to ‘there is no taxation without representation’ (Gwenn 296). The political class has used the non-tax payment as a shield to wade off the emergence of any political dissent. In this way, the government is relieved of political accountability since democracy is not a problem.
Significance of rentier economies for the Middle East and North African states
A rentier economy is an economy that substantially relies on external rent (Knowles 90). A rentier economy relies on external sources for its revenue income. The term rentier economies can be applied in reference to the Middle East and North African states especially because these Arab states rely on international sale of petroleum for their states’ income. As in the case of these states, in a rentier state, the creation of wealth in the hands of a few people while the majority remains as distributors and consumers. The economic power of the few also affords them political might (Beblawi 87-88).
In the rentier economies, the state plays the greatest role in determining how the resources are to be allocated. In Kuwait, a rather shrewd Sheikh Abdullah made a decision that the state was to share a proportion of the oil rent with the populace. In this case, the government acted as an allocator of the oil largesse (beblawi 90). In these states, the government becomes the principal or rather the chief rentier and being a citizen, you enjoy the economic benefits.
It is said that these economies (Middle East and North African) are part of the world’s capitalist nature. It is although quite far-fetched to refer to a capitalist mode of production in these Arab states. This is because there is very little or hardly any production in these states. The clause ‘oil producing states’ is quite to the contrary since these states merely excavate or rather extract the oil (Ayubi 226).
In these economies, the government is not only the distributor of the benefits but also the chief employer (Beblawi 92). A citizen is either self employed or working for the private sector but if not, then that individual has the legitimate aspiration to be a government employee.
The rentier nature of the Middle East and North African state has, to a large extent, done away with the autonomous and economically vibrant group of persons and in place has transformed a segment of the bourgeoisie and made them dependent on the state (Shambyati 307). This has created a population of the dependent.
How external rents (other than oil) affect processes of economic and social reforms
Other external rents would include such rents as economic aid, grants and even loans. These rents are always in the form of extended financial aid from one body or state to the other. In this respect, the biggest rent providers are the World Bank and the International Monetary fund (IMF), also known as the Bretton Woods Institutions. However, if the interaction is between individual states, then it is always in the terms of ‘one good turn deserves another’.
The external rents in these forms always come with strings attached with the donor party always trying to influence social, economic or both status of another state. The Bretton Woods Institutions, for example, formulated the structural adjustment programs (SAPs), which tended to guide the other states on structural inputs to boost social and economic reforms (Knowles 98-99). Countries that fail to meet the set targets are never looked at in good faith. Eventually the recipient states always end up with socio-economic structures that reflect their donors’ interests.
Works Cited
Ayubi, Nazih. “The Political System of Articulated forms: The Conservative, Kin-ordered Monarchies,” in Ayubi, Overstating the Arab State: Politics and Society in the Middle East, NY: IB Tauris, 1995, pp. 224-255.
Beblawi, Hazem. “The Rentier State in the Arab World.” in Giacomo Luciani (ed.). Berkeley, CA: University of California Press, 1990. Print.
Gwenn, Okruhlik, “Rentier Wealth, Unruly Law, and the Rise of Opposition: The Political Economy of Oil States.” Comparative Politics, 31.3 (1999): 295-315. Print.
Knowles, Warwick. “Contesting Structural Adjustment: The Donor Community, Rentier Elite and Economic Liberalisation in Jordan.” in Jane Harrigan and Hamed El-Said (eds.) Globalisation, Democratisation and Radicalisation in the Arab World, New York: Palgrave Macmillan, 2011. Print.
Shambyati, Hootan. “The Rentier State, Interest Groups, and the Paradox of Autonomy: State and Business in Turkey and Iran,” Comparative Politics, 26.3 (1994): 307-331. Print.