The emergence of rentier states in Middle East

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Rentierism, economic reforms and democratization are some aspects widely discussed in the context of the Middle East. Most of the states in the region are rentier states. They possess a very different politico-economic system as compared to the rest of the world. Most of the states show a very different path of the state that is altogether dissimilar to the way other states went through. Exploration of natural resources formation, dependency on oil and gas had created feeble states, that are autonomous from societal demands and do not rely on domestic taxation. Thus, as a result, in these rentier states, state-formation has not been accompanied by political accountability and transparency. Similarly, these rentier states have been facing various economic recessions due to multiple reasons, such as fluctuation in oil prices, decreasing global demand for oil exports, and growing expenditure on the part of the government. Further, the exceptionally uneven labor markets in the region, growing population, possibility of reduction in oil resources, and lower demand for oil exports have encouraged the regimes to go for full-scale economic reforms. The pace and pattern of reforms vary from state to state, depending on their resources and basic economic structure. Rentierism and democracy are two opposite things. It is evident that in rentier states, democratic forces have always remained very weak. The course of democratization all over the Arab region has been irregular, slow, and comparatively new. Though various waves for democratization have emerged in the region such as Arab spring, but at best they remained unsuccessful in transforming the states into true democratic republics. The concept of rentiers in the Middle East basically had emerged both from substantial external rent and from the statist model of development, in which legitimacy was secured through rent distribution. The flow of external rent coupled with internal rent-seeking has cherished the power wealth and of the political and economic elites and has limited economic opportunities for the larger population. Depending on countries in the region’ their resources, political system and population, rentierism had affected them differently. Further, based on relative resources, the countries in the Middle East are divided into three broad categories. The first category includes countries with large oil and other mineral resources, having large populations and immense agricultural resources, for example, Algeria, Iran, Iraq, and Egypt. The second category includes those states with only oil exports and a small population, such as Gulf countries. And third, the type comprises of countries with very minimal oil and other recourses, such as Jordan, Syria, Israel, Lebanon, Morocco, and Yemen. The pattern of acquiring legitimacy in the Middle East is altogether different as compared to the rest of the world. The oil-rich governments in the region seek legitimacy for their autocratic rules through a social contract with their citizens that is to guarantee essential goods and services at highly subsided rates thereby ensuring livelihood and social security. Further, this legitimacy is ostensibly sought through a hierarchy of rent distribution mechanisms. Thus, access to privileged economic opportunities through jobs, finances, subsidies to factors of production, and market contracts have been crucial aspects of rent distribution. Since the exploration of oil and gas, the economies and societies of Middle Eastern countries have transformed to a greater level. Citizens of these states enjoy a greater level of opportunities with oil wealth and have the protection of a comprehensive welfare state. But the question arises, how sustainable are the Gulf economies because their populations are burgeoning, oil and gas resources are reducing, advancement in technology could minimize global demand for the Gulf’s oil as certain states have announced they are going carbon-free till 2050, and sudden price changes is making planning very difficult. Further, many of the Gulf kingdoms have made little progress in transforming their economies according to the changing circumstances, while reducing their large-scale dependency on oil reserves. For instance, periods of economic recession and low oil prices are generally met with deficit spending until prices go high again, instead of devising long-term economic restructuring. Thus, one cannot deny the fact that the economies in gulf monarchies are built with profound structural imbalances that makes it more difficult to reduce their reliance on oil. In a nutshell, the overall debate shows that the states in the Middle East have gone through a winding road. They have transformed themselves from very poor and weak regimes into oil-rich rentier states. Further to deal with the economic crisis, the regimes have embarked upon various economic transformations, diversifications and economic restructuring.

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