Rentier states of the Muslim world

Daily Times, June 6, 2006
Daily Times - Site Edition Tuesday, June 06, 2006
COMMENT: Rentier states of the Muslim world —Ishtiaq Ahmed

A rentier is an individual whose income is derived from the free gifts of nature such as land. He lets others use the land or any other such free gift of nature in exchange for rent. His own investment is nil and he retains overall ownership. In political science and international relations a rentier state is one which derives all or a substantial portion of its national revenues from indigenous natural resources that are rented to external clients who work on it and produce an income.

In most states national wealth is the product of multifarious activities performed by private entrepreneurs, traders, middlemen and workers. As a result raw materials or natural objects are converted into objects that have both use value and exchange value. Major portions of the population are involved, directly or indirectly, in the production process. The state collects revenues through taxes and levies imposed on such commodities and services.

In contrast, in a rentier state the gifts of nature — usually one or two items, which are valued highly in the international market — suffice to provide a huge income. The production process involves foreign investors and a foreign work force. The local population is alienated from the production activity. Therefore the income of the state is not derived from infrastructural output or risks taking in the market.

I am sure that by now this discussion on the concept of a rentier state must sound familiar. Saudi Arabia, Kuwait, Qatar, Bahrain and the Arab Emirates are classic examples of the rentier state. Control of the rent-producing resources lies with the ruling families and their associates. The rest of the indigenous population is denied political freedoms, but guaranteed economic advantage and welfare facilities. This bribery of sorts is calculated to keep them politically passive.

These countries employ people from all over the world. Highly skilled Western employees draw handsome salaries while people with the same qualifications from Third World countries are paid much less for the same job and skills. The worst off is the semi-skilled and unskilled work force from the Third World. They are denied the right to organise and unionise to protect their interests.

Consequently a democratic civil society that can express, promote and protect the opinions and interests of the indigenous as well as foreign populations does not exist. In fact the ruling class ensures that the local population and the foreign work force do not develop common interests.

However, the rentier states are not completely insulated from the rest of the world. Events elsewhere affect them too. In recent years the local Shia communities and even Sunni citizens of these states have been agitating for political reforms. Cases of female domestic servants being molested and raped are reported all the time. Several strikes and agitation have been reported recently. The states have dealt with workers’ unrest by firing and deporting them. Such threats coerce most of them to continue working for low wages and under very harsh conditions.

This is all the more disgraceful because for quite some time now all international media carry advertisements inviting investors to buy apartments in Dubai. I am sure the trend will also emerge in the other Persian Gulf states. The advertisements only represent glitter and glamour. We know that celebrities like Michael Jackson have moved to Dubai and others are likely to follow.

In the Western world permanently domiciled immigrants are granted citizenship after a few years but it is impossible for the foreign labour force, which includes a very large number of Muslims, to obtain the citizenship of the rentier Arab states. They have small indigenous populations which makes them particularly wary of granting citizenship to foreigners. However, they are not hesitant to sell property to rich foreigners. Thus the rentier states are fully co-opted into global capitalism as free zones for the movement of capital and rich people.

Casual visitors to the airports in the Emirates and the other smaller states are dazzled by the grand variety of consumer goods on sale. I wonder if the rich ever ponder over the fact that the super-modern buildings and seven-star hotels that they own or live in are the product of the ruthless exploitation of the poor. This is after all the era when human rights are supposed to be part of the customary law so that these states too must respect them.

Saudi Arabia with its rigid Wahhabi ideology and totalitarian system has not liberalised its lifestyle in the same fashion as Dubai, Sharjah and other Emirates. There are no golf courses or luxurious sea resorts for the entertainment of global fun-seekers though it is perceived as the major rentier state in the Arab world. It is seen to violate more human rights than any other Arab rentier state.

Iran is a different type of rentier state. Originally its wealth from oil was the product of the technological and infrastructural input of British petroleum companies. However after the 1979 revolution, foreign oil firms lost their privileges. Also because of its own very large labour force Iran could not possibly employ Third World workers on a large scale. Shiites from Pakistan, Afghanistan and India do find openings in Iran, but by and large the labour force is domestic.

Before the revolution, the Shah and his close associates enjoyed a monopoly over power and the rents from oil. After 1979, this fell into the hands of the Shia clerics. The latter continued with the tradition of authoritarian government despite the popular mass base of the revolution. Even when representative institutions were introduced the supremacy of the clergy was maintained and the scope for democratic civil society virtually scuttled. This is all the more tragic because industrialisation had been going on under the Shah and there existed an educated and qualified professional class that could have taken Iran forward on the road to economic prosperity and development.

Under the circumstances, the rentier states of the Muslim world are either consumer and entertainers’ paradises or bastions of reactionary Islam.

The author is an associate professor of political science at Stockholm University. He is the author of two books. His email address is Ishtiaq.Ahmed@statsvet.su.se