Saudi Arabia: A state for rent?

[Originally published by SaudiDebate]

Another month, another series of proposals on how to bring democracy to Saudi Arabia. Recent efforts include the Centre for Contemporary Conflict[1], which recommends developing private enterprise, and the Washington Quarterly[2], which argues for engaging with the autocrats. Many such proposals import a model of the state based on the Western experience, and lack an appreciation of just how different other states can be.

Enter the rentier state hypothesis. This tries to explain why countries which derive most of their income from external sources (the ‘rent’ bit) work in a very different way to countries where a people’s acceptance of their government comes from extraction (consenting to being taxed).

Count out the people

The theory claims that states that get their income from external sources have very little need to be accountable to the people they govern. Rather than deriving legitimacy from people consenting to being taxed, they gain legitimacy by dispensing money earned from external rents. According to rentier state theory, this has profound effects on the way a society works. As Shambayati[3] claims “renterism enhances state autonomy by eliminating economically motivated pressure groups and by making a segment of the bourgeoisie dependent on the state.” In such a theory, states are largely free to do what they want, using their control of the economy to dispense money and resources to mollify those who protest too much. Rentier theory holds that such a state enters a periods of crisis when the economy enters a downturn and there are insufficient resources available to appease all the groups previously supported.

In a rentier state, citizens do not oppose the government in the same way. In a country where the population have some control over the mode of production, opposition to the government can be carried out through economic groups (such as trade unions), who threaten to disrupt the flow of resources upon which the government is dependent. But if a state’s income is autonomous from its citizens, then opposition cannot be economic. Rather, rentier state theory holds, opposition will take the form of challenging the ideological basis for rule.

Saudi Arabia would seem to be a text book example of a rentier state. It derives almost all its income from external rents in the form of oil revenues, it does not tax its population, and if there is an economic underclass it is the foreign workers, who are not exactly the biggest source of trouble for Al Saud regime. Rather, in line with rentier state theory, the biggest source of opposition is based on people disputing the sovereignty of the house of Saud. Superficially, such a theory would offer a explanation for why the pace of reform in Saudi Arabia is so slow: the government uses oil revenues to co-opt a bureaucratic class, who thus has little incentive to press for reform. That is the theory. But does it work?

Give and take

One does not have to look hard to find examples of the royal family using money to attempt to buy off the opposition. In 1980, following Shi’a protests[4]cancellation of mortgage payments, costing the country over one billion dollars. This would all seem to fit the pattern of an autonomous state using its money to placate potential opposition. in the Eastern Province, the government immediately started to invest in improving the infrastructure of the region. Then, following the unrest over the Gulf war, Fahd issues a complete

However, both these examples are a good deal more complicated than they might seem. While the traditional Shi’a leadership might have been content with the offers of the state, some Shi’a went into exile, to continue the struggle from abroad. This was not simply a question of being offered insufficient resources. Rather, the movement became one against a official version of history and society which neglected to provide a place for the Shi’a.

The first problem with rentier theory is that is tends to foreground economic processes to the detriment of the political pressures that underlie economic decisions. Furthermore, even the reaction of the traditional leaders implies that while dispensing resources might not be equivalent to tax collecting, it nonetheless forces the state to be accountable to groups who would otherwise threaten the stability of the country.

Money is not given out in a vacuum. While this vast mass of fluid capital can be used to assuage potential opposition, as Okruhlik has pointed out[5], it also has a tendency to create an opposition. Unequal distribution of funds leads groups to feel excluded from power and resources. This is especially the case in times of crisis, when certain groups are privileged with the scarce resources available. This occurred during the retrenchment of the 80′s, where construction projects were almost completely cut – apart from those for mosques and Islamic education centres. Such a choice of distribution is an eminently political one. It cannot be understood simply as an economic decision to appease certain groups. It appeases a specific group. We have to know that the basis of the house of Saud’s power is partly derived from the backing of religious institutions, and that it made a decision to embrace rather than to confront religious radicalism, otherwise these decisions are inexplicable. Choices about resources are made politically, and in making these choices, governments make explicit their loyalties and priorities in society.

Together in the centre

Fahd’s cancellation of mortgage payments did not placate the opposition for very long. The 1992 petition continued to criticise “the total chaos of the economy and society.” This is not what would be expected in a rentier state model. In such a model, opposition groups would try to use pressure to gain access to resources, rather than demand a reform of the system. Part of the reason rentier hypotheses fail to explain such a situation is because they place too great an emphasis on the division between state and society.

During the reign of King Fahd, there was a slow transference of economic power from the Hejazi to the Najdis, as all the banks were transfered to Riyadh and the hajj became increasingly regulated by the state. During the growth years the house of Saud created a bureaucracy, dominated by the Najdis. In rentier theory, the Najdis would then play the role of the bourgeoisie co-opted by the government and dependent on the state’s benevolence. Yet during the years the oil economy was low, when the house of Saud wanted to restructure the economy, their creation came back to haunt them. Bureaucracy and business worked in alliance to oppose any government restructuring and to try and work towards a equitable rent distribution. State and society worked together to oppose the royal family. A convincing theory would have to not just explain the economic placation of the opposition, but recognise the myriad ways in which state and society are linked through a series of identities not determined by the state.

Forced together at the margins

While rentier state theory might not be very good at explaining the genuine desire for economic reform in Saudi Arabia, it fares far better at explaining the formation of other forms of opposition within Saudi Arabia today. The theory would have it that because groups are deprived of an ability to dissent economically, they are increasingly pushed towards cultural forms of expressing dissent. Indeed, the politics of the House of Saud seems to have played a major part in encouraging these forms of opposition. When in 1995 huge parcels of land in the south were confiscated by the state, the protests increased the strong ties the region has to Yemen. Likewise, the recent attempt to build a fence between Yemen and Saudi Arabia has met with strong resistance. Demands for inclusion into the state, rather than taking the form of economic resistance, have in part coalesced around regional identities.

That said, rentier state theory struggles to explain the ambiguous relationship between the ulama and the royal family. As Okruhlik argues, following the 1979 occupation of the Great Mosque, “the regime chose to embrace rather than confront religious radicalism to protect the centrality of the ruling family in national life[6].” This is not simply a question of finding some tired Marxist notion of religion as a superstructure that justifies the House of Saud’s total ownership of the economy. Rather, the close relation between the state and the ulama springs from the official narrative of the Saudi state, which weaves together the al-Saud’s as protectors and founders or the state with a particular articulation of Islam. Their difficult co-existence is not simply an economic affair.


Some of the more ambitious uses of rentier theory have tried to link certain forms of behaviour to rentier states. For instance, it is claimed that rentier investors show a predilection for status projects and short term investments, given the insecurity of the economic climate and the absence of established economic rules. But to explain the construction projects in Saudi Arabia without referring to tribal and political pressures is only even going to give one half of the story. Nor is it the case that you can simply take an economic model, search for a political justification, and – hey presto! – you have an explanatory theory. Political choices are constitutive of the processes of the economy.

The battles we see taking place in Saudi Arabia are not simply battles for access to resources; they are a struggle to determine what it means to be Saudi. Despite rentier state theory’s economic determinism, it does point out how differently people feel allegiance in a state where they do not feel part of the process of production. It also correctly notes that in such a state many of the important battles are not those of resources, but those of identity. This is an important lesson to be learned for all those who still want to talk about bringing democracy to Saudi Arabia.



[3] p.308 in Shambayati, H. 1994: The Rentier State, Interest Groups, and the Paradox of Autonomy: State and Business in Turkey and Iran. Comparative Politics, Vol. 26, No. 3. pp 307-331.
[4]al-Rasheed, M. 1998: The Shia of Saudi Arabia: A Minority in Search of Cultural Authenticity. British Journal of Middle Eastern Studies, Vol. 25, No. 1, pp. 121-138.
[5]Okruhlik, G. 1999: Rentier Wealth, Unruly Law, and the Rise of Opposition: The Political Economy of Oil States. Comparative Politics. Vol. 31, No. 3. pp. 295-315.
[6]p. 157. Okruhlik, G. 2005: The Irony of Islah (Reform). The Washington Quarterly. 28:4. pp. 153-170.