Is Saudi Crown Prince Mohammad bin Salman doing away with the rentier state?

This is an ‘Analytical Blog Post’ I wrote for my second year module “Comparative Politics of the Middle East and North Africa.” I’ve always been fascinated by the region encompassing the gulf states (those bordering the Persian Gulf: Iraq, Saudi Arabia, UAE, etc.) and I thought I’d share this piece as it was of particular interest.

Since his appointment as Saudi Arabia’s Crown Prince in 2017, Mohammad bin Salman – son of Salman bin Abdulaziz – has helped enact a significant number of social reforms in the country; from restrictions on the powers of the police, to ending the ban on female drivers last summer, and weakening the male-guardianship system earlier this year. He has also unveiled Saudi Vision 2030 – a plan to restructure and diversify the economy of the country, reducing its reliance on oil and pursuing the development of public service sectors such as health, education and tourism. Despite the perceived challenges for the program it shows a clear desire from the Saudi leader to move the country away from the notion of a rentier state.

To understand the concept of the rentier state, one must first understand ‘rentierism’. This term refers to “the (relative) dependence of states on rents for their internal functioning.” ‘Rents’ are forms of income generated from the selling of natural resources. Ergo, a rentier state is one in which most of the revenue is made in this way. Rentier states are characterised by an absence of domestic taxation; negated by the country’s natural wealth, there is no need to draw revenue from the public. This, allied with the state’s generous welfare programs – effectively bribing the population – fosters a “rentier mentality” where wealth and success are perceived as not being contingent on hard work, rather on chance and circumstance. Rentierism can accordingly be seen as impeding democracy and a blessing for autocrats: the lack of taxation weakens the regime’s accountability. Thus, efforts aimed at democratisation have past been ineffective and the Al Saud family have managed to retain absolute control over the gulf state.

Studying the history of Saudi Arabia through the paradigm of the country’s rentier status can help us to understand the monarchy’s decision. The 1938 discovery of vast oil reserves beneath the country changed Saudi Arabia’s fortunes, catapulting it from an isolated British territory to an area of worldwide attention. The formation of the Saudi Arabian-American Oil Company (Aramco) brought then-leader Ibn Saud – father of Salman bin Abdulaziz – a great deal of international political leverage. For example, Saudi Arabia led an oil embargo against Israel-backing Western countries in the Yom Kippur War against Egypt and Syria, increasing the price of oil fourfold. After buying out the final American interests in Aramco, the country’s growing oil returns led to great technological modernisation and urbanisation, but the royal family continued its power monopoly, leading to discontent among many Saudis.

Such discontent was exacerbated by closer relations with the West, particularly vis-à-vis the Gulf War. This unrest amongst the public lead to a series of Islamist terrorist strikes in the country and notably the September 11 attacks in New York City. Leader at the time, King Fahd, intended to respond to such grievances with a number of limited reforms, such as the introduction of the “Basic Law” in 1992 and creation of the Consultative Council in 1993. Despite this, however, signs of discontent have continued throughout the 1990s and into the 21st century, particularly in the 2011-12 protests as part of the Arab Spring. Crown Prince Mohammad bin Salman’s recent move is therefore consistent with a number of reforms in Saudi Arabia over the past thirty years as a means of quashing dissent amongst the citizenry. The state’s traditional reliance on oil as a means of generating revenue, coupled with the onset of the Arab uprisings in 2011, have exposed a significant degree of instability for the country, casting doubt over its future unless it moves away from being a rentier state.

The United Arab Emirates (UAE) tells a different story. Since it was only grazed by the 2011 protests, the country’s ruling regime were able to avoid reform to the extent that it has been sought in Saudi Arabia. This predominantly stems from the state’s harsher suppression of critical speech and attempts to organise public demonstrations. Venezuela, too, presents a contrasting narrative with that of Saudi Arabia, having historically incorporated a measure of rentierism with variable degrees of democracy, including Presidential elections, the most recent of which was held in 2018. Despite this, it is a de facto one-party system, ruled by Nicolás Maduro under the United Socialist Party (PSUV) since its inception in 2007. In 2018, The Economist rated Venezuela an “authoritarian regime,” bringing it into line with the inherent expectations of a rentier state gleaned from the above analysis of Saudi Arabia. These two contrasting case studies confirm a key principle of rentierism: it needs an authoritarian or autocratic regime in order to survive. If it weren’t for the popular uprisings in Saudi Arabia, the country wouldn’t have taken the path of major reform – the Crown Prince’s ultimate rejection of rentierism. The UAE’s harsher freedom-suppression laws and consequent lack of dissent from the public are what has helped the regime there to keep power, and Venezuela’s attempts at combining the two ultimately led to the state’s devolution to authoritarian control – it seems almost inevitable.

In conclusion, Mohammad bin Salman is doing away with the rentier state. Through an examination of Saudi Arabia’s history, as well as a comparison with two other rentier states it can be said that rentierism can only operate within an authoritarian framework. Without the challenges to the Saudi government, there would be no pursuit of a coda for the rentier state in the country. This could result in one of two outcomes, either a reversion to rentierism – the state unable to cope under the pressure of democratisation from the popular classes – or a victory for democracy, ultimately hinging on the vigour of the Saudi people.