International Relations

of the Gulf Region

Khaled Almezaini
 The Iranian Revolution and the Gulf Regional
System

• The Iranian Revolution is a critical juncture in the modern

Middle Eastern history.
• It was the rarest of political events – a real social revolution, on
par with the French, Russian, and Chinese revolutions. (Gause,
2008)
• It has changed the geopolitics of the Gulf region.
• Led to end the US-Iran alliance; one of the twin pillars upon
which American policy in the region was built. (ibid)
• Led to the Iraq - Iran war that lasted for eight years
• Led to establish relations with its old enemies.
• Led to the destruction of infrastructures and stopped oil
production

Source: https://www.google.co.uk/url?sa=i&url=https%3A%2F%2Fptop.only.wip.la%3A443%2Fhttps%2Fwww.newyorker.com%2Fnews%2Fnews-desk%2Firan-celebrates-the-revolutions-fortieth-anniversarytwelve-blocks-from-the-white-
house&psig=AOvVaw2a8anZJOBEBITXiM51ZtDQ&ust=1581917809070000&source=images&cd=vfe&ved=0CAIQjRxqFwoTCLjXuKKt1ecCFQAAAAAdAAAAABAE
Definition and Theories of Revolution
• A social revolution refers to a fundamental and often rapid transformation of a society's political, economic, and social structures, which
can have significant international implications. These revolutions typically involve the overthrow of existing power structures or regimes,
often through mass mobilization or violent upheaval, and lead to changes in governance, policies, and the state's role in the global order.

• According to Davies, revolutions occur when long-term socioeconomic development is followed by short-term and sharp
economic reversals.

• Gurr’s theory of relative deprivation refers to individuals’ perceptions of the discrepancy between the standard of living that they
believe deserving and the standard of living they are actually capable of achieving. When the deprivation is intense, anger,
frustration, and political violence follow.

• Huntington (1968) relies on modernization theory to explain social revolutions. According to him, “Revolution is . . . an aspect of
modernization” (p. 265). His main argument is that modernization, specifically social mobilization and economic development,
leads to political awareness. Consequently, the people, being educated and urbanized, start to demand greater political
participation.

• Consequently, the people, being educated and urbanized, start to demand greater political participation.

• If political institutions do not allow or establish mechanisms for the incorporation of the mobilized people, political violence,
including revolution, is possible.

Source: Tiruneh, G., Social Revolutions: Their causes, Patterns and Phases, (sage, July-September 2014: 1–12
Definition Social • Social revolution refers to the transformation of
political and socioeconomic systems.

Revolution • Unlike in political revolutions, where only old

political regimes are replaced by new ones, in
social revo- lutions, both political and economic
systems of the old order have to be dismantled.

Source: Tiruneh, G., Social Revolutions: Their causes, Patterns and Phases, (sage, July-
September 2014: 1–12
 Causes of Revolution: economic development, regime type, and state ineffectiveness

• Economic Development
• Economic development changes traditional societies to a modern way of life. This has been particularly true since the advent of the
Industrial Revolution, which started in Great Britain in the 18th century. With modern way of life, people tend to become more educated
and are more aware of their political, social, and economic conditions. This means that the values that have sustained traditional societies
for hundreds of years would start to change.
• Economic development tends to bring much more urban and industrialized ways of life. As people migrate from rural areas to towns and
cities, they may find themselves without jobs or without sufficient incomes (see also Goldstone, 1994; Kruijt, 2008).
• Regime Type
• Social revolutions have rather occurred in traditional autocracies such as in France, Russia, and Ethiopia and in modern authoritarian regimes,
such as Kuomintang’s China and Batista’s Cuba. Many autocratic and authoritarian regimes may not adjust themselves with timely reforms
when faced with massive and rapid changes wrought by economic development. Communist regimes do not often allow the presence of
alternative parties and civil liberties. Such regimes could lead to popular discontent and are more vulnerable to revolution.

• State ineffectiveness
• Autocratic or authoritarian states that are quite ineffective may have a higher chance of facing revolutions. The state is often defined as
the political institutions that govern a given society. According to Nordlinger (1987), the state can also be defined as the political leaders
who govern a given society. To Nordlinger (1987), it is individual leaders who act and govern, not institutions.
• Some ineffective states also tend to create patron–client relationship, which benefit only a certain group or segment of a given society.
Moreover, state ineffectiveness could occur when a state declares or is engaged in unnecessary wars.

• In sum, revolutionary situations seem to occur when mas- sive and rapid social, economic, and political factors reshape the people’s
sociopolitical value systems and affect their eco- nomic welfare.

Source: Tiruneh, G., Social Revolutions: Their causes, Patterns and Phases, (sage, July-September 2014: 1–12
 Iran’s Shah

Time Magazine picture

Causes of the Iranian revolution

• Political Repression
• Western influence and economic inequality
• Economic discontent
• Religious Opposition
• Cultural Alienation
• U.S. intervention and the 1953 Coup
Political Repression

• The Shah’s regime was autocratic and highly centralized.

• SAVAK, the secret police, suppressed opposition with arrests, torture, and
executions.
• Political freedoms were virtually nonexistent, with censorship and
persecution of political opponents.
Western Influence and Economic
Inequality

• The Shah maintained close ties with Western powers, particularly the United
States.
• His modernization and Westernization efforts were seen as impositions of
foreign values on Iran.
• While oil revenues enriched the elite, economic inequality widened, with
rural and urban poor feeling alienated.
Economic Discontent

• Despite economic growth, inflation soared, and unemployment remained

high, especially among the youth.
• Economic policies favored the elite and large corporations, neglecting small
businesses and the working class.
• Rural areas suffered from inadequate land reforms, exacerbating poverty
and dissatisfaction.
Religious Opposition

• Ayatollah Khomeini led the religious opposition, denouncing the Shah's

regime as anti-Islamic.
• The clergy held significant influence, particularly in rural areas, and viewed
the Shah’s secularism as a threat to Islamic values.
• Khomeini’s message of returning to Islamic governance resonated with both
the lower classes and religious conservatives.
Cultural Alienation

• The Shah’s push for Westernization, including modern dress codes and
cultural reforms, alienated traditional segments of society.
• Many Iranians, especially religious groups, felt their cultural identity was
being eroded by Western influence.
• The disconnect between the Westernized elite and the conservative masses
fueled resentment.
U.S. Intervention and the 1953 Coup

• The 1953 coup, orchestrated by the CIA and British intelligence, ousted
Prime Minister Mohammad Mossadegh and reinstated the Shah.
• This intervention left a lasting legacy of mistrust towards the Shah and
Western powers.
• Many Iranians viewed the Shah as a puppet of foreign interests, particularly
the United States, fueling nationalist sentiments.
Geopolitical effects of the Iranian revolution

• • The Iranian Revolution had profound effects on the Middle East and the world.
• • It disrupted the balance of power in the Persian Gulf, challenging the dominance of Western-backed monarchies.
• • The revolution sparked the Iran-Iraq War (1980–1988), a devastating conflict that further altered regional geopolitics.
• • It contributed to the global oil crisis, with oil prices nearly doubling between 1978 and 1980.
• Political fallout of the Gulf: reverberation were greatest over Shi’a in Arab states. Demonstration took place in Iraq, Bahrain and Saudi Arabia. The seizure of
the Grand mosque in Mecca.
• The Iranian Revolution and the world oil market – the ‘second oil shock’ 1979 – 1981: decrease of oil production from Iran led to another increase of oil
prices
• The superpower and the Iranian revolution:
• The Soviet welcomed the the revolution as a major setback for the United States
• The new Iranian regime became an anti-American
• The hostage crisis
• The Iran-Iraq War, 1980-1988
Cont.’

• The Iran-Iraq War, 1980-1988:

• Saddam Hussein’s decision to launch a large-scale attack on Iran September 22, 1980,
began the longest and the most devastating war in the modern Middle Eastern history.
Lasted for eight years.
• The war can be divided into three periods: 1. Sep. 1980 to the summer of 1982 , when
Iraqi forces were occupying Iranian territory; 2. summer 1982 to the end of 1986, during
which time Iranian forces were on the offensive and most of the war was fought in Iraqi
territory; and 3. 1987 to the summer of 1988, when Iraqi forces regained the imitative,
eventually leading Iran to accept a cease-fire in July 1988.
• Iraq invasion of Kuwait 1990/1991
The Gulf and the Iranian revolution

• Further tension
• Rise of sectarian politics
• poor economic trade
• rise of religious fundamentalism
• The emergence of the Islamic Republic of Iran became an inspiration for
Islamist movements in Arab and Muslim-majority countries
International Relations of the
Gulf Region
Khaled Almezaini
Conceptual Understanding of ‘ regionalism, cooperation and
Integration.’

REGIONAL INTEGRATION REGIONAL COOPERATION

• Regional Integration: This involves a more comprehensive process
where countries not only cooperate but also unify certain policies,
economies, and regulations. It often leads to the reduction or
elimination of barriers to trade, the movement of goods, services, and
people, and may involve shared political or institutional frameworks
(e.g., European Union).

• Regional Cooperation: This is less binding and more flexible. Countries

work together on specific issues, such as trade, infrastructure
development, or security, without necessarily merging their policies or
creating shared institutions. Cooperation is often issue-based and
doesn’t involve the same level of commitment as integration.
 Political Commitment
• Regional Integration: Often requires countries to give up a degree of
sovereignty in certain areas (like trade, borders, or monetary policies) to
achieve closer ties and uniformity.
• Regional Cooperation: Countries retain full sovereignty and only cooperate in
areas where mutual benefits are identified without significant obligations or
political unification.

Institutional Framework
• Regional Integration: Generally involves the creation of supranational
institutions or legal frameworks that manage the integration process, such as
a common market or customs union.
• Regional Cooperation: May not require the establishment of formal
institutions or legally binding agreements. Cooperation is often ad hoc and
focused on specific projects or programs.
Economic and Social Impact

• Regional Integration: Tends to have a more profound impact on the

economies and societies of the member countries, as it involves
deeper harmonization of policies and laws (e.g., free movement of
people, common currency).

• Regional Cooperation: The economic and social impact is usually

more limited since it focuses on specific projects or sectors without
the same level of integration across the board.
Differences between cooperation and regional
integration
• Key Features of Integration
• Common policies and regulations
• Supranational institutions (e.g., European Commission).

• Key Features of Cooperation

• Flexible agreements between states.
• No transfer of sovereignty.
Levels of integration
• Political Union: Coordinate aspects of members' economic and political systems
• Economic Union: Remove barriers totrade, labor, and capital; set a common trade policy against
nonmembers; and coordinate members' economic policies
• Common Market: Remove al barriers to trade, labor, and capital among members; and set a common
trade policy against nonmembers

• Customs Union : Remove alL barriers to trade among members, and set a common trade policy
against nonmembers

Free-Trade Area: Remove alL barriers ot trade among members, but each country has own policies for
nonmembers.
 Establishing the GCC:
➢ Factors affecting the formation of the Council
• Ideological Fear (Communism)
• British exit from the region
• The Iranian revolution
• The Iraq-Iran War
➢ The Omani establishment in its inception (Muscat conference in
November 1976) and Kuwait's invitation in 1978.
➢ The first idea of establishing the council emerged at the Gulf summit
held on the sideline of the Islamic summit that was held in Taif in
Saudi Arabia
• In this conference, it was initially approved in principle to
the establishment of the Council on the basis of the
participation of the six Gulf States
➢ Meetings of the Preparatory Council. The foreign ministers of the six
countries held a conference in Riyadh in February 1981 and signed a
document on the establishment of the council.
• .
• The statement of the establishment of the council referred to the link between the founding countries of this
regional organization "special relations and common characteristics stemming from their common believe, similar
systems, unity of their heritage, similar political, social and demographic composition, and cultural and civilizational
rapprochement”

• The statement was also issued «the establishment of the Council came in line with the national goals of the Arab
nation, within the framework of the Charter of the League of Arab States, which urged meaningful regional
cooperation at strengthening the Arab nation.

• Most Arab countries supported the establishment of the council

• On May 25, 1981, the first summit of the Council was held, where the GCC as a regional cooperation was signed in
Abu Dhabi.
• The meeting discussed the dangers facing the region, its wealth and the existence of a power gap in the region.
• Common security concerns at the first meeting before May 25th.
Source: Aljazeera Centre
Objectives: The GCC Charter states that the
basic objectives are :
• 1. To effect co-ordination, integration and inter-connection between member states in all fields in order to achieve
unity between them.

2. To deepen and strengthen relations, links and areas of cooperation now prevailing between their peoples in
various fields.

3. To formulate similar regulations in various fields, including the following:

A. Economic and financial affairs.
B. Commerce, customs and communications.
C. Education and culture.
D. Social and health affairs.
E. Information and tourism.
F. Legislative and administrative affairs.

4. To stimulate scientific and technological progress in the fields of industry, mining, agriculture, water and animal
resources, to establish scientific research: to establish joint ventures and to encourage cooperation by the private
sector for the good of their peoples.
‫‪The GCC Joint Program Production Institution‬‬
‫مؤسسة االنتاج البرامجي المشترك لدول الخليج العربي‬
Organizational Structure of the GCC
• The Supreme Council:
• The Supreme Council of the Gulf Cooperation Council (GCC) is the highest authority
of the organization. It is composed of the heads of the Member-States. Its
presidency rotates periodically among the Member States in alphabetical order
• The Ministerial Council
• The Ministerial Council is composed of the Foreign Ministers of all the Member
States or other ministers deputizing for them. The Council is presided over by the
Member State which presided over the last ordinary session of the Supreme Council.
It convenes its ordinary sessions once every three months .
• The Secretariat General
• The functions of the Secretariat General are broadly the preparation of special
studies relating to cooperation, coordination, planning and programming for
common action, preparation of periodical reports regarding the work done by the
GCC, following up the implementation of its own decisions, preparation of reports
and studies on the demand of either the Supreme Council or the Ministerial
Council, making arrangements for holding of the meetings of various organs,
finalization of their agenda and drafting resolutions.
GCC: Achievements and Failures: check
website:
• Security:
• Security cooperation
• Identity Card; movement between the member states

• Military:
• Aljazeera Shield Forces
• Defense Agreement
• Security communications

• Economic

• Media
• Is the GCC useful for Gulf citizens?
Economic Development of the Gulf Region: Oil, Rentierism
and Prospective Challenges

[email protected]
Dr. K. Almezaini
Email: [email protected]
What is Rentier state theory?
• The concept of rentier state originally developed in relation to Iran’s economy in the
1950s,1960s & 1970s.
• The concept of the “rentier state” was first proposed by the economist Hossein
Mahdavy to identify the effects of oil nationalization on the structure and source of
economic growth in the Middle East, especially in the case of Iran after the mid-
1950s. (Qasem, 2016)

• Mahdavy defined rentier states as “those countries that receive on a regular basis
substantial amounts of external rent. (Qasem, 2016)
• In other words: it refers to a concept in political economy that describes countries
that receive a substantial portion of their national revenues from the rent of
indigenous resources to external clients. These "rentier states" rely on external rent
rather than domestic production or taxation for their economic stability.

• The term "rentier" refers to a state or entity that receives substantial income
without engaging in productive activities. Rentier states typically rely on the
extraction and export of natural resources, and their economies are heavily
dependent on these rents

•
• Therefore, “the stage at which a country can be called a rentier state is
determined arbitrarily,” and Mahdavy is mainly interested in those cases where
“the effects of the oil sector are significant and yet the rest of the economy is not
of secondary importance.” (Qasem, 2016)
• The crucial point for Mahdavy is that rapidly increasing oil revenues transform
governments into decisive players in the economy. (Ibid)

• Key characteristics of rentier states:

1. External Revenue Dependency: The state derives significant income from external sources, often
through the export of natural resources like oil or minerals, rather than from internal production or
taxes.
2. Weak Institutional Development: Since the state is not dependent on taxes from its citizens, there
is less incentive to build strong institutions or ensure accountability. As a result, these states often
have weaker democratic institutions and governance structures.
3. Patronage and Clientelism: Rentier states may use the wealth derived from rents to buy loyalty
and maintain political power through patronage networks, distributing wealth to allies while
excluding opponents.
4. Economic Distortion: Since the economy depends heavily on one or a few external revenue
sources, it often lacks diversification, leading to economic vulnerabilities when commodity prices
fluctuate.
• Hazim Beblawi and Giacomo Luciani refined the concept of the rentier state in
the 1980s.
• In The Rentier State (book)Beblawi and Luciani refine the concept of the rentier
state in several ways. First, the concept of state is redefined. Unlike Mahdavy’s
definition of state, which seems synonymous with “country,” Beblawi and Luciani
define the nature of the state as “the combination of essential indicators
describing the relationship between the state and the economy.” (Qasem, 2016)
• Second, the state is seen as being “synonymous with that of society and indicates
the overall social system subject to government or power.” (Ibid)
• Third, they offer a distinction between what is meant by a “rentier state” and
“rentier economy.” Instead, Beblawi and Luciani prefer to view the rentier state
from an economic prism, embedding their definition of the rentier state within a
broader definition of the “rentier economy.”
• Thus, they write: “an economy substantially supported by expenditure from the
state, while the state itself is supported from rent accruing from abroad; or more
generally an economy in which rent plays a major role. A rentier state is then a
sub-system associated with a rentier economy.” (Ibid)
Rentier Economy*
• Beblawi delineates four characteristics of a rentier economy :
• First, rent situations must predominate in that there really is no such thing as a pure rentier economy.

• Second the rent must come from outside the country.

• Third, in a rentier state only the few are engaged in the generation of rent, while the majority is involved in its
distribution and consumption. Translated, this means that government leaders make the deals and take in the revenue
and then allocate to the public, which is not involved in the creation of wealth.

• Fourth, the government must be the principal recipient of the external rent in the economy

• Giacomo Luciani: Allocation vs. Production States

- Allocation state: is a state where rentier income predominates . The state will have the role of
allocating income received from external sources .

- Production state: most of the population derives its income from sources other than the state
itself. The state has to rely on taxes, and economic growth is the main goal of the economic policy.
• Money from oil has created enormous opportunities for development in the countries where it is
concentrated, such as Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates, Qatar, Iraq, Iran, and Algeria

• Oil Rentier Economy defined inter alia, as one in which “a minority of the population is engaged in the
generation of the rent while the majority is involved in the distribution and utilization of it . This leads to a
‘rentier society (a society dependant on the state)

Sources: Luciani and Beblawi, The Rentier State; Anne Brocard and Stéphanie Vallet
The Reniter state in the Middle East.
 Rentier Mentality
• The ‘rentier mentality’ has been a key concept in rentier state theory since the
1980s. It posits that wealth distribution by government breaks the link between
effort and reward in society, thereby undermining the society’s work ethic. (Hertog)
• The idea was first introduced by Hazem Beblawi in 1987. He described it as the
result of government-orchestrated distribution of externally derived wealth through
various channels of patronage, which breaks the link between effort and reward in
society, undermines its work ethic, and creates high material expectations. (hertog)

Economic welfare
The rulers The people
Political Loyalty
 Rentier Mentality.
• Rentier Mentality refers to a mindset or cultural attitude that develops in societies, particularly in
rentier states, where a significant portion of income comes from external rents (like oil revenues or
resource extraction) rather than from productive economic activities such as industry or
agriculture.
• Key features of the rentier mentality include:
1. Dependence on External Income: People and governments in rentier states tend to become reliant
on easy, unearned income from natural resources or foreign aid. This dependency discourages
innovation, entrepreneurship, and productive work within the domestic economy.
2. Lack of Accountability: Since the government generates its revenue primarily from external sources
rather than taxation, it has little incentive to be accountable to its citizens. In turn, citizens may
become disengaged from holding their government responsible for governance or economic
policies.
3. Entitlement: In a rentier economy, there can be an attitude of entitlement, where individuals
expect to receive benefits or subsidies without having to work or contribute to the broader
economy. This often leads to expectations of state-provided wealth and services without significant
personal or societal effort.
4. Complacency and Stagnation: The rentier mentality can promote complacency, where neither the
state nor its citizens actively pursue economic diversification or long-term development goals.
Instead, both may focus on the short-term gains from resource rents.
5. Resistance to Change: Societies with a rentier mentality may resist economic or political reforms, as
they are comfortable with the status quo of receiving rent without having to engage in productive
activities.
• This mentality often reinforces the cycle of economic underdevelopment and political stagnation
seen in many resource-rich, rentier states.
GCC nationals working in private
sector – 2022/ 2023
UAE Qatar Bahrain Kuwait Oman Saudi
Arabia
92,000 0.06 17% 4.3% 20.9% 2.32 million
(104,882 in
2018)
How does oil shape the economies of oil producing
countries in the MENA region?

• Changes in the structure of the GDP: sectors

contributions; oil is a dominant contributor.

• Relative importance of exports and imports

• High consumption and limited investment

• Sectoral distribution of the labour force

• Oil provides the necessary capital for investment.

Oil rentier states: The case of the
Gulf
• “All in all, I wish we had discovered water”
Sheikh Yamani, Saudi former oil minister
• No taxation without representation
• Rentier economy and political stability

• Dependency on oil leads to slow integration into the international

economic system.
• Lack of water hinders development in other sectors

• Mixed failure and success: Dubai from a rentier to a diversified

economy. Saudi Arabia: an oil-based economy.
The case of Saudi Arabia
• Oil-based economy
• Government control over major economic activities
• Has 20% of world proven oil reserves
• Largest exporter of petroluem
• Oil sector accounts for around %70 of revenuse,
45% of GDP, and 90% of export earnings.
• High unemployment: why?
• Plans to establish a number of ‘economic cities in
different regions to promote diversification.
• GDP per capital: $23,200
• GDP – Real Growth Rate: 4.7%
• Unemployment : 13%
• Inflation rate: 10.6%
• GDP by sector:
• Agriculture: 3%
• Industry: 65.9%
• Services: 31.1%
Dubai’s Model: failure or success
Dubai – Background*
• Second largest emirate of the United Arab Emirates (UAE)

• Member of the Arab Gulf Cooperation Countries (AGCC)

• Dubai : City of Merchants

• Ruled by the Al Maktoum Family

• Politically stable

• Area: 4,114 sq. km

• Population: 1.204 million (Year 2005)

• 17% of population are UAE nationals

• Cosmopolitan city with 120 nationalities

Source: Dubai – Department of Tourism and Commerce

Dubai - Economy
• Dubai’s GDP in 2005: US$38.2 billion ( +26.7% from 2004 )

• Oil 5%, non-oil 95%

• Main non-oil industries: Trade, Tourism

• Manufacturing and Transport

• Diversified economic base

 Economic Diversification
• Why is Economic Diversification Important?
• Oil wealth per se creates few jobs directly, if any at all.
• Oil prices/revenue fluctuate widely oil distribution
cannot support rising living standards.
• Instability of oil revenue has an impact on the overall
growth rates (mainly through changes in government
spending), fiscal and external position, and employmen

Source: https://unfccc.int/sites/default/files/200311_ed_imf.pdf
Diversification is Also Important
• To reduce or spread risk
• To promote economic development To limit the
impact of fluctuations in
• the oil price and quantity produced
• To create job opportunities for a rapidly growing local
labor force

Source: https://unfccc.int/sites/default/files/200311_ed_imf.pdf
• The ESCWA study (2001: 8) summarizes the palette of actual
measures fully or partially applied by the GCC countries in
order to achieve economic diversification (and development in
general):
• the development of the physical and social infrastructure
• the development of capital-intensive industries that utilize the region’s
comparative advantage in hydrocarbon resources
• the development of other manufacturing industries
• the development of other productive sectors and services
• the reduction of the direct role of the public sector as an agent of
economic growth
Soure: https://www.researchgate.net/figure/GCC-Countries-Sectors-Shares-in-GDP_fig1_270881484
Taxation in the Gulf (open
discussion)

• No Taxation without representation