The GCC Must Navigate the End of Rentierism

The formation of the Fatimid Caliphate in Cairo is an interesting case for studying the collapse of state legitimacy in Islamic history. After conquering Cairo, the Fatimids presented themselves as the state’s legitimate rulers, arguing that they were descended from the Prophet and were therefore qualified to lead the Islamic community. They even named their nascent state after Fatima, the Prophet’s eldest daughter, in a bid to emphasize their religious credentials and gain legitimacy in the eyes of the people.

However, as discontent brewed, the ruling authorities soon fell back on more conventional means of securing public support. According to one story, when Egyptians doubted the Fatimids’ claim of descent from the Prophet, the ruler Al-Mu’izz li-Din Allah Al-Fatimi took to the street and threw gold to the public, saying, “This is my lineage and power.” This story in particular reflects the links between power, money, and authority – and what it means to seek legitimacy through this triangle, or what we identify nowadays as a rentier economy.

Does This Resemble Anyone We Know?

The story also serves as a cautionary tale. A state’s money, and therefore its power, will eventually be eroded; if its legitimacy relies only on them, the state will fail, as the Fatimid Caliphate eventually did. A ruler’s true legitimacy does not come from his ability to claim descent from the Prophet, or to throw gold to the people. Instead, it is derived from proper governance with regard to the state’s citizens.

This brings us to the GCC, whose leadership has pursued in substance, if not necessarily in style, the tendencies of Al-Mu’izz li-Din Allah. Rentier states in the GCC use state’s wealth to gain legitimacy by distributing wealth and social services to citizens with abundance; rather than collecting taxes, which gives citizens less incentive to participate in government. They have also pursued it through the power of intimidation; by controlling religious institutions, they have influenced societal norms, emphasizing Islamic scriptures dictating obedience to the ruler and helping to preserve their position.

All of this has been made possible by the decades of prosperity and wealth that the GCC has enjoyed. Because the rulers could provide for their people through natural resource extraction, democracy and participation in government have long remained absent from serious consideration, as the government has been able to provide wealth and service without asking for anything in return from their citizens. The feeling of security provided by states’ abundant services has also diminished the popularity of reform movements, which have long been viewed with suspicion among the GCC publics.

Today, however, the GCC’s financial situation is changing, and the social contract between the state and its citizens must be updated accordingly. The GCC is facing new economic challenges and changes, in addition to increased geopolitical risks. Everyone in the GCC understands that rentierism is in its last stages; austerity measures have been suggested and tentatively implemented for years, and financial grants to individuals and different societal classes are diminishing. Unemployment and financial hardship is increasing, and oil revenues are more unstable than ever, as the world is trying to pivot away from fossil fuels.

A New Social Contract

The GCC states’ economies are still stuck with an over-reliance on oil revenues to fund the state’s activities. While the solution to this problem – economic diversification and decreased expenditures on the public sector – are clear and well-understood by the GCC governments, citizens, and international organizations, they are politically difficult to implement and have faced considerable opposition. Moreover, the governments of the GCC have started informing their citizens that they will cut expenditures and legalize tax collection in order to minimize budget deficits. Therefore, the perception of legitimacy should be revisited by the authorities in the GCC. There is a risk that, rather than moving towards openness and political reforms, the GCC governments will instead veer towards autocracy – presenting the image of a strong state through providing security and stability, and framing any calls for reform as attempts by foreign actors to cause instability. In these states,  intimidation will be the primary tool; they will not possess any true “legitimacy” in the sense that the GCC states have it today. In general, the poorer the state, the more repressive it is, and the transition from rentierism to repression – in effect,  forcing the people to accept taxation without representation – is unfortunately a natural one.

This equation is not very complicated or hard to understand. Many countries and states are currently living in similar situations, and the GCC states have a clear roadmap for where they are headed if changes are not made. To prevent such a scenario, the GCC states should start educating their citizens that moving from rentierism into a productive state will require citizens to be responsible for the production and income generation into the government’s coffers. In order to do that, citizens also have to be responsible for becoming a part of the government’s decision-making. If successful, everyone will be responsible for the country’s situation, and the ruling authority will have true legitimacy and true stability without resorting to repression, or, alternatively, the gold of Al-Mu’izz li-Din Allah.

After the rentier state, the GCC states have two options – either repression in the name of stability, or elected governments and productive citizens responsible for their realities. The current governments have the authority to choose between both options.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.