State and Private Sector in the GCC after the Arab Uprisings

Abstract

While the Gulf private sector has made huge strides since the first oil boom, most of its activities still amount to more sophisticated rent recycling rather than autonomous diversification. Its interests are in stark opposition to those of the citizenry at large, as it provides no taxes, little employment and few investment opportunities for GCC nationals. Instead, business and other social forces face a zero-sum conflict over — in some cases increasingly scarce — state resources. This structural isolation of business helps to explain Gulf capitalists' weak role in today's public political arena despite a strong pre-oil history of collective action. In recent decades, business elites have either kept their heads below the parapet or have provided auxiliary public support to beleaguered local regimes. They have for the most part abstained from or failed in electoral politics; in austere times, regimes have privileged the distributional interests of the state salariat and consumers at large over those of business. Gulf business has a chance for a greater developmental role and political autonomy only if it increases its interdependence with society at large through providing a tax base, employment and investment opportunities for GCC citizens. Of the three, employment is the most important and could decide the political fate of private capital in the Gulf in the long run.