By Kristian Coates Ulrichsen

Kristian Coates Ulrichsen files the startling upward push of the Arab Gulf States as local powers with overseas succeed in and offers a definitive account of the way they've got turn into embedded within the international method of strength, politics, and policy-making.

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Classical rentier state theory developed in the 1970s and 1980s to examine the impact of external rents such as oil on the nature of states such as Saudi Arabia and their interaction with society. 55 Yet since the 1990s, a number of critiques of rentier theory moved beyond the structurally deterministic ‘no taxation without representation’ axis to emphasise the importance of local agency and decisionmaking in the creation of contemporary Gulf polities. These critiques put forward a more nuanced and multi-causal approach to the study of the formative period of state-building in the Gulf during the 1950s and 1960s.

49 As oil prices soared following the 1973 Arab–Israeli war and the subsequent Arab oil embargo, the revenues pouring into Gulf treasuries multiplied. Across the region, oil rents were used to create an allencompassing welfare state, as the government became a distributor to, rather than an extractor of wealth from, citizenry. 50 in 1981, as the 1973 rise in prices was followed by a second spike in 1979–1980 in the wake of the Iranian revolution and the outbreak of the Iran–Iraq War. 50 They entered into a society, however, still characterised by poverty and under-development, with low absorptive and human capacity to manage the sudden wealth, and ruling elites prone to commissioning extravagant and wasteful ‘white elephant’ prestige projects.

This grew out of the traditional ‘merchant family’ business elites that predated the discovery of oil. Cut out by the ruling family/government from direct participation in the development of oil and gas resources, ‘Gulf capitalists’ (which are examined in greater detail in Chapter Five) pursued business opportunities in other industries that were either derivative to the oil sector or initiated with state assistance from accrued oil revenues. The most important of these opportunities initially were service and construction contracts granted to local companies by governments and foreign multinationals, either in the oil sector directly or for the infrastructural and industrial projects that formed the backbone of economic diversification programmes.

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