The Gulf States in International Political Economy

Kristian Coates Ulrichsen

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9781137385611
• Topic: Politica e relazioni internazionali
• Subtopic: Commercio e tariffe

Kristian Coates Ulrichsen documents the startling rise of the Arab Gulf States as regional powers with international reach and provides a definitive account of how they have become embedded in the global system of power, politics, and policy-making.

Part I

Globalisation and the Gulf

1

The Gulf and the Global Economy

The opening chapter in this book assesses the multifaceted reasons behind the Gulf States’ uneven record of integration into the global economy. It begins by documenting how the ties binding the Gulf States into the global economy are both deep-rooted and long predate the discovery and extraction of oil in the twentieth century. Rather, the opening section highlights the historical interconnectivity of the transnational flows that tied the region into a broader economic hinterland spanning the Indian Oceanic world. Nevertheless, these processes were patchy and subject to partial reversal during the early oil years. Thus, the second section in this chapter examines the entrenched dynamics that also served to limit the Gulf States’ relationships with the international system, both politically and economically. Such dynamics included the conservative leanings of many of the ‘post-traditional’ governing systems in the (Arabian) Gulf, and the Gulf States’ enmeshment in Western political and military spheres of influence, during the period of prolonged British protection and following the passage to independence.

In the second half of the chapter, the focus shifts to the role of energy in framing the role of the Gulf in global economic structures and international trade and investment flows. Beginning in the 1940s, oil exports integrated the Gulf States firmly into the international economic system as Gulf oil became a motor of Western economic growth in the post-World War Two era. Securing stable access to regional supplies and the Western guarantees of security that underpinned this became the pillars that structured the international relations of the Gulf after 1945. Oil from the Gulf, particularly Kuwait, supplied 51 per cent of British requirements in 1971, while Saudi Arabia and the US enjoyed a similarly symbiotic relationship. The chapter ends by describing how the Gulf States were only partially impacted by the broader acceleration of economic globalisation in the 1970s and 1980s and by the rapid spread of global interconnections in the 1990s.1

An inter-regional crossroads

By virtue of its geographical location, both the Arabian and Persian shores of the Gulf and its hinterlands have been inter-regional crossroads for centuries. Powerful processes of settlement and exchange tied the area into a cosmopolitan network of inter-regional trade and migration. Such social and commercial links extend back into antiquity and the pre-Islamic era. Archaeological discoveries of imported Persian ceramics and seals at many sites in modern-day Kuwait and Bahrain indicate the presence of thriving traffic between the two coasts of the Gulf as far back as the third millennium BC. In about 2000 BC, the island of Failaka, lying just off the Kuwaiti coastline, was inhabited by colonists from the Dilmun civilisation, centred on modern Bahrain, who developed it into a commercial and trading outpost for the entire region.2 Later, the Gulf’s geographic location astride the meeting-point of the Middle East, Africa, and Asia was instrumental in shaping economic development in the region. The lucrative frankincense trade routes that linked Oman and Yemen with the Levant, North Africa, and the Mediterranean were one early example of inter-regional networks in operation; another example was provided by the dhows and booms that from the seventeenth and eighteenth centuries sailed among the Gulf sheikhdoms, the coast of western India, and the port cities of East Africa. Dhows and booms departed each season from Basra and the coastal settlements on both sides of the Gulf for the east coast of Africa and the west coast of India, laden with goods and binding the region into a much broader ‘transoceanic’ maritime community.3

In the latter half of the nineteenth century, important new export markets for Gulf dates and pearls emerged in Europe and as far away as North America. Global demand for both commodities boomed in the later years of the century, as international seafaring trade networks proliferated. The value of the date export trade in Muscat (today the capital of Oman) doubled between 1899 and 1906 and increased two-and-a-half times in Bahrain in the same period. Meanwhile, lifestyle changes and the expansion of the middle and upper classes in industrialised countries generated a substantial boom in demand for pearls, and the total value of pearls exported from the Gulf as a whole trebled between 1893 and 1904.4 The Kuwaiti historian Fahad Ahmad Bishara has documented how:

By the early twentieth century, as the boom reached its zenith, the merchants and mariners of the Gulf had established sizeable communities in a number of western Indian ports, including Karachi, Bombay, Goa, and Calicut, with some venturing further into the interior and taking up residence in such trading centres as Hyderabad and Poona. Western India quickly became a cornerstone of the Indian Ocean world of Gulf merchants, providing them with access to foodstuffs such as rice, sugar, tea, and spices as well as textiles, building materials such as Indian teak and other types of timber, which were vital to the burgeoning dhow-building industry in the Gulf.5

The powerful merchant families of the Hejaz (including the Ali-Rida, Zainal, Shobokshi, and Jamjum) constituted the mainstay of economic power in the Arabian Peninsula, together with immigrant merchants, many of whom came from Hadramawt in Yemen (the Bin Mahfouz, Bin Ladin, Bin Sakr, and Ka’aki families being prominent examples). These early economic elites operated within a broad transnational sphere stretching from East Africa to India and were cosmopolitan in their outlook and connections to international economic interests. In his seminal study of the major Gulf merchant families, Michael Field described how one of the scions of the Alireza family (in modern-day Saudi Arabia), Mohammed Ali, visited Paris for the first time in 1920.

Drawing on the help of business friends, he opened an office at 62 rue La Fayette, on the edge of the main shopping area of Paris . . . From the early 1920s, Mohamed Ali made it his habit to spend several months at a stretch in Paris each year – he bought a house on the Champs Elysees . . . During the height of his career in pearls, he lived almost permanently in Bombay and Paris.6

Writing about Bahrain’s most prominent merchant family of the nineteenth century, the Safar, James Onley provides an evocative description of a relentlessly trans-regional family hailing from Hillah in modern-day Iraq but putting down deep roots across Bahrain, Iran, and India.

Hajji Mirza Muhammad Ali Safar (1778–1845) was born in Bushehr; lived in Hillah, Mochah, Bahrain, Bushehr and Bombay; was a Persian, Ottoman and possibly British Indian subject; wrote his letters in Farsi and Arabic . . . His brother, Hajji Muhammad Jafar, was born in Bombay to a Persian mother from Shiraz, lived in Bombay and Bushehr, was a British Indian subject, dressed in the style of an Indian merchant in Bombay, and probably spoke Farsi, Arabic and Hindi.7

Such movement (and opportunity) was restricted to elites and was not generally available to the majority of the inhabitants of the Arabian Peninsula but, in addition to the intermixing of merchant elites and economic migrants, tribal movements were also fluid, as allegiances and relationships shifted over time, and in response to localised factors.8 A case in point was the movement of large numbers of people as a result of the collapse of the pearling economy in the Gulf in the aftermath of the Great Depression in 1929 and the Japanese introduction of cultured pearls. Socio-economic hardship and conditions of near-famine caused more than one-third of the population of Qatar at the time to migrate to neighbouring states in search of work and sustenance.9

Countervailing forces of conservatism

The intermixing of peoples and cultures described above had a strong influence on the emergent states and societies in the Gulf. This rich geographical history belies any notion of the region as peripheral to world history in the pre-oil era or any attempt to define the Gulf solely by its possession of some of the largest energy reserves in the world. Nevertheless, the integration of the coastal Arabian Peninsula sheikhdoms into the network of British protected states between 1835 and 1916 profoundly influenced the region’s subsequent political development. Beginning with the signing of a General Treaty of Peace in 1820 and a ‘perpetual’ Maritime Truce in 1835 and motivated by imperial considerations of safeguarding the coastal flanks of the maritime route to India, British officials representing the (British-controlled) Government of India concluded individual treaties with the Trucial States (now the UAE) in 1835, Bahrain in 1861, Kuwait in 1899 and again in 1914, and Qatar in 1916. Together, the agreements enmeshed the emerging proto-state entities into an inward-oriented, sub-regional unit in which British ‘protection’ was extended in return for exclusive political and economic relations.10

British protection elevated and formalised the roles of the ruling families in each sheikhdom, as Lisa Anderson documented in her important article on the ‘resilience of monarchy’ in the Middle East in 1991. This external protection additionally gave ruling elites in the Arabian Peninsula – whether members of the ruling families or the British political officers – a considerable stake in maintaining the conservative status quo. A prime example of this conservatism in practice occurred in Kuwait in 1938, where the powers of the ruler, Sheikh Ahmad al-Jabir Al Sabah, were threatened by a vigorous reform movement that culminated in the election of a Legislative Council in June of that year. Under the leadership of a senior member of the ruling family, Sheikh Abdullah al-Salim Al Sabah (himself a future ruler of Kuwait between 1950 and 1965), the new body immediately involved itself in the administrative and financial governance of Kuwait and made unprecedented demands on the ruler’s power. Most notably, they forced Sheikh Ahmad al-Jabir Al Sabah to consent to Article One of the law that established the Council, which stipulated that the people were the source of power as represented by elected members of the Legislative Council. Article Five further stated that the head of the Council would exercise executive authority in Kuwait.11 These were meaningful powers to give away, and the Legislative Council rapidly sought to take responsibility for both Kuwait’s external affairs and collective state revenues. However, when these developments inspired similar reform movements in Dubai and Bahrain, they began to alarm British officials as much as the ruler himself. With power seemingly slipping away from the carefully constructed group of British-protected Sheikhs up and down the Gulf, Britain supported Sheikh Ahmad al-Jabir Al Sabah when he dissolved the Council in December 1938 and violently suppressed its elected replacement in March 1939.12

A slightly different set of circumstances prevailed in Oman and Saudi Arabia although the end result was broadly similar. In Oman, British influence was informal yet pervasive, as opposed to the formal establishment of protected state relations with Kuwait, Qatar, Bahrain, an...