Gulf States Under Pressure

Protests in Bahrain in 2011
Protests in Bahrain in 2011. Photo: Al Jazeera English/Flickr.

Since independence, relations between citizens and their states in the Gulf have been shaped in part by the oil and gas wealth that these countries enjoy. Control over oil and gas revenues allows the governments to offer extensive benefits to citizens, while hardly needing to extract any taxes. This system, often described as a rentier state, means that while the state is absolved from the usual need to obtain income from its citizens, they in turn have less of a stake in demanding transparency, accountability and so on, or so the argument goes. Meanwhile, others in the Gulf see their state benefits as evidence of the magnanimity of paternalistic rulers.

The arguments between those who see dissidents as mere ingrates, and those who see conservatives as regime stooges, have been growing more polarized. The resulting political tensions are visible above all in Bahrain, where renewed protests are being met with an intensive crackdown today; and in the UAE, over the recent sentencing of opposition activists, and to some extent also in Kuwait. But either way, the fact remains that this economic model is not sustainable in the long term.


Egypt’s Presidential Elections: The Economy

Egypt’s economy has suffered short-term pain from the uncertainty over its political transition – but there’s a chance for confidence to pick up after the presidential elections.
Since the uprising, inward investment and tourism revenues have fallen, growth has slowed, unemployment has risen and the fiscal deficit has widened.

But the fundamentals of Egypt’s economy have not changed. The country has by far the largest population in the Middle East and is one of the Arab world’s most diversified economies. It has oil and gas, world-class tourist attractions and a strategic trading location at the nexus of Europe, the Middle East and Africa. These assets explain why no major investors have pulled out of Egypt since January. There is a chance, though an uncertain one, that Egypt’s economic prospects could be improved if the new regime proves to be less corrupt and more meritocratic.

Of course, the country has deep-seated economic problems. Its demographics are a double-edged sword: the fast-growing, young population of 85m or more can be an engine of growth, but too many are stuck in poverty and unemployment, and state services and infrastructure have been unable to cope with the rising numbers. All the new presidential candidates are under pressure to promise to spread the country’s wealth more evenly – and to create jobs. Whoever wins will face a difficult task. But the possibility of greater clarity over government policy may help to provide a more conducive environment for investment.