BEFORE OIL25once nominal tribal sheikhs evolved into dynastic “rulers” and, later,
“heads of state” in the European fashion.
It is remarkable that the same handful of families has managed to
control these monarchies for hundreds of years, across periods of all-
encompassing change. A comparable counterfactual would have the
Native American tribes retaining absolute power in North America
despite widespread immigration and invasion. Tribal power in the Gulf
might be more understandable if these countries had remained far- flung
backwaters and continued to lie outside the main currents of globaliza-
tion. But the Gulf ruling families found themselves in control of resources
critical for global commerce and modern life. How did these isolated ter-
ritories manage to transform into multicultural modern states with the
same traditional ruling families at the helm?
As told by the scholars of political economy who chronicle the Gulf ’s
rise, the sheikhs survived by buying the support of their people. When
the Gulf monarchies discovered and then nationalized oil, the sheikhs
seized the assets that would underwrite both modernization and their
families’ continued rule. Governance had always rested on patronage;
before oil, patronage depended on sheikhs’ ability to squeeze funds—
more accurately described as rents— from the various parties who sought
access into the region. Once oil arrived, export earnings became the chief
source of rents.
Because of the importance of rents in governance, the Gulf states are
described by political scientists as “rentier states.” This description is
based on the concept of “economic rent,” which remains crucial to under-
standing the politics and development of the Gulf. What are economic
rents and how are they different than, say, the monthly rent a tenant pays
a landlord? To an economist, a landlord is an investor who earns— and
is entitled to— a profit because he has risked financial capital. Economic
rent is different. In this book, rent describes a financial reward for a “gift
of nature” such as mineral deposits or a strategic location. Unlike the
landlord, income from economic rent doesn’t require the recipient to risk
his own capital, work particularly hard, or even demonstrate any com-
mercial expertise. Economic rents are unearned. It’s money for nothing.