26BEFORE OILRents in the modern Gulf take the form of excess profit that goes
beyond a reasonable rate of return. In the case of petroleum, the rent por-
tion is generally accepted as the surplus left over after oil is sold and
deductions are made for the costs of exploration, production, process-
ing, marketing, and transport. In low- cost oil- producing states like those
in the GCC, rent might make up 90 percent of the revenues from inter-
national sales.
In the Gulf, political power was— and is— based around rents. In the
1800s, Gulf sheikhs signed treaties with foreign powers, the Ottomans
and British in particular, because the foreign powers provided rents as
part of the bargain. Rulers considered rents as personal income they
could use for public benefit. They distributed some of the cash to build
support among their subjects. In the 1930s, Sheikh Saeed al- Maktoum,
the ruler of Dubai, received rents because the territory he controlled
included the Dubai Creek, a sheltered saltwater inlet around which clus-
tered Dubai’s homes and souks. The creek was a useful landing and
stopover site for British flying boats traveling between London and India.
Britain’s Imperial Airways paid Sheikh Saeed 440 Indian rupees a month
(about $150, or £30), plus a landing fee of 5 or 10 rupees.^25 The stipend
amounted to a small sum in British terms but provided the sheikh with
a source of rents to maintain power and fend off his rivals.
Ibn Saud, who governed Saudi Arabia without entering into treaties
with foreign powers, also secured rents to distribute among his sub-
jects. Before oil, Ibn Saud’s main revenue source flowed from hajj
pilgrims paying fees to visit Mecca and Medina. But the king also con-
vinced the British to provide him a yearly subsidy based on his recogni-
tion of Britain’s dependencies on the Trucial Coast. These sources of
rent allowed Ibn Saud to distribute patronage to Bedouin tribes in the
form of cash, tea, sugar, and textiles. He provided subsidized food to resi-
dents of Jeddah, Riyadh, and other towns.^26 When oil was discovered, the
ruling sheikhs captured those rents, too. Oil rents flowed into sheikhs’
preexisting distribution channels, becoming the paramount financial
resource for maintaining political control.
Over the centuries, Gulf ruling families built governing institu-
tions that turned out to be surprisingly durable. The sheikhs’ ability