Class and Capitalism in the Gulf

December 17th, 2011

The Political Economy of the Gulf Cooperation Council - Published on Global (first on New Left Project), by Ed Lewis interviewing Adam Hanieh, December 15, 2011.

Ed Lewis (EL): You see the six states of the Gulf Cooperation Council – Saudi Arabia, Kuwait, UAE, Qatar, Bahrain and Oman – as being at the centre of the Middle East economically and politically, but not simply because of their vast reserves of oil. What, then, is your account of how the Gulf states have come to be in this position of centrality?  

  • Adam Hanieh (AH): There are a number of factors involved here. First, of course, is the question of oil. The GCC’s supplies of oil and gas are among the highest in the world. There are various estimates here – and the assessment of oil reserves is highly controversial – but a commonly cited figure is that the GCC holds about 40-45 per cent of global proven oil reserves and 20 per cent of world gas. It currently produces close to 20 per cent of the world’s total oil production. Given the centrality of fossil fuels – both as an energy source and feedstock for the petrochemical industry – this gives the region a vital importance to the patterns of accumulation in the global economy.
  • A related factor is the huge levels of surplus capital that have accrued in the region as a result of sales of crude oil, gas and petrochemicals. These ‘petrodollars’ have been a key feature in the development of the global financial architecture. This is not a new aspect; during the 1970s financial flows from the Gulf were an essential part of the development of the Eurodollar markets (U.S. dollar deposits held in banks outside the United States) and also in supporting the purchases of U.S. Treasury bonds (see David Spiro’s work on this). In this way, petrodollars have been key to buttressing U.S. dollar hegemony and in sustaining the global financial imbalances that have characterized the world market over recent decades. The rapid financialization of the global economy has thus been partly premised upon the integration of the GCC into the world market and its financial circuits.
  • What this means is that the way that the world market has developed over the last few decades, with complex production chains stretching from the manufacture of goods in low-wage zones to the sale of commodities in the advanced capitalist countries, depends heavily upon both the Gulf’s commodity production as well as its financial surpluses. In this sense, the nature of class and state formation in the GCC region has occurred alongside (and is very much linked to) the broader development of the capitalist world market … //

… EL: With the partial exception of Bahrain, the Gulf states are generally known for a very low level of political discontent, leaving its authoritarian regimes with a firm grip on power, despite very deep material inequalities. What accounts for this? Is it largely a result of domestic factors or is it significantly shaped by the relationship between the Gulf and the global order?

  • AH: There is a hidden and largely forgotten history of significant social struggles in the Gulf. From the 1950s to 1970s, there were several well-organized and militant Arab nationalist and left-wing movements across the region. The role of these movements could be seen, to mention only a few examples, in strikes and protests across the Saudi oil fields, the guerrilla struggle in the Dhofar region in Oman, and the widespread support in Kuwait and elsewhere for the Palestinian struggle. There was a strong sympathy among the Gulf populations for Palestinian and Arab nationalist causes, often linked to the presence of Arab workers from Palestine, Egypt, Syria, Yemen and so forth.
  • These movements were met with repression by the ruling monarchies (strongly backed by British and U.S. advisors). But in addition to this repression, there was also a transformation in the nature of the region’s labour markets that became evident through the 1980s and 1990s. During this time, particularly following the deportations that took place around the 1990-1991 Gulf War, there was a shift away from Arab workers toward temporary migrant workers from South and East Asia. These workers were brought on short-term contracts, often housed in camps away from the citizen population, and subject to severe restrictions on labour and political rights. In many cases, particularly in low-wage sectors such as construction, it was very difficult for these workers to bring their families with them.
  • Today, the Gulf states are distinguished by their very high reliance upon this type of temporary migrant labour, with around 70% of these workers from South and East Asia and 30% from the Middle East (the proportion had been essentially the opposite in the mid-1970s). These labour flows differ from the permanent migration flows seen in other areas of the world because they are short-term in nature, lack associated citizenship rights, and are focused on maximizing remittance flows back to the country of origin. In all of the GCC states, temporary migrant workers represent more than half of the entire labour force and in four of these states (Kuwait, Qatar, Oman and the UAE) the proportion is greater than eighty per cent. This heavy reliance on temporary labour flows closely ties the key labour exporting regions to accumulation patterns in the GCC.
  • The relative stability and adaptability of Gulf capitalism and its ruling elites is closely connected to this class structure. High levels of exploitation are enabled because a worker’s residency status is directly tied to holding a job. Once they become unemployed they become ‘illegal’ and are required to leave the country. In other words, because the right to be in the country is conditioned on employment, employers hold an enormous power differential over the worker. Moreover, generational reproduction of the class is highly fragmented because workers generally return home when they finish their contracts – class memory and bonds of solidarity are weak, and collective action very difficult to undertake. Legal restrictions codify these barriers to class-based action, with unions banned in Saudi Arabia and the UAE and severely restricted elsewhere.
  • Contrary to the generally accepted picture of these societies, relative poverty does exist among the citizen population in countries such as Saudi Arabia (and elsewhere in the Gulf). But the absence of a local, citizen working class means that political struggles lack an effective social base. Political conflict in these states (with the exception of Bahrain which I will discuss below) thus generally originates in inter-elite discord (such as between different branches of the ruling family, and the conflict between religious scholars and the monarchy) or Islamist movements – not from any widespread class struggle. This relative political calm can be contrasted with the situation in two oil-rich neighbouring countries, Iraq and Iran, where the working class has a long history of mobilization and persistent opposition to Western policies in the Gulf and wider Middle East … //

… (full long interview text).

Publication: Divided We Stand, Why Inequality Keeps Rising, on OECD,  – Directorate for Employment, Labour and Social Affairs, ISBN Number: 9789264111639, Publication Date: December 2011, Pages: 400: In the three decades prior to the recent economic downturn, wage gaps widened and household income inequality increased in a large majority of OECD countries. This occurred even when countries were going through a period of sustained economic and employment growth …

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