Oil and Politics in the Gulf: Rulers and Merchants in Kuwait and Qatar
How oil revenue let rulers buy out the merchant families; the origin of the modern business elite.
Summary
Jill Crystal examines how oil revenue changed the relationship between rulers and merchants in Kuwait and Qatar. Before oil, both ruling families depended on the merchant community for revenue, through taxes on pearling and trade, and that dependence gave merchants political leverage that constrained the rulers.
Oil revenue accrued directly to the ruler and severed that dependence. Crystal's argument is that what followed was a negotiated settlement rather than simple exclusion: merchants were removed from political decision-making and compensated with economic privileges, including exclusive import agencies, requirements that foreign firms take local partners, land purchases by the state at inflated prices, and access to state contracts. The merchants accepted the trade. The ruling families then used the revenue to build state bureaucracies and distribute welfare, which created a new constituency of nationals dependent on the state.
The comparison between the two countries is the analytical device. Kuwait's merchant community was older, larger and better organised, and it obtained the National Assembly and a somewhat more constrained monarchy; Qatar's was weaker and obtained less. Crystal's work is one of the foundational studies of the rentier state, and its argument that oil produces a specific political bargain rather than simply enriching rulers has shaped the field. The book covers the period to the late 1980s, and the enormous changes in Qatar since, including its gas development and its state investment activity, fall outside it.
Key takeaways 7
- Before oil, Gulf rulers depended on merchant taxation, and that dependence gave merchants effective political leverage.
- Oil revenue accruing directly to rulers ended the fiscal basis of merchant political power.
- Merchants were bought out rather than suppressed, receiving import monopolies, partnership requirements and state contracts in exchange for political withdrawal.
- Ruling families used oil revenue to build bureaucracies whose employees became a new dependent constituency.
- Kuwait's older and better-organised merchant community secured more political concession than Qatar's did.
- Crystal argues that the rentier bargain is a negotiated settlement whose terms depend on the pre-oil balance of power.
- State purchase of merchant land at inflated prices was a specific and deliberate mechanism for transferring oil revenue to the former elite.
Who should read it
Investors and analysts working in the Gulf who need the historical origin of the ruler-merchant bargain that still structures business there.
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