After the Oil Boom: The Holiday Ends in the Gulf

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The most unmanageable risk facing American interests in the Persian Gulf is neither Saddam Hussein nor Iranian expansionism. Rather, it is the slow but sure decay of the economic and political structures of the United States' key regional allies. They are the Gulf Cooperation Council (GCC) states: Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, and the United Arab Emirates (UAE). Washington's obsession with external threats to friendly governments and direct risks to the continued flow of oil has blinded it to the end of these countries' 20-year holiday from politics and economics.

The holiday from economics was characterized by, among other syndromes, the lack of binding budgetary constraints, which reduced and sometimes even eliminated the need to set spending priorities and allocate scarce economic resources. Furthermore, the financial pie was so large that even with a highly skewed income distribution all sectors of society saw some measure of improvement in their standard of living. Unemployment was unimaginable as governments showed a seemingly infinite capacity to hire both citizens and foreigners in public jobs.

These economic circumstances led the way to a parallel escape from politics, in which the ruling elites rarely faced the need to share power, renew their legitimacy and credibility, or tolerate any meaningful public debate over major economic, social, or political issues such as oil and budgetary policy. The resulting system had neither taxation nor representation. These symptoms were mild in Oman, more serious in Qatar and Bahrain, and severe in Saudi Arabia, Kuwait, and the UAE.