Diminishing Returns of the Saudi Rentier State: The Gulf War

If the cult hit film Clerks is any indicator of western society, the stereotypical retailer is an underachiever always seeking the path of least resistance, justifying his minimal efforts with the dead-end minimum wage received. Mohamed Bouzazi of Tunisia was not a stereotypical western retailer, but its Middle Eastern equivalent. A young man doing everything in his power to make ends meet in a broken, repressive nation masquerading as a democracy. His tough days on the job involved more than difficult customers ordering their quasi-coffee caffeine fix concocted in a tediously precise manner, he was the regular victim of beatings and extortion by the local police. Instead of making passive aggressive Facebook status updates in a bid for sympathy likes, he confronted his problems with a can of gas and handful of matches.i Bouzazi, or Basboosa as he was affectionately known by those he regularly donated his meager goods toii, ignited a series of revolutions, riots and civil wars that day, 17 December 2010, along with himself. Collectively, this ongoing movement was coined the ‘Arab Spring’, a long overdue reaction to the increasingly repressive regimes of the region.

After decades of corrosive authority, the collective iron fist of President Zine El Abidine Ben Ali of Tunisia, Hosni Mubarak of Egypt, Col. Muamar Gaddafi of Libya, President Ali Abdullah Saleh of Yemen and inshallah President Bashar Al Assad of Syria have rusted away. Conspicuously missing from this list of ousted leaders is the title of King, which at least to Americans is a far greater symbol of repression that ought to be taken down by any means necessary. With the glaring exception of Bahrain, where the minority Sunni Al Khalifa family rules over a discontent Shiite Majority, the Gulf monarchies have been largely spared the negative effects other leaders have faced over the course of the regional movement. In fact, dynastic monarchies, or monarchies that install family members in most positions of power, have a far greater history of retaining their rule and keeping the coups at bay than their non-dynastic monarchial or pseudo-democratic counterparts from Mohamad Rezah Shah Palavi in Iran to President Ahmed Hassan al-Bakr of Iraqiii. The typical answer to the question of the Gulf Kingdoms’ secret weapon to power is oil, yet the Shah, Al-Bakr and King Idris of Libya all enjoyed great oil wealth. The Al Saud in Saudi Arabia have never been under European rule, strengthening legitimacy among their subjects, yet all of the other Gulf monarchies still standing owe their very existence to early European patronage and protection. The key concept to the staying power of their system of rule is its resemblance to tried and true traditional Arab authority.

The philosophy of leadership for both commoners and kings has slowly evolved over time. An increasing number of scholars are seeing vulnerabilities in the Gulf Monarchies that did not exist prior to the 1990 Gulf War. In this series, I will explore the beginning of the end of the Al Saud. Though not an epitaph by any means, their invitation of Coalition Forces to the holiest land in the Muslim world during the Gulf War marked an irreversible anti-regime trend not seen in the Kingdom since the seizure of the Grand Mosque in Mecca 20 November 1979. This erosion of religious legitimacy, coupled with increasingly expensive security and social obligations in the face of stagnant or falling revenues as more sources of oil are discovered elsewhere in the world, has undermined the bargaining power of the House of Saud and prompted them to make several concessions and adapt progressive policies demanded by their subjects and the world.

Traditions of Arab Authority

Scheherazade is a name largely unknown to modern audiences around the world, unless they have an interest in 19th Century fairy-tale literature. Her legacy, as the spitefully bold and bright eldest daughter of a Sassanidae Grand Vizier who used her wits and charm to delay the sadistic misogynist sultan’s killing spree for a thousand nights, lives on as a symbol of resilience to the wanton abuses of a malevolent monarchy. According to the legend, Scheherazade volunteered to serve as the latest wife to Sultan Schahriar who married and subsequently strangled a fresh virgin every evening to spite his first wife whom had scorned him. Her plan was to put a halt to this series of killings by telling the Sultan a captivating story every night, only ending with a cliff hanger at the end of every session and refusing to continue the story until the next night. She continued this for a thousand nights and this tale is widely known today as A Thousand and One Nights or the Arabian Nights, despite its Persian characters and origin.iv

While this distinction is important, it also serves as an allegory to the modern day Al Saud Regime, though not in the way most would assume. The Al Saud family is a modern monarchy often criticised as nothing more than another repressive Arab regime by both the Shiite minority within the kingdom and human rights activists elsewhere. The family is represented in this tale not by the Sultan, but by the heroine. The Gulf Arab tradition of sheikhly authority does not concentrate overwhelming and absolute power into a single body as the European tradition of divine right, but empowers the ‘virtuous’ with the authority of negotiation and reasoning between parties within their loose jurisdiction. Scheherazade used her wisdom and wealth of folklore to simultaneously satisfy the sultan and spare the lives of an untold number of ill-fated future brides. A competent sheikh would likewise convince local merchants to divert a portion of their wealth to men-at-arms under his command to safeguard trade routes necessary for their respective businesses to flourish and simultaneously enforce agreements mediated between parties by the sheikh. The sheikh’s value to society was based entirely upon the resources granted to him, initially by the will of merchants within his sphere of influence and eventually by coercion, as the contributions accumulate to the point of dominance over competitors. In this power equation, the sheikh and the merchants were clearly interdependent upon each other to flourish in the harsh and untamed deserts of the Arabian Peninsula where competing nomadic tribes carried out routine raids upon each other and no leviathan existed within the tribe.

Petroleum Power Play

One of the tales allegedly told by Scheherazade to stave off the bloodthirsty desire of her captor, Aladdin and the Enchanted Lamp, serves as yet another allegory of Arabian politics. The seemingly infinite wealth and power bestowed upon the sheikhs by oil, symbolised in the story by the jinn of the lamp, was initially squandered to unscrupulous and more experienced outside powerbrokers and eventually used to ascend to a place of international importance and vanquish jealous enemies seeking to undermine this newfound position.v

Oil rapidly transformed Saudi Arabia from a struggling nation of illiterate, nomadic Bedouins into an increasingly settled and wealthy nation. It also altered the power relations between the sheikhs and those under their jurisdiction. The newfound wealth concentrated in the hands of the sheikh rather than the merchants granted the royal family financial independence and the nature of their overwhelming fiscal power in comparison to that of the merchants enabled them to essentially purchase the faith and loyalty of those under their jurisdiction rather than bargain for it. In exchange for the public’s political bargaining power, the royal family doled out generous benefits under the framework of the state and incorporated the most powerful political rivals into the state with high-paying and high-responsibility positions. This system of ‘no representation without taxation’ came to be known as a rentier-state.

Unfortunately for the House of Saud, oil is not a magical resource, but a physical one that is limited and its power subject to factors outside of their direct control such as global supply and demand. The omni-directional demands made upon the royal family, many of which are contradictory, all rely upon excess oil profits to be satisfied. Some of these demands, such as those by the religious establishment, are increasingly immune to the placative power of money if it comes from what they perceive as an immoral source. These immoral sources, usually defined as western industrial consumers of Saudi oil, are essential to the economic development of the Saudi state by direct means of petroleum purchases and indirectly as the source of skilled expatriate labor that occupy the bulk of essential occupations Saudis are either unable or unwilling to perform. The Saudi population, which only four decades ago was small enough to enjoy a lavish share of profits in the boom days of skyrocketing oil prices, has grown at one of the highest rates in the world. Today, the young population of Saudi Arabia far outweighs their living ancestors, and comparatively lower oil prices means that social spending must be spread thinly amongst them. A Saudi graduating college today is no longer guaranteed a job as he was in the past, a problem that is only made worse by cultural factors that force employers to seek talent elsewhere.

A Betrayal in Confidence

Saddam Hussein considered himself a champion for Sunnis in his eight-year pre-emptive campaign against Iran from 1980-1988. He launched the offensive in response to the revolutionary fervor of Shiites that overthrew the Shah in Iran and threatened spread into the Shiite majorities of Iraq and Bahrain as well as the substantial minorities in the remainder of the Gulf States. By 1986, the war was in Iran’s favor as they made significant incursions into Iraqi territory and settled into positions at Al-Fao that directly threatened Kuwaitvi. At this point, it was in the Gulf States’ vital interest to keep Iraq in the fight with massive loans of money and oil and even arm themselves for direct defense against the Iranian threat. Reckless disregard for production quotas was required to finance these initiatives, which forced oil prices to a rock-bottom seven dollars a barrelvii despite official quotas being lower than ever at a mere 14.5 million barrels per day.viii

At the conclusion of the war two years later, Hussein found himself buried under nearly $80 billion in debt owed mostly to the Gulf states, a massive reconstruction project to repair the damage done by eight years of war at an estimated cost of $230 billion and a standing army of more than one million he could neither afford to pay nor release into the devastated economyix. Hussein required oil prices to be raised to a minimum of $25 a barrel to remedy his situation. Instead prices fell from $20.50 a barrel in early 1990 to $13.60 in the summer due to continued overproduction by Saudis and Kuwaitis, each dollar taking a billion dollar toll on Iraqi revenues. To add insult to injury, Kuwait was allegedly slant-drilling along its border with Iraq into the Iraqi side of the Rumaila oil field, causing an additional loss of $2.5 billion. Saddam claimed ‘The oil quota violators have stabbed Iraq with a poison dagger‘, issuing the ominous warning that ‘Iraqis will not forget the saying that cutting necks is better than cutting means of livingx‘.

King Fahd of Saudi Arabia, seeking to calm an increasingly agitated Iraq, forgave a significant portion of Iraq’s war debt on top of signing non-aggression and military assistance pacts with Saddam. The Emir of Kuwait refused to follow King Fahd’s lead, and even pushed for repayment of Iraq’s war debtxi. Saudi Arabia hosted the failed bilateral Jeddah talks in an effort to ease tensions between the two nations, but Iraq only increased its demands on a stubborn Kuwait who refused to budgexii.

On the eve of the Gulf War, Kuwait was spending only 5.1% of its $23.1 billion gross national product on defense, with a mere 16,000 troops and 245 tanks in its land order of battle. Saudi Arabia was spending up to 16.5% of its estimated $72 billion gross national product on defense, both countries procuring advanced aircraft and armor from the United States, Britain and France.xiii Despite this heavy investment in defense expenditures, the Kuwaitis were easily overwhelmed by Saddam’s million-man army, only 100,000 of which were deployed in the invasion of 2 August 1990. Hussein swiped nearly 94 billion barrels of proven reserves overnight in the invasion, quickly reinforcing his position with another 500,000 men within reach of Saudi Arabia’s giant oilfields.xiv

Osama bin Laden, a veteran mujahad from the Afghan Jihad, offered his assistance to King Fahd in defending the land of the two holy mosques from the secular Iraqi invader.xv This offer was refused, King Fahd instead welcoming and paying $16.8 billion for hundreds of thousands of infidels from the United States, Soviet Union and an assortment of other nations from around the globe to do a job he deemed fellow Muslims incapable of doing.xvi The most radical of Saudi Muslims, who had long considered the House of Saud an apostate regime yet needed solid proof of wrong doing to mobilise, now had their motive.

What was the purpose in keeping production high and oil prices low? What is the point in purchasing such expensive weapons systems if they cannot fend off an invasion without extensive outside help? To the general public of Saudi Arabia, these were questions of little importance, as they were generally unconcerned with the investments of the government as long as they enjoyed stable and relatively prosperous lives provided mostly by the government. To the radical clerics and their followers, this signified a betrayal of epic proportions and a grand Zionist-Crusader conspiracy pitting Muslims against Muslims for the greater benefit of this unholy alliance.xvii Thus began the sahwa, or Awakening Movement, engaging the alleged apostate regime in a battle not of bullets, but of piety and petitions.


i http://www.aljazeera.com/indepth/features/2011/01/201111684242518839.html. return to main text
ii http://gulfnews.com/opinions/editorials/tunisia-events-turning-point-in-arab-world-1.746884. return to main text
iii See Herb, Michael. All in the Family pp. 183-209. return to main text
iv http://www.gutenberg.org/files/128/128-h/128-h.htm. return to main text
v The protagonist of the story is Aladdin, the son of a deceased shopkeeper and his impoverished widow. Upon acquiring the lamp and discovering its powers, he initially uses it to climb out of poverty selling gold and silver tableware granted to him by the jinn of the lamp. He failed in this venture because he did not know the true value of the goods he was selling and taken advantage of by other merchants. He then used the lamp to disrupt the arranged marriage of the Sultan’s daughter and put himself in place to secure her hand in marriage. http://www.wollamshram.ca/1001/Payne/aladdin/p13_index.htm return to main text
vi Creighton, John. Oil on Troubled Waters p. 55. The Al-Fao peninsula is Iraq’s only access to the Persian Gulf and also the heart of the Iraqi oil industry. Its 1986 capture is likely the main reason Iraqi oil exports dropped to zero in 1986 and 1987. return to main text
vii Parra, Francisco. Oil Politics: A Modern History of Petroleum (p. 290-291); The Saudis increased production to over 6 billion barrels per day in August 1986, well above their 4.3 million barrels per day quota. The massive arms purchases by the Saudis created a $20 billion deficit, which equaled 5 million barrels per day at the abyss of the 1986 Oil Glut. return to main text
viii Ibid. return to main text
ix Woods, Kevin M. The Mother of All Battles: Saddam Hussein’s Strategic Plan for the Gulf War p. 41. return to main text
x Allen, Thomas B., Berry, F. Clifton and Polmar, Norman. War in the Gulf: From the Invasion of Kuwait to the Day of Victory and Beyond. p. 61-62. return to main text
xi Woods p. 47. Iraq, the military power house of the Arab world, initiated the non-aggression and military assistance pact with Saudi Arabia. Hussein initiated talks with Saudi Arabia, Kuwait’s southern neighbor, prior to Kuwait in a move to pressure Kuwait into a more favorable position for negotiation. Iraq considered Kuwait’s refusal to be more lenient in its collection ‘disrespectful’, to a large neighbor who had sacrificed so much on behalf of the Arab states and suspected the U.S. and Israel conspired with Kuwait to weaken Iraq. return to main text
xii Ibid. p. 52. Iraq demanded from Kuwait $2.4 billion in compensation for the disputed Ramalia oil field, $12 billion for Kuwait’s role in depressing oil prices, forgiveness of $10 billion in war debt and a long-term lease on Bubiyan Island. return to main text
xiii War in the Gulf pp. 18-19. return to main text
xiv Parra. p. 298. Kuwait held about ten percent of the world’s proved oil reserves and its southern border was adjacent to major Saudi oil fields in the Eastern Province containing another twenty-five percent. return to main text
xv Hegghammer, Thomas. Jihad in Saudi Arabia: Violence and Pan-Islamism since 1979. Amazon Kindle loc. 1278-1300. Osama bin Laden had been a loyal supporter of the Saudi Regime up until their invitation of infidel forces to defend the peninsula. A common theme throughout Osama bin Laden’s 1990s rhetoric was the defense of Saudi Arabia from all outsiders, to include the Iraqis in the north and the newly established Republic of Yemen to the south. return to main text
xvi War in the Gulf p. 97. return to main text
xvii Foreign Broadcast Information Service – Near East and South Asia 24 August 1990 reveals two broadcasts from a Clandestine radio frequency named Holy Mecca Radio urging the overthrow of King Fahd and revealing the Zionist-Crusader conspiracy. return to main text


In January 2013 Safaniya Tie-In Platform No. 20 (Safaniya TP-20) became the largest TP in Saudi Aramco’s offshore fields (around 4,000 metric tonnes heavier than compared than normal TPs), and will be the main crude oil gathering and power supply hub for North Safaniya offshore field.
Saudi King Abdullah bin Abdulaziz Al Saud (right) meeting with Afghan President Hamid Karzai (left) at King Khalid airport in Riyadh in 2010.
Kuwait celebrated their 50th year of independence from Great Britain and 20th year of liberation from Saddam Hussein’s invading forces with several coalition countries, including the U.S., by staging a very large military parade, Feb. 26, 2011.

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