Middle East Rentier States on the Brink

UI – Part 584 – Middle East Rentier States on the Brink


The Middle East appears to be characterized by authoritarian regimes.  They wear the cloak of religious righteous individuals to be revered and respected.  This high ranking status was not earned, but gained through exploitation.  Oil was the enabler. The basic model of governance was to use the sale of their country’s resource, oil, as the primary revenue for their nation, and then employ in public service jobs many citizens to placate a potential for a demanding nature while the elites corrupted the system for personal gain and power. Oil wealth has funded a system of economic patronage, however with the price of oil in decline and buyers of oil finding other suppliers, other than the middle east, the money needed to maintain a quiet stable citizenry, to provide health care and education, the expenses of the nation, are now exceeding the revenue generated from oil exploration and sales from the desert.  Taxes from citizens has not been necessary. 

Oil became a factor in the 1900’s.  Before then these desert areas exhibited high levels of poverty and showed little progress when compared to other areas of the world.  Islam was the dominant religion, or ideology, while survival was a daily chore for residents.  Major cities were colorful and had an author’s element of romance which they incorporated in their writing, while at the same time being backward.  Little was produced, woven products mainly, rugs, scarves and pashminas.  Some farming and grazing of animals, goats and camels, provided milk products for the locals as well as meat.  The political aspect of Islam widespread today was not as obvious, at least to the outside world. The Imam’s, the scholars (ulema) of Islam, were close to the leadership, and provided guidance for residents, few in fact strict adherents of this faith, but laws were based on Islamic Law (Sharia) and used to control the masses. 

With oil and the mounds of dollars generated, far in excess of immediate needs, those seeking or already in power saw an opportunity to exploit the resource and the people.  What they shared was just enough to improve lives, but more than enough to provide for their immediate families and personal needs, wants and habits.  Political legitimacy has been dependent on feeding a bureaucracy with inefficient systems.  More people were employed in governments than needed, padding the payroll to maintain authoritarian control.  

Economies Change – Reform

Times are changing.  The revenues from oil are not keeping up with the expenses of a government made far too fat.  More will be needed from the people, less may be given, and taxes may be imposed. Can this lead to civil unrest?  The leaders will want greater restraints to maintain their power, if needed, or consider reform.  Reform can be most problematic for the political Islamists. Can productive economies be constructed, where in the past oil was sufficient?  History is not on their side.

Referred to as a ‘rentier’ model, as defined, ‘rentier’ means producing income from the assets, or oil, to cover the expense of the populace. It is not earned income, but unearned income. The primary national revenues of places like Iran, Saudi Arabia, Libya, Oman, Iraq, and others, are derived from the rent of indigenous resources, oil, to external clients, buyers and users outside the nation itself. When prices cannot be controlled to generate growing economies then problems arise.  These nations need to do something or they may well have civil strife as their people demand more.

Big question – can these Middle East nations succeed in having their Muslim majorities actually work and produce income making items and paying taxes on earnings from their labor?  When you visit prominent Muslim majority cities the bulk of the employees tend not to be indigenous persons, but foreigners willing to work.  The Muslims want to be served. What will happen when the Muslims themselves, those wealthy and catered to from the local resources, actually have to work.  Or even consider the idea? Accustomed to slaves, mostly non-Muslim, who will clean the toilets?

Top down control, imposing the social model on their people, has been dependent on this valuable resource.  What now?  Are they living beyond their means?  Is the stage being set for further uprisings, such as the Arab Spring; but this time will it be more effective? Can a private sector grow and provide sufficient tax revenues to offset the losses from the reduced price of oil?  An alternative – social reform.  

Social Reformation

Social reform – what does this mean and how will it help?  Will allowing woman to drive in Saudi Arabia curb their desire for more.  Or opening movie theaters and other fun things make the people happy, while being unemployed?  Can money be found elsewhere to throw at the residents to keep them at bay? Increasing public debt can only stave off the problem for so long, and then the burden of the debt itself will become an added obstacle. There are countries in the Middle East with 25 to 35% youth unemployment. Will the youth want to be heard? More than they have been in the past? 

Can the economies in the Middle East be made more efficient?  Where will innovation come from?  What about equal opportunity?  Is there any possibility a private sector can grow and supplant the reduced revenue from oil?  Can the ratio of public-sector jobs decline versus private sector jobs to yield the needed outcome to produce more revenues?  Will these areas be attractive to private investment?  Is there a work force there ready, willing, able and affordable to manufacture goods for the rest of the world?  Questions, questions, questions, but the answers based on history are virtually the same – It is doubtful. 

Governments cannot remain the primary employers in the Middle East, just as governments in socialist countries cannot maintain the peace, without controlling the weapons and the military (to protect the elitist leaders).  Private sector economies are essential (capitalism) where there is to be peace. To maintain power will require it be shared, allowing the populace to aide in future guidance of the realm. Is there a leader in the wings of any middle east nation that can emerge and turn things about?


A concern is towards emigration from these areas.  Wealthy families relocating, taking their money, to free nations.  Young able bodies may move too, in some cases because the benefits available in places like the EU and UK are attractive and can provide a lifestyle not requiring work.  Men with multiple wives can receive welfare checks for the many children produced and live collectively.  This is happening in places in the USA such as Dearborn, Michigan, localities in Minnesota, and elsewhere. 

Others relocate for work, where work is available.  They are willing to work and do not feel adequately kept in their own homeland.  But they bring their culture with them, often incompatible with their new host countries.  This leads to problems as we hear story after story of abuse of women and non-Muslims, the infidels among them whom they chose to move next to. 


The Middle East, many south Asia countries, where Islam dominates, need a savior, a leader that can instill new ideas, to have a large following that will grow and seek reform, reform that transforms these non-productive areas to be more vital to the world, not just a haven of terrorists, political Islamists, and ideological zealots. Whoever emerges must be able to deal with the political Islamists who prefer 7th century conditions to modernity, as long as Allah provides. But what happens when Allah is not providing what is expected?

When the Well Stops Working

The ‘rentier’ model, just as socialism, can only work for so long, and then it does not.  That is why capitalism works, why areas where people seek to innovate, to create and to make things with their own hands, to find news ways to do old things, are thriving.  Oddly enough such areas find innovators becoming wealthy, not just government officials, and then those government officials want more, fearing their power may be usurped.  And also those that do not earn what others may, such as those more productive and willing to work, will seek their politicians out to demand entitlements for their vote.  The cycle will continue as greed, a struggle for power, and a want for what others may have goes on and on.  To placate the needy, the demanding, dispensing candy for the multitude becomes a prop for those wanting control.


The balance required is found only in productive societies where people can be rewarded for what they do, their work, and their creativity.  The playing field must be equitable for men and women, for all races and religions.  Private lives must not filter into the public marketplace to attempt to shape the future for only a few.  Societies must always work for all, common laws, and equal opportunities.  Even the goal of education must be a balance of conservative and liberal thinking, objective in its discourse and unbiased in the lessons taught. In choosing those who lead consideration must be given the whole, a love of country, a desire for safety and security for everyone, protection of home and nations, a framework that insures and creates jobs, encourages innovation and enables success.  The poor and disenfranchised will not be ignored, at least not in a Christian nation.  

The basic principles of fairness are wired in our core.  We know what is right and wrong; the choice is our own, just as it is to sin. 

Grace and Peace

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