Princes, Brokers, and Bureaucrats

Princes, Brokers, and Bureaucrats: Oil and the State in Saudi Arabia

Steffen Hertog
Copyright Date: 2010
Edition: 1
Published by: Cornell University Press
Pages: 312
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  • Book Info
    Princes, Brokers, and Bureaucrats
    Book Description:

    In Princes, Brokers, and Bureaucrats, the most thorough treatment of the political economy of Saudi Arabia to date, Steffen Hertog uncovers an untold history of how the elite rivalries and whims of half a century ago have shaped today's Saudi state and are reflected in its policies. Starting in the late 1990s, Saudi Arabia embarked on an ambitious reform campaign to remedy its long-term economic stagnation.

    The results have been puzzling for both area specialists and political economists: Saudi institutions have not failed across the board, as theorists of the "rentier state" would predict, nor have they achieved the all-encompassing modernization the regime has touted. Instead, the kingdom has witnessed a bewildering mélange of thorough failures and surprising successes. Hertog argues that it is traits peculiar to the Saudi state that make sense of its uneven capacities.

    Oil rents since World War II have shaped Saudi state institutions in ways that are far from uniform. Oil money has given regime elites unusual leeway for various institutional experiments in different parts of the state: in some cases creating massive rent-seeking networks deeply interwoven with local society; in others large but passive bureaucracies; in yet others insulated islands of remarkable efficiency. This process has fragmented the Saudi state into an uncoordinated set of vertically divided fiefdoms.

    Case studies of foreign investment reform, labor market nationalization and WTO accession reveal how this oil-funded apparatus enables swift and successful policy-making in some policy areas, but produces coordination and regulation failures in others.

    eISBN: 978-0-8014-5877-4
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-viii)
  4. List of Acronyms
    (pp. ix-x)
  5. Dramatis Personae
    (pp. xi-xiv)
  6. Introduction
    (pp. 1-8)

    When I entered the telex room of a notable Saudi ministry in the summer of 2003, it dawned on me that something was wrong with communications between the different parts of the Saudi government. A Sudanese expatriate employee with a massive turban sat before several flickering twelve-inch amber computer monitors dating from the 1970s. Occasionally, an old matrix printer in a corner, which at first appeared to be decommissioned, would come noisily back to life and hammer out a message on its endless reel of paper.

    This was the way Saudi ministries communicated with each other in 2003, after billions...

  7. Chapter 1 Unpacking the Saudi State: Oil Fiefdoms and Their Clients
    (pp. 9-36)

    After almost two decades of economic drift and stagnation, the Saudi government started an ambitious program of reforms in the late 1990s, putting not only the Kingdom’s long-term economic survival but also standard theories of Saudi politics and economics to the test.

    Contrary to both academic pessimists and regime propagandists, there has been great variety in policy outcomes—some quite successful, others not. On the one hand, after many half-hearted attempts at trade reform, the Kingdom witnessed swift regulatory changes when the government pushed for accession to the WTO in 2005. The Saudi regime also engineered the successful privatizations of...

  8. Part I: Oil and History

    • [PART I Introduction]
      (pp. 37-40)

      The first half of the book explains where the institutions that underpin the Saudi Kingdom’s modern political economy come from and how oil income has allowed them to take the idiosyncratic shape they have. It will try to bring individual agency and personality back into the “structuralist” political economy accounts of Gulf states and rentier systems in general.¹ More specifically, it will address how the scope of individual agency has shrunk over time and how early contingencies and choices have determined long-term institutional outcomes.

      Unlike the general expectation of rentier literature—and unlike standard political science accounts of Saudi state-building—...

    • Chapter 2 Oil Fiefdoms in Flux: The New Saudi State in the 1950s
      (pp. 41-60)

      The state that King Saud inherited in 1953 from his father, King Abdulaziz, was at once highly centralized and extremely underdeveloped in administrative terms.¹ Abdulaziz (“Ibn Saud” in Western parlance) had by 1934 by and large managed to extend his sovereignty over all of modern-day Saudi Arabia. He did, however, not rule through a modern bureaucratic apparatus but rather through personal links with trusted lieutenants, local intermediaries, and clients.

      In the Najd, the central region of Saudi Arabia whence the Al Saud hailed, Abdulaziz ruled through a personalized administrative system, with his son Saud as vice-regent and a few regional...

    • Chapter 3 The Emerging Bureaucratic Order under Faisal
      (pp. 61-83)

      Trying to build up Saudi Arabia as an anticommunist bulwark in the Middle East, the U.S. government and embassy were highly concerned over the administrative chaos of the 1950s and voiced their worries repeatedly. However, American pressure was largely ineffective under Saud, who allowed his state to sprawl incoherently. It was Faisal’s reign that brought some degree of order into the government apparatus. But again, this was at least as much driven by royal family politics as by perceived development needs. Faisal’s struggle with Saud was at its apex between 1958 and 1962, exactly the period during which institutions were...

    • Chapter 4 The 1970s Boom: Bloating the State and Clientelizing Society
      (pp. 84-136)

      If a Saudi bureaucrat from the year 1970 were to use a time machine and travel to 1980, he could probably continue in his job in the same ministry in almost the same fashion. The internal functioning of state agencies and the micro-mechanisms surrounding them had not changed much, as hierarchies were still steep, horizontal coordination weak, agencies overstaffed with bureaucratic clients, the bureaucracy heavy, and the state’s regulatory capacity limited. Yet, on stepping out of the ministerial door, our bureaucrat would quickly realize that the Kingdom had gone through a rapid, dizzying transformation on both the meso- and the...

  9. Part II: Policy-Making in Segmented Clientelism

    • [PART II Introduction]
      (pp. 137-142)

      By the mid-1990s, Saudi Arabia had endured a dozen years of fiscal retrenchment without policy reform. “During King Fahd’s latter days the country at best stood still or moved backwards in both business methods and nepotism.”¹ After the brief Gulf War spike, the oil price mostly lingered between 10 and 20 US$ per barrel. The government axed development expenditure further, state services gradually deteriorated, and contractors suffered from severely delayed payments. After a brief recovery in early 1997, oil prices plunged below 10 US$ in late 1998 as the Asian economic crisis caught OPEC off guard.

      Public debt, although held...

    • Chapter 5 The Foreign Investment Act: Lost between Fiefdoms
      (pp. 143-184)

      Although built as an inclusive system, the political economy of the Kingdom is hard on latecomers. This is as true for regulations and institutions as it is for individuals. The foreign investment law of April 2000 and SAGIA, its adjunct administration, have been perhaps the most prominent victims of this rule in recent years.

      Together with the Saudi gas initiative, the new foreign investment act was the bellwether project of the Saudi reform drive starting in 1999/2000. In the way it was promoted and negotiated as well as in the way in which its implementation faltered, it reflects both resilient,...

    • Chapter 6 Eluding the “Saudization” of Labor Markets
      (pp. 185-222)

      The foreign investment reform discussed in the last chapter was not able to break or remold existing structures of authority and clientelism in the Saudi state; instead, SAGIA settled on working through and around them. It was, however, a specific initiative tied to a specific new agency. One might argue that the policy simply got off to a bad start, being a victim of SAGIA’s outsider position, and perhaps was not the leadership’s highest priority. This chapter will analyze the policy of “Saudiizing” the national labor market, a policy implemented by long-established ministries, which the leadership clearly regards as crucial...

    • Chapter 7 The Fragmented Domestic Negotiations over WTO Adaptation
      (pp. 223-245)

      Rich rentier states like Saudi Arabia enjoy the privilege of conducting most economic policy negotiations domestically: Since the 1990/91 Gulf War, the Saudi government has not contracted any international debt, and World Bank, the International Monetary Fund, and other actors are present as paid consultants, not as creditors that can impose political conditions on the Kingdom’s policy-makers. Accordingly, labor market issues have been negotiated within Saudi Arabia, and issues of foreign investment regulation until 2003 also were decided domestically—against a background of international competitive pressures, to be sure, but without the involvement of external political actors. The same is...

    • Chapter 8 Comparing the Case Studies, Comparing Saudi Arabia
      (pp. 246-276)

      When the Saudi state embarked on its first comprehensive economic reform drive in two decades in the late 1990s, it did not look so bad, at first glance. It was still relatively well-funded, corruption—despite the widespread myth—was less endemic on the administrative working level than in many other Arab states, bureaucratic education levels were reasonable, and the higher echelons of the technocracy contained a host of highly qualified figures with a liberal outlook. From a technocratic perspective, policy-making did not seem unduly encumbered by organized social interests that could thwart reforms, and despite an oligarchic structure of princes...

  10. References
    (pp. 277-288)
  11. Index
    (pp. 289-298)