As discussed later in this book, in those Gulf monarchies where public sector employment can no longer be guaranteed for citizens, it has been harder for the ruling families and governments to rely continuously on salary increases to boost popularity. Nevertheless, steps have been taken to make sure that those who end up working in the private sector can still benefit from their nationality. In Saudi Arabia and Kuwait, for example, many jobs that appear to be in the private sector are very often in large, government-backed parastatals such as the Saudi Basic Industries Corporation or the Kuwait Projects Company (KIPCO). In this sense, employment conditions for citizens differ very little from those working in ministries or government departments. Similarly, in Abu Dhabi, which has recently streamlined the number of civil service jobs from 65,000 to 28,000, and has plans to trim the number to 8,000,[236] many new pseudo-public sector jobs have been created by giant government-backed companies and the many joint ventures they have sponsored. The aforementioned Mubadala Development Company is particularly noteworthy, as together with its many offshoot projects it now employs thousands of young UAE nationals.
Where genuine private sector employment opportunities for nationals do exist, for example in Bahrain and Dubai’s export-processing free zones it is far more difficult to earmark jobs for citizens or to offer them different rewards from expatriates. Nevertheless, efforts have been made — though not always successfully — by some Gulf monarchies to encourage companies to help indigenise the labour force, either by imposing quotas or by introducing legislation that offers citizens greater job protection or better working hours than their expatriate peers. In 2004, a report conducted by Tanmia — the UAE’s National Human Resource Development and Employment Authority — recommended that the ‘system introduced by the Government of applying minimum quotas for employment of UAE nationals needs to be applied to more economic sectors to ensure jobs for nationals’ and that private sector firms should contemplate introducing training programmes specifically for citizens.[237] Moreover, in late 2009, with concerns over the credit crunch growing, the UAE’s federal government resorted to blatant protectionism, announcing that it would be illegal for employers to make UAE nationals redundant from their jobs, except in the most extreme cases.[238]
Other aspects of the wealth distribution strategy of the Gulf monarchies include the regular cancelling of debts, and the dispensing of ‘government charity’ to the minority of indigent citizens who somehow slip through the free housing and welfare state net. The former mechanism, much like the periodic public sector salary increases, tends to be deployed during economic or political crises as a means of reinforcing the loyalty of citizens. Kuwait provides the best example of this, with the government having revoked most personal debts and stock market losses following the 1982 Souq al-Manakh crash — named after the informal, unregulated bourse that had been set up in an air-conditioned garage. Thousands of Kuwaiti nationals had bought into the market, in many cases their first experience of personal investments, before having their stocks wiped out. In 1991, following Kuwait’s liberation from Iraq, the government again moved to abrogate most personal debts, allowing citizens more quickly to resume their pre-war lifestyles. And in 2008 the government set up an $18 billion emergency fund, specifically to assist Kuwaiti nationals with debt problems. As the effects of the credit crunch on Kuwait’s economy intensified, this was extended in 2009 following the government’s purchasing of over $23.3 billion of consumer loans — this being financed from the annual interest accrued on foreign assets held by the Kuwait Investment Authority.[239] As discussed later in this book, widespread debt cancellation has re-emerged in Kuwait 2011 and in many other Gulf monarchies, as all grapple with the aftermath of the Arab Spring.
With regards to ‘government charity’, much like the free housing projects, the organisations involved tend to remain very closely tied to the state and are invariably patronised or very publicly subsidised by key members of the ruling families. In the UAE for example, there exists the Khalifa bin Zayed Al-Nahyan Foundation in Abu Dhabi which donates to a wide range of causes, and the Emirates Foundation which is chaired by the crown prince and has recently focused on distributing grants for nationals with special needs. In Dubai and the other emirates there exist similar, albeit less well-endowed, bodies. Qatar also provides a good example of this strategy, with its largest domestic charitable body — Qatar Charity — providing a range of funds to help less well off Qatari families and to support Qatari orphans. Crucially, although it styles itself as a non-governmental organisation and is headed by a general manager,[240] rather than a member of the Al-Thani ruling family, Qatar Charity is nonetheless inextricably linked to the establishment. It receives financial and logistical support from government bodies including the Ministries for Civil Service Affairs and for Housing, Foreign Affairs, Finance, Economy and Trade, Islamic Affairs, and Education. It is also assisted by the Supreme Council for Family Affairs and the Planning Council — both of which are key social policy vehicles for the Qatari government. As such, it has been argued that Qatar Charity’s various efforts are fully in line with state policies and objectives.[241] Ironically, it is now difficult for citizens of Gulf monarchies to give money directly to the poor and thereby bypass such state-sanctioned charities. And in some cases such private charitable acts are frowned upon by the establishment. In recent years in the UAE, for example, in advance of Ramadan — the holy month during which all practising Muslims have a duty to be charitable — the Ministry for Interior has been issuing statements that beggars should not be tolerated, and that those caught would be arrested, deported, and blacklisted from returning to the UAE, meeting the cost of the deportation themselves. In 2007 it was reported that over seventy such beggars, mostly of Arab origin, were arrested and deported in this manner, with any nationals caught having been directed to official charities and threatened with punishment if they repeated their behaviour in the future.[242]
An important corollary of the Gulf monarchies’ allocative states is the visible lack of taxation, or at least any obvious extractive practices. It is often assumed that the region has no real history of tax, and that hydrocarbon exports and the resulting rentier structures have allowed states to avoid such unpopular measures. This is partly true, as there has never been a system of direct taxation in any of the Gulf monarchies. However, prior to the oil era there were a substantial number of indirect taxes, licence fees, and other charges levied by the old, traditional governments. Taxes were levied on the size and quality of pearls that merchants attempted to sell and sales of camels, dates, and fish were taxed too. Payments also had to be made to sheikhs for all fishing or trading vessels that were moored in their ports. In some cases these indirect taxes — or more modern variations — have been reintroduced, especially in those Gulf monarchies that have faced declining hydrocarbon resources. In Dubai there are now significant charges levied for parking cars, crossing bridges, purchasing alcohol, and waste removal. Government fees have also been added to utility bills. In the near future value added taxes may start to appear in the Gulf monarchies, but it is far from certain. In 2008 all six of the Gulf monarchies began planning to introduce a modest VAT, but despite IMF recommendations to press ahead,[243] in late 2011 the plans were delayed until at least 2013 given the tense political situation in the region.[244] Nevertheless, there remain no plans to introduce income tax in any of these states, as this continues to be regarded as deeply unpopular among citizens and thus politically unpalatable for the ruling families and their governments. A recent study on Saudi Arabia puts this well, describing the ‘large-scale fiscal obligations’ owed by the state to its ‘various clients in society’, and demonstrating that ‘over time this paternal largesse has proved difficult to reverse’.[245]
237
16. Nelson, Caren, ‘UAE National women at work in the private sector: conditions and constraints’, Tanmia Labour Market Study, No. 20, 2004, p. 30.
238
17. See Davidson, Christopher M., ‘Dubai Foreclosure of a Dream’,