In 2006 the Saudi king visited China to sign several new agreements that were intended to ‘write a new chapter of friendly cooperation with China in the twenty-first century’. As a gesture of goodwill he also agreed to grant China a substantial loan in order to build infrastructure in the oil rich Xingjiang province.[455] This was his first international trip as the newly-installed king — before visiting any western states — and the Chinese president declared that the visit ‘would begin a new phase in partnership between the two countries in the new century’.[456] Following the Abu Dhabi ruler’s visit to China in 1990 the UAE has made many large donations to China, including grants to establish an Arabic and Islamic Studies Centre at Beijing Foreign Studies University and the financing of the expansion of a printing factory for the China Islam Association. Subsequent visits also led to China being granted permission to set up UAE branches of the Xinhua News Agency and the People’s Daily newspaper.[457] And soon the UAE’s Zayed University will establish a Confucius Institute as a result of an ‘imaginative new partnership’ that is being developed with China’s Xinjiang University.[458] Meanwhile, Kuwait has been one of the most generous suppliers of low interest loans to China, with the Kuwait Fund for Arab Economic Development having provided China with over $600 million in such loans since the 1990s.[459] There have also been several large gifts, including a disaster relief package in 1998 following serious flooding in China.[460] The poorer Gulf monarchies have been less active in providing gifts and development assistance to China. Nevertheless, in 2001 Oman’s ruler donated $200,000 to assist the Guangzhou Museum of Overseas History build a new Arab and Islamic exhibition room.[461]
4
MOUNTING INTERNAL PRESSURES
Despite the Gulf monarchies’ internal and external survival strategies, many of which have contributed to their relative stability over the past few decades, there are nonetheless several weaknesses and pathologies that have been undermining their polities. These have often been under-reported or ignored, given the various rulers’ ability to continue buying acquiescence from their people and cultivating legitimacy. Moreover, they have often been subtle problems, and have rarely led to violent protests or headline-grabbing incidents. But given that most of these weaknesses are deep-rooted, structural, and seemingly unsolvable, it can be argued that they cut to the very core of the Gulf monarchies’ political and economic structures, often exposing the vulnerability and unsustainable nature of the current practices. As the later parts of this book demonstrate, the Gulf monarchies are not immune to the Arab Spring, which is undoubtedly serving as a catalyst for reform and revolution in the region, but it is perhaps these domestic, Gulf-specific problems which are most central to understanding the monarchies’ looming challenges.
Affecting all six Gulf monarchies are their declining hydrocarbon reserves and rising patterns of domestic energy consumption, coupled with their rapidly increasing indigenous populations — most of which are now under the age of twenty-one. This is already placing great strain on these states’ ability to keep fulfilling their citizens’ economic expectations, while their welfare states and distributive systems are also feeling the strain, even in the wealthier Gulf monarchies, due to the costs of perpetually subsidising their populations. Connected to this has been the structural problem of ‘voluntary unemployment’: despite frequent labour nationalisation initiatives, most Gulf monarchies remain unable to motivate their citizens to gain meaningful employment and contribute to the national economy given their reliance on state welfare and expectation of automatically remaining members of a wealthy national elite, courtesy of their citizenship. Exacerbated by the lack of transparency in these monarchies, other pressures on their increasingly limited national resources include the ongoing financing of prestige projects, the squandering of government spending, and the accumulation of vast wealth by the ruling families and their closest allies.
Already apparent in the poorer Gulf monarchies has been the increase in poverty among citizens, with real unemployment increasing as states can offer no longer the same kind of economic opportunities as in the past. This is leading to stark wealth gaps emerging between the wealthiest and poorest families in some of the national populations, which in turn is undermining any sense of equality between them and thus jeopardising the tribal heritage and religious legitimacy resources that the rulers have previously enjoyed. Widespread, and in many ways state-sanctioned, discrimination against large sections of the Gulf monarchies’ national populations is also on the increase — again undermining the ruling families’ credentials — with hundreds of thousands of stateless persons now probably further away from being naturalised than ever before, and with substantial indigenous Shia populations — especially in Bahrain and Saudi Arabia — now firmly relegated to second class citizenship. Of equally great concern, and similarly weakening the ruling families’ ability to uphold their social contracts and maintain legitimacy, has been the reliance on increasingly repressive forms of censorship — in some cases long before 2011. Affecting citizens and expatriates alike, this has choked off most remaining channels of expression and discontent, and is thus making it much harder for the Gulf monarchies to keep disguising the authoritarian nature of their polities.
Resources, populations, and subsidies
Although some Gulf monarchies still command substantial hydrocarbon resources, even these will face pressure to maintain the same level of subsidies for their populations in the coming years, especially as reserves rapidly deplete and meaningful diversification of their economic bases remains limited. Meanwhile, those monarchies that are already suffering from severely depleted reserves are now failing to maintain certain subsidies. Given the obvious political ramifications of declining benefits and any cutbacks to their welfare states, the Gulf monarchies have been understandably sensitive and often secretive with regards to their remaining resources. According to US diplomatic cables despatched between 2007 and 2009 it was claimed, for example, that Saudi Arabia may have been overstating its crude oil reserves by as much as 300 billion barrels — or 40 per cent. Quoting a senior geologist, the cables disagreed with Saudi Aramco’s senior vice president for exploration, who claimed in 2007 that Aramco had 716 billion barrels of total reserves, of which 51 per cent were recoverable, and that in twenty years Aramco would have 900 billion barrels of reserves. Instead it was argued that Saudi Arabia will soon reach a plateau in total output that will last only fifteen years before beginning to decline.[462]
Importantly, cables from 2009 also noted that Saudi Arabia’s ability to export oil (and thus keep financing the welfare state and providing subsidies) will decline as its domestic energy demands rapidly increase. The cables stated that ‘…demand [for electricity] is expected to grow 10 per cent a year over the next decade as a result of population and economic growth… as a result [Saudi Arabia] will need to double its generation capacity to 68,000MW in 2018’, while also claiming that various major project delays and accidents in Saudi Arabia are ‘evidence that Saudi Aramco is having to run harder to stay in place — to replace the decline in existing production’.[463]
460
152. Ghafour (2002), pp. 87, 89. Chinese Ministry for Foreign Affairs. Overview file on Kuwait 2009.