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The Rentier State in the Arab World Author(s): Hazem Beblawi Source: Arab Studies Quarterly, Vol. 9, No. 4 (Fall 1987), pp. 383-398 Published by: Pluto Journals Stable URL: http://www.jstor.org/stable/41857943 Accessed: 19-01-2016 17:52 UTC

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The Rentier State in the Arab World

Hazem Beblawi

Introduction

The concept of a rentier state has gained renewed interest with the advent of the oil era and the emergence of the new Arab oil-producing states.

In a celebrated passage, Adam Smith distinguished between rent and other sources of income: wages and profit. "Rent," says Smith, "enters into the com- position of the price of commodities in a different way from wages and profit. High or low wages and profit are the causes of high or low price; high or low rent is the effect of it" (Smith, 1960: 412). A rent, it is to be remembered, is not merely an income for landlords, but generally a reward for ownership of all natural resources. "Mines, as well as land," affirms Ricardo, "generally pay rent to their owners and this rent, as well as the rent of the land, is the effect and never the cause of the high value of their produce" (Ricardo, 1962: 590). The same applies to all natural and differential endowments: location, climate, etc. In its general usage, the term "rent" is reserved for "the income derived from the gift of nature" (Marshall, 1920). Rent in this broad sense exists in all economies, albeit in different degrees.

It is not the purpose of the chapter to discuss the economic concept of rent and its various forms: rent/quasi-rent, scarcity/differential rent, etc. In modern economic analysis an efficient management of resources would call upon rent as much as on other factor prices. No value judgment is implied; rent is an economic price or factor income like any other price.

It remains true, however, that social scientists - including economists -

suspect a difference between "earned" income and effortless "accrued" rent. Religious ethics, and then the capitalist instinct for work salvation, helped create a long tradition of hostility against non-earned income.1 This was reflected in a deep-rooted mistrust of the economic profession against rent and rentiers.

Hazem Beblawi is Chairman of the Export Development Bank of Egypt. Reprinted by permission from H. Beblawi and G. Luciani, The Rentier State, vol. 2 of Nation , State and Integration in the Arab World (London: Croom Helm and New York: Methuen, 1987), published in association with the Istituto Affari Internazionali. © 1987 Istituto Affari Internazionali. Funding for the series was received from the Ford Foundation and the IDRC of Canada.

ASQ Volume 9 Number 4 383

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384 Arab Studies Quarterly

Classical economists - Malthus apart - and later Marx have few kind words to say about rent and rentiers. Rentiers as a social group were thus assaulted by both liberal and radical economists as unproductive, almost anti-social, shar- ing efforlessly in the produce without, so to speak, contributing to it.

A rentier is thus more of a social function than an economic category, and is perceived as a member of a special group who, though he does not participate actively in the economic production, receives nevertheless a share in the pro- duce and at times a handsome share. The distinguishing feature of the rentier thus resides in the lack or absence of a productive outlook in his behavior.

It is important to emphasize here that it is the social function of the rentier rather than his legal status of private ownership, that is usually evoked with undertones of discontent. The contrast between the rentier and Schumpeter's entrepreneur is striking as well as instructive. Dynamic, innovative, risk- bearing, Schumpeter's entrepreneur is the antithesis of the rentier.

Such stereotype rentier is, of course, a caricature. In fact "pure rent in the strict sense of the term is scarcely ever met with; nearly all income . . . con- tains more or less important elements, which are derived from effort invested" (Marshall, 1920: 350).

The emergence of the new oil states in the 1970s and their promotion to the forefront of world trade and finance resuscitated the concept of rentier economies. A windfall wealth of unprecedented magnitude in such short time revived the idea of unearned income, hence the epithet of rentier economies. The impact of the oil phenomenon on the role of the state and on economic behavior in general has been so profound in the Arab world during the sev- enties as to justify special treatment. The concept of a rentier state is chosen for lack of better concepts to characterize the prominence of the oil economies in the Arab region.

A rentier state: elements for definition

The purpose of an attempt to define a rentier state is not to reach an abstract notion of such a state but to help elucidate the impact of recent economic developments, in particular the oil phenomenon, on the nature of the state in the Arab region.

Certain characteristics should be kept in mind in view of the definition of a rentier state in our context. First, there is no such thing as a pure rentier economy. Each and every economy has some elements of rent. A rentier economy should be defined as one where rent situations predominate. This, of course, is a matter for judgment.

Second, and this is very important, a rentier economy is an economy which relies on substantial external rent (Mahdavi, 1970: 428). The externality of the rent origin is crucial to the concept of a rentier economy. The existence of an

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The Rentier State in the Arab World 385

internal rent, even substantial, is not sufficient to characterize a rentier economy , though it could indicate the existence of a strong rentier class or group. A pure internal rent cannot be sustained without the existence of a vigorous domestic productive sector. In such a case, a rentier class is only one face of the coin; the other face would be a productive class. Internal rent is no more than a situation of domestic payment transfer in a productive economy. An external rent, on the other hand, can, if substantial, sustain the economy without a strong productive domestic sector, hence the epithet of a rentier economy.

Third, in a rentier state- as a special case of a rentier economy - only few are engaged in the generation of this rent (wealth), the majority being only involved in the distribution or utilization of it. The distinction between generating wealth and its utilization is not always clear. It can, however, be accepted that the creation of wealth is the cause of all other activities and the utilization is only the effect. It is true that interactions always exist between various activities, blurring the cause-effect relation. In the case of the oil- producing countries, the role of oil revenues is so overwhelmingly obvious that it can be approximated to be the cause of other activities.

A rentier economy is thus an economy where the creation of wealth is centered around a small fraction of the society; the rest of the society is only engaged in the distribution and utilization of this wealth. The respective roles of the few and the many can hardly be overstated for the concept of a rentier economy. Accordingly, an open economy with high foreign trade is not a rentier state, simply because it relies on the outside world, even if it generates its income from natural endowment (e.g. tourism) in as far as the majority of the society is engaged in the process of wealth generation.

Fourth, a corollary of the role of the few, in a rentier state the government is the principal recipient of the external rent in the economy. This is a fact of paramount importance, cutting across the whole of the social fabric of the economy affecting the role of the state in the society. The role of the govern- ment as the principal recipient of the external rent is closely related to the fact that only few control the external rent. In fact, the "economic power" thus bestowed upon the few would allow them to seize "political power" as well, or else induce the political elite to take over the external rent from them without major political disruption. A predominantly rentier state will accordingly play a central role in distributing this wealth to the population. This brings us close to a distinction proposed by Giacomo Luciani, that is, between productive and allocative states (see Beblawi and Luciani, 1987: ch. 3).

Having characterized the main features of a rentier state, it is important to emphasize that the choice of such a concept is based on the assumption that such an economy creates a specific mentality: a rentier mentality. The basic assumption about the rentier mentality and that which distinguishes it from conventional economic behavior is that it embodies a break in the work-reward causation. Reward - income or wealth - is not related to work and risk bear-

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38Ó Arab Studies Quarterly

ing, rather to chance or situation. For a rentier, reward becomes a windfall gain, an isolated fact, situational or accidental as against the conventional outlook where reward is integrated in a process as the end result of a long, systematic and organized production circuit. The contradiction between production and rentier ethics is, thus, glaring.

It is also assumed that the pre-eminence of the oil countries has not only brought to the fore a contradiction between production and rentier ethics, but more seriously, has meant the prevalence of the rentier economy. A decade of the oil era shows that the whole of the Arab world, oil rich as well as oil poor, is becoming a sort of oil economy with various undertones of rentier mentalities. This development has effected the role of the state in the whole Arab world.

The oil states: .multilayers of rentiers

The Arab oil states represent, it has been said, the example par excellence of rentier states. With oil exports' revenues, the Arab oil states depend on ex- ternal rent. Oil revenues represent more than 90 per cent of budget revenues, 95 per cent or more of exports. Also, only a small fraction of the population is involved in the generation of oil revenues, the rest being engaged in the use of the oil wealth. No more than 2 to 3 per cent of the labor force is engaged in the production and distribution of the oil wealth, which adds 60 to 80 per cent to the GDP, as conventionally measured. Nevertheless, this fact does not preclude genuine productive activities outside the oil sector. Finally, oil revenues (rent) accrue directly to the state or the govenment. The Arab oil states thus correspond to our definition of rentier states. The role and the nature of the state have been greatly affected by this fact.

The state or the government, being the principal rentier in the economy, plays the crucial role of the prime mover of the economic activity. Rent that is held in the hands of the government has to be redistributed among the popula- tion. Special social and economic interests are organized in such a manner as to capture a good slice of government rent. Citizenship becomes a source of economic benefit. Different layers of beneficiaries of government rent are thus created, giving rise, in their turn, to new layers of beneficiaries. The whole economy is arranged as a hierarchy of layers of rentiers with the state or the govenment at the top of the pyramid, acting as the ultimate support of all other rentiers in the economy. It is important to add here that the rentier nature of the new state is magnified by the tribal origins of these states. A long tribal tradition of buying loyalty and allegiance is now confirmed by an état providence , distributing favors and benefits to its population.

The conventional role of the state as provider of public goods through coercion - mainly taxation - is now blurred in the Arab oil states by its role

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The Rentier State in the Arab World 387

as a provider of private favors through the ruler's benevolence. Public goods and private favors have thus gone together in defining the role of the state.

With virtually no taxes, citizens are far less demanding in terms of political participation. The history of democracy owes its beginnings, it is well known, to some fiscal association (no taxation without representation). The govern- ment's budget in the oil states remains a one-sided document, an expenditure program, a promise to spend money and distribute benefits to the population with virtually no levy on them in terms of taxes or similar impositions.

Kuwait was probably the one to introduce into the Gulf area the concept of distributing part of the oil wealth to the population which eventually evolved into that of the welfare state. The shrewd Sheikh Abdullah al-Salim of Kuwait made the fundamental decision that he (the state) should share part of the oil rent with the population. The role of the government was thus defined as be- ing primarily a partial distributor of oil wealth among the population. In his quest to create vested interests among notable Kuwaiti families round the new states in the early 1950s, Sheikh Abdullah al-Salim introduced the system of government land purchase, at prices hardly related to market value. No more than a decade or two later, the same system was adopted by other Gulf states: Qatar and UAE. In Saudi Arabia, the practice of land gifts was already in force since the 1920s and 1930s. With the annexation of Hijaz in the pre-oil era, the pilgrimage royalties (another source of rent) gave Ibn Saud the means to distribute favors (land). The government continued to grant land to relatives, ministers and anyone else it wished to favor. The recipients sometimes sold their land to private developers, but the biggest and most generous buyer was always the government itself (Field, 1984: 99). The early relationship between oil revenues and land speculation - the proper domain for rent and rentier- can be seen here. Later developments, as we shall see, made land as well as shares a prosperous source of rentier speculation.

Of course, governments in the oil states outgrew their role as distributors of favors and benefits and embarked on the modern function of providing public goods and services to their population. Governments are providing their popula- tions with a wide range of genuine public goods and services: defense, national security, education, health, social security, employment, an impressive net- work of infrastructure, etc. The level and quality of these public goods and services are usually adequate, sometimes excellent. They are also provided free or at very low cost to the beneficiary. However, the original sin remains, sometimes open but mostly latent, thus vitiating the provision of these public goods. It is reported that "if a prince heads a ministry or some other govern- ment department, it is accepted that he is entitled to draw on the budget of that department or take a share of its spending in major projects" (Field, 1984: 101-2). Toa certain degree, all government contracts are seen as royal favors. Their origin as part of the ruler's benevolence does not fail, thus, to exhibit their peculiarities.

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388 Arab Studies Quarterly

The distinction between public service and private interest is very often blurred. There seems to be no clear conflict of interests between holding public office and running private business at the same time, and it is not infrequent to use the one to foster the other. Sometimes high-ranking public officers (ministers) take the trouble to form their private businesses under the names of their sons, brothers or similar prête-noms. In fact, huge development projects, joint ventures, agents, tenders and awards of hundred million - sometimes billion - dollar contracts have provided opportunities for those in public office to use their positions for private gain (Beblawi, 1982: 216). The practice varies from one oil state to another; it is most conspicuous in Saudi Arabia and least apparent in Kuwait. In Saudi Arabia, contracts are given as expression of royal gratitude. Contract brokers, commission fees for the ruling elite, lobbying the royal family, etc., are not unusual practices in the Gulf areas. Some names earned notorious reputations in this respect; Adnan Khashoggi, Mahdi Tajir, Princes Muhammad Bin Abdel- Aziz, Muhammad Fahd, Sultan Bin Abdel- Aziz are only the most visible (Field, 1984).

The government not only distributes benefits and favors to its population, but it is also the major and ultimate employer in the economy. Every citizen - if not self-employed in business and/or not working for a private venture - has a legitimate aspiration to be a government employee; in most cases this aspira- tion is fulfilled. Though utterly free enterprise oriented, the number of govern- ment employees in the oil states is only matched by socialist-oriented states. Civil servant productivity is, understandably, not very high and they usually see their principal duty as being available in their offices during working hours ( al'dawam ).

If governments are the principal rentiers in the Arab oil states, they are by no means the only ones. Trade and business professions in many cases consist in no more than taking advantage of special situations entrusted to them by law or fact. Merchants are favored by existing laws. It is the law in oil states that foreign companies may sell their products only through local agents. Most states insist that foreign companies should also take local merchant partners if they want to operate on their soil. In any case, foreign companies find it difficult to desìi with local bureaucracy without local partners or sponsors (Field, 1984). The big trading houses, the family conglomerates that are involved in all business matters owe their wealth, in one way or another, to some rent situa- tion. Being a sales agent is the classical road to business and hence to wealth. Big family names in the oil states are intimately related with one or more brand names; e.g., in the car distribution business we have Alghanim with GM in Kuwait; Juffali with Mercedes in the truck business in Saudi Arabia, and Bisher and Al-Kazmy with same company in Kuwait; Futtaim with Toyota in Dubai and Al-Sayer with it in Kuwait; Galadari with Mazda in Dubai . . . The list is long indeed ("Arabian Trading," Financial Times , 23 January 1985).

Not only should distribution agents be exclusively nationals but also the prac-

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The Rentier State in the Arab World 389

tice of most professions and trades be restricted to nationals. This legal restric- tion has been established to counter the well-known shortage of professional and skilled labor. The result is the appearance of a peculiar function, that of the sponsor, al-kafil. This is someone, a national of course, who offers his name to expatriates to exercise various trades and professions under his name, in return for a share of proceeds (rent). The kafil mentality, where citizenship is becoming a sort of financial asset and hence a source of income, transcends national/expatriate relations to become, even among nationals, a normal feature of everyday life. For example, in Kuwait, during the euphoria of the stock market, it was the habit of the government to allocate a certain number of shares for each Kuwaiti citizen in new public shareholding companies. A very active trade in "citizenship" ( ganad ) took place, where those not interested in buying their shares would sell their rights - as attested by the citizenship certificates - to others. Citizenship is not only an affective relation between man and his homeland, it is also, or primarily, a pecuniary relation.

Oil rent thus gave rise, in turn, to a secondary wave of rent generations: second order rents. Two areas seem to distinguish themselves as rent centers: real estate and stock market speculation.

Land, it was said, has played a major role in the process of trickling down oil money from governments to private individuals. The readiness of gov- ernments to purchase land at higher prices sustained ever-growing prices for real estate. A very profitable business was created round land speculation with some very active brokers. Government was always prepared to act as the ul- timate buyer.

The ingenuity of some land brokers soon introduced a very powerful instru- ment to keep real estate prices high even in face of credit squeezes, liquidity shortages and/or government's momentary reluctance to inject money into land purchase. This was the so-called forward market or post-dated check system. Kuwaiti brokers masterminded these new techniques and extended them imaginatively - and dangerously - to stock market transactions. Growing prices for real estate and stocks cannot be sustained indefinitely unless they are matched by a growing injection of liquidity to back up demand for these assets. Sooner or later there comes a time when liquidity is not forthcoming and the market comes to a halt if not a collapse. This is where the role of the forward transaction which provides the market with a new instrument for credit crea- tion at the disposal of the speculators, bypassing the banking system, comes in. Each speculator becomes something of his own bank, capable of adding to liquidity by issuing his own IOUs which are more or less accepted in the market (real estates, stock market). In final analysis, liquidity is created through bank intermediation in the exchange of obligations. With forward transactions and the issuing of post-dated checks, speculators assume the role of informal banks and pay for their deals by increasing their own liabilities.

A forward deal is a spot deal with credit, where the buyer gets the commodity

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390 Arab Studies Quarterly

(shares, land, etc.) at the time of the transaction and pays forward with a post- dated check with a premium (an interest rate or rather a usury rate) which can vary between 50-200 per cent per annum. At maturity, he can either roll over the check with another more attractive premium (an offer which the other party usually cannot refuse), or if his creditor refuses the offer, he can just bor- row from the market by buying another commodity (shares) on a forward basis (another post-dated check to a third party) and selling it on the spot market to get the cash to pay his first creditor. The game can continue indefinitely in as far as dealers are prepared to accept each other's post-dated checks. In fact, there was a general tacit agreement to continue the game, with everyone issuing and receiving post-dated checks at the same time. Checks were rolled over and every second new checks were added to the market thus giving the illusion of ever-growing fortunes. These were the rules of the mirage wealth creation or the big casino later know as Souk al-Manakh. A money machine - the dream of all speculators - was invented and nothing could stop the attractive- ness of Souk al-Manakh. Young graduates left their jobs for the new gold mine, early retirements took place, "creative" companies invested heavily in the stock market, thus scoring huge profits and offsetting their losses in their normal lines of business. Even off-shore bankers and more sober institutions and pro- fessionals were tempted by the new phenomenon. New companies were created every day, giving rise to new share-offerings on the market and accordingly fresh opportunities for new wealth. Social life was also transformed: politics was no more a subject for discussion, and even gossiping, a favorite pastime, was fading away. The new and almost only talk of the town was centered on share prices and the new shares coming on to the market.

The end of this fancy world is well known to all. The Souk al-Manakh dream turned into a nightmare. In July 1982 some dealers, sensing the imminent dif- ficulties of the market, began to cash their checks ahead of time. A minor crisis was thus turned into a full-scale crash. The age-old adage that what goes up -

artificially - must come down, was finally vindicated in Kuwait (Beblawi and Fahmi, 1984: 173).

The government role in the development of this speculative activity can hardly be overestimated. Not only did governments indirectly help speculations, but in many instances were directly involved in supporting speculative markets. When the Kuwaiti stock market faced its first setback in 1976/7, the Kuwaiti government was prompted to bail it out. Even in 1982, when the Kuwaiti government refused to repeat the role it played in 1976/7, it compensated the so-called small investor- defined as one owed no more than KD 2 million ($6.75 million): no small reward for speculators. In both cases, a number of key mem- bers of government and parliament were deeply involved in the stock speculations.

The juxtaposition within Arab oil states of a rentier economy and a pro- ductive economy is paralleled by the coexistence of two social communities:

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The Rentier State in the Arab World 391

nationals and expatriates. Expatriates are called upon to help fill the gap in available manpower in oil states. More often than not, these expatriates assume productive activities to satisfy the growing needs of the society. They earn their living by the work they do. The relationship work-reward is actually main- tained in their case. Rent economy, on the other hand, is normally confined to nationals; the privileges it conveys hardly extend to expatriates.

The contrast between the two communities is striking as well as revealing. Nationals live more in a rentier economy and associate with its financial man- na all the political rights of citizenship. On the other hand, although earning their living in a more productive manner, the impact of the rentier economy on expatriates is far from negligible, giving rise to serious corruption of the productive system and work ethics. Even if they form the core of the produc- tive manpower, expatriates nevertheless remain alien to the body politic. Though they serve the country, live - and also die - on its soil, they are not part of it. Expatriates are thus part of the labor force but not of the society. The material life of expatriates is usually comfortable and by no means com- parable to the living conditions in their homeland. Their emotional life is, none the less, unstable, terribly wanting in security and lacking a sense of belonging.

The political cleavage between the two communities widens as the economic rent to citizens increases. Restrictions on expatriates' professional mobility as well as their political integration increases with the increase in the oil wealth. The contrast between the less abundant years of the 1960s and the more af- fluent 1970s is very significant. Regardless of the vocal rhetoric of Arab national- ism, in the 1970s the political elite in the oil states, no matter whether right- or left-wing, advocated a narrow local nationalism and restrictive benefits to expatriates.

The non-oil states: semi-rentiers without oil

The Arab non-oil states are by no means rentier states in the sense previously outlined. The predominance of the oil phenomenon on the whole region is, however, such that many non-oil Arab states are showing increasing signs not dissimilar to those witnessed in oil states.

Let us first draw attention to the fact that because of oil wealth, the whole Arab area- oil rich as well as oil poor- has assumed strategic value in the world chessboard. The area as a whole, particularly neighboring countries, have gained location rent.

Military and political aid to preserve and/or introduce superpowers' - as well as mini-powers' - influence in the area, is a major source of external rents to many states. Otherwise remote and poor states (e.g., Somalia) would hardly receive alternately Russian and American aid. In the 1960s Egypt received the highest Soviet aid to a foreign country, to become, together with Israel,

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392 Arab Studies Quarterly

the highest American aid recipient in the 1970s and 1980s. Syria, Jordan and South Yemen are other examples.

Rhetoric aside, inter- Arab aid was related, to some extent, to its effect on the stability and tranquility of oil rent in oil states. Very often Arab aid to fellow Arab states was used in much the same way as domestic redistribution of oil revenues: to buy allegiance or rather avoid trouble. Pan-Arabisrn and Arab money were, to a great extent, and in different hands, the stick and the carrot, used to bring about a very subtle equilibrium in sharing oil rent. By conferring and/or withholding super-legitimacy over individual states, the ad- vocates of pan-Arabism used their political clout as a source of financial aid. By distributing and/or promising aid, the carrot in the hands of the oil states helped them buy peace and stability. Arab finance was thus more a counter- part than a complement to pan-Arabism. It is no wonder, then, that Arab fi- nancial flow to Arab brothers coincided with the retreat of the pan-Arab system after the 1967 war, which "marked the Waterloo of pan-Arabism" (Ajami, 1978/9). In the wake of the October 1973 war, it was Sadat and Assad - "revi- sionists" or "correctionists" of the pan-Arab doctrine - who obtained Arab finance. With the decline of Egypt's role in mobilizing Arab public opinion, particularly after Camp David, the Baghdad Summit relieved the Arab oil states of their financial commitments to Egypt, shifting them to more assertive Iraq, Syria and the PLO. The subsequent Iraq-Iran war proved to be quite a drain on their treasury. The Baath party, which is in power in both Iraq and Syria, though two competing factions, is notorious for its unscrupulous and ruthless practices vis-à-vis its opponents. Some oil states - Kuwait and UAE for example - had the privilege of actually experiencing firsthand such practices when a number of attacks and/or bombings took place on their territory. They had, of course, the tact and discretion to turn a blind eye to these "accidents." But the message is clear.

External location rent is also evident in so-called transit countries (Mahdavi, 1970). Suez Canal revenue and oil pipeline royalties are major revenue sources to some countries, e.g., Egypt and Syria.

Workers' remittances are becoming one of the major foreign exchange sources in some non-oil states. Yemen is a well-known example where remittances rep- resent more than 85 per cent of GDP. Workers' remittances are becoming the biggest single source of foreign exchange in Egypt as well. In Syria, Lebanon, Tunisia, Algeria and Morocco, workers' remittances play a very important role in their balance of payment adjustments. It is not easy to equate workers' re- mittances to external rent. From the worker's point of view, he is earning his income at the cost of effort and work. From the recipient country's point of view, remittances are, nevertheless, more akin to aid or non-requited money transfers.

All told, various elements of external rent play an increasing role in non-oil

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The Rentier State in the Arab World 393

Arab states. In Egypt, for example, it is estimated that about 45 per cent of its GDP is represented by exogenous - read rent - elements in the form of oil revenues, workers' remittances, foreign aid, Suez Canal revenue and tourist expenditure. It is also to be noticed that most of these revenues accrue directly to the state or the governemnt. The epithet of semi-rentier state is, thus, not far-fetched.

The semi-rentier nature of non-oil states is not without its effects on the role of the state and on citizens' behavior. Government favors are now embodied in a welfare doctrine. Subsidies of all kinds pervert the economic system. A huge bureaucracy, sort of a new rentier class, is getting a substantial slice of the government's accrued rent. Though individually very low-paid, civil ser- vants as a social group are a very expensive element in view of their contribu- tion to the country's productivity (it is often thought that they contribute negatively to the growth of the economy).

It is also interesting to see how each source of external rent has bred its own chain of second-order rentiers. In Egypt, for example, a prosperous trade has been developed around workers' movement to the Gulf. Also, money dealers have grown immensely to process workers' remittances. American aid helped create a flourishing consultancy - legal, technical, economic, etc. - business to prepare proposals for aid consideration. A new social class - lawyers, con- sultants, financial analysts, lobbyists, brokers, etc. - is on the rise everywhere.

Finally, when not direct recipient of the rent, the state, because of its ex- ternal origin, quite often tactfully courts the rent earners. Suffice it to observe tax exemptions and other incentives given to workers' remittances, foreign banks, tourism, etc. Governments do their utmost to sweeten their normal co- ercive practices. They are willing to appeal and not to impose. Economic liberalization, infitah or whatever, is everywhere.

Conclusion : an oil Arab economy

It seems from the foregoing that the oil phenomenon has cut across the whole of the Arab world, oil rich and oil poor. Arab oil states have played a major role in propagating a new pattern of behavior, i.e., the rentier pattern. Oil as the primary source of rent in the Arab region has generated various sec- ondary rent sources to other non-oil Arab states. To the first-order rentier oil states is thus added a second-order non-oil rentier strata. The impact of oil has been so pre-eminent that it is not unrealistic to refer to the present era of Arab history as the oil era, where the oil disease has contaminated all of the Arab world. Be it oil revenue, or workers' remittances, or strategic location, or al-kafil , or Souk al-Manakh, they are all consequences of the oil phenomenon, and have been accompanied by a serious blow to the ethics of work. Income

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394 Arab Studies Quarterly

is no longer a reward of serious and hard work, it is very often related to special circumstances, change, location, etc. In a word, we are living in a rentier universe which has affected both the state and the citizen.

NOTE

1 . "The religious valuation of restless, continuous, systematic work in a wordly call- ing, as the highest means to asceticism, and at the same time, the surest and most evi- dent proof of rebirth and genuine faith, must have been the most powerful conceivable level for the expansion of that attitude toward life which we have here called the spirit of capitalism." Weber (1958: 127).

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Abdel-Fadil, M. (1979) "The pure oil-rentier states: problems and prospects of develop- ment," in Oil and Arab cooperation , Vol. 5, No. 3 (in Arabic).

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