Rentiersim: Cause of the Inevitable

Rentiersim: Cause of the Inevitable

The inevitability of an authoritarian regime existing in the Middle East is a subject of many nuances, often as a result of the political institutions and structures that previous governments have placed in the region. One of these institutions is the establishment of a rentier state. These states have become dependent mainly on the external revenue they earn through the “renting-out” of certain resources—oil being the main subject in the Middle East. This form of revenue has impactful effects on the modes of governance in a given region—aiding in the development of the unique power structures of nations like Iran, Syria, the United Arab Emirates, and others. This system of revenue has led to the lack of an established social contract, widening the space for tyrannical rulers to act in their self-interest, thus promoting the authoritarian trend in the region.

Rentier states are characterized by their devotion to economic manageability, often blind to the citizens’ call for reform on socio-political issues. The state’s economy is heavily reliant on external sources of income, thus losing its attachment to domestic enterprises within the state. Minimizing the effect it has on domestic enterprises, the government erases the need for taxation—a compulsory charge for the services the government provides. Literature tends to describe the call for “no taxation without representation” but with the absence of this claim, on what issues is the government expected to execute reform? The focal point of the government is on external sources of income, creating a separation from reliance on private business within the state. Instead, domestic enterprises become heavily reliant on the revenue that the government is earning. This eliminates any need for the government to respond to the grievances of the population—they aren’t collecting any form of taxation so there is no incentive to become involved in social reform. In the article, The Rentier State, Interest Groups, and the Paradox of Autonomy, Hootan Shambayati states, “In rentier states, financial autonomy acts as a double-edged sword, strengthening the state’s control while limiting its responsiveness to societal demands” (Shambayati, 1994). Shambayati draws light to this idea—the nature of a rentier state gains power over its citizens, they become reliant on the revenue the government receives from their external sources of income. Along with this, as I mentioned earlier, the state loses its awareness of social issues. They do not have a system where a social contract is prevalent, so they do not need to get involved with the population's needs.

Rentierism heavily influences the level of authoritarianism that is exercised in a given nation. As stated previously, the institution of rentierism decreases the likeliness of government intervention when social issues are involved. While evaluating a set of data on the World Value Survey website, I found positive evidence of a correlation between levels of rentierism and the perceived importance of freedom. Placing Iraq and Turkey in this case study, I asked the following question, “Most people consider both freedom and security to be important, but if you had to choose between them, which one would you consider more important?”, and the results were fascinating. The percentage of individuals from Iraq, a rentier state, who determined freedom to be of more importance than security was 9.6%. Comparatively, and with an alarming result, the percentage of individuals from Turkey who find freedom to be of more importance than security was at a greater 39.1%. Turkey, being a far more democratic state than Iraq, has the perception of freedom being a highly important aspect of their lives. Looking over the results of the Iraq survey, the civilians of a highly authoritarian, rentier state, decided that freedom was a disposable concept. Rentierism has influenced the political attitudes of its people—the economic repression the government has placed upon its people has eliminated the idea of economic freedom, or freedom in general. This survey blatantly reveals the correlation between a rentier state and the concept of freedom being a subject of less importance

To continue, I wanted to further the description of the rift between government and society that has been caused by the rentier state. In Turkey, domestic enterprise contributes to a large portion of the nation’s revenue, allowing them to call for increased government reform. This was created because of the lack of natural resources that Turkey could rely on. Unlike nations like Iraq, the abundance of natural resources that could produce significant amounts of revenue was non-existent in Turkey, at least when Turkey is compared to states like Iraq, Iran, Syria, and the United Arab Emirates. As a result of the acknowledgement of domestic enterprise, the voice of the civilians was of great importance to the government. Production is a necessity to keep revenue flowing, so the responsiveness of the government is increased. An example of this is stated in the article titled, Structural and Regulatory Reform in Turkey: Lessons Form Public Utilities, as Tamer Cetin expresses, “Recently, the government introduced a bill in parliament about the liberalization of railways. The law aims to commercialize the state-owned assets and liberalize the market…” (Cetin, 2014). To increase, promote, and facilitate a competitive market within the Turkish economy, the government began to introduce policies that enabled the population’s ability to create a more active economic status—an attempt at converting into a capitalistic society. Efforts of this nature were becoming a common occurrence in Turkey. As for Iraq, such reformative action has not taken place. Instead, the lack of reform in Iraq will possibly lead to the collapse of its rentier economy.

Rentierism encompasses several aspects related to authoritarian behavior, one important aspect being its hindrance to economic progression. Rentierism within nations like Iraq tend to be unresponsive to any call for reform. Revenue gained from external sources has proven to be consistent over time, offering a direct flow of income without having to worry about the needs of other players—their civilians. Even as the economy begins to trend downward, these governments tend to stand firm in their economic structure—the implementation of rentierism is difficult to reform once it has been integrated into society. Examining Iraq’s worrisome indications of economic despair, an article from the World Bank states, “...its dominant undercapitalized state-owned banks and weak private commercial banking sector remain major barriers to economic diversification.” (The World Bank, 2023). Long-standing institutions within the economic structure of Iraq have made it difficult to call for reform. Rentier states exhibit another quality that is favorable to authoritarian regimes; the lack of government responsibility for domestic enterprises causes a lack of a reformative voice. Because the government is not reliant on the production from domestic enterprises, the officials do not see any need to keep them satisfied with the economic institutions. Pervasive tendencies of the rentier state continue to alienate the people from the government. Another piece of literature form Hootan states, “The lack of economic pressure groups and minimal taxation in rentier states diminish the urgency for representative governance, contributing to the persistence of authoritarian regimes” (Shambayati, 1994). Representation has become obsolete in this form of political economoy. Economic pressure groups do not see a political opportuinity for them to advance upon. Persistent neglect of private business in a given nation hinders the ability of the population to stand up for themselves.

It can be argued that the existence of a rentier state cannot effectively explain the persistence of authoritarian regimes in the Middle East. These arguments focus on the fragility of the rentier state structure, specifically when you involve a lack of resources, or mass civil unrest. This counterargument says that as civil unrest increases, the rentier state must respond. Or even, when a central resource is depleted, the state must change its economic structure. These arguments pose interesting questions of the interactions rentierism has with external forces. But, they do not have any substantial implications of a lack of influence on the level of authoritarianism in a given region. Rentier states tend to do the exact opposite of what these arguments claim. Due to the difficulty of creating economic reform in states such as Iraq, the population tends to seek reform in socio-political issues. Paradoxically, the state exercises no interest in pushing for reform, a result from the absence of a social contract, which eliminates the possibility for either economic or social reform. To further this argument, I evaluated another set of data from the Word Value survey. When I asked the question “Do men make better political leaders than women?” the results were as follows: 47% of the citizens in Iraq agreed that men made better leaders, while only 13.4% of citizens in Turkey agreed with the same assumption. Reform in Iraq is significantly lacking as compared to its more democratic adversary. Citizens of the rentier state are impacted by the long-lasting conservative nature of the political climate. Reform is not a topic of urgency for them, unless they are at risk of an economic collapse, and even then, rentier states do not respond by establishing private enterprise. Iraq has participated in similar actions over recent years. Facing the risk of softening oil prices and the scarcity of natural resources, the cultural impact of rentierism has crippled their government—leaders have become comfortable with their steady flow of revenue. The negative trend in the oil economy has not hindered their modes of income.

Continuing, rentierism promotes an uneven development of elitist power through its dependency on resources like oil. External resource revenue calls for the increased amount of outside workers. This is described by Sameen Hameed in her article, Political Economy of Rentierism in the Middle East and Disruptions from the Digital Space, when it says, “The region has attracted a large expatriate workforce as the oil revenue financed massive industrialization and urbanization projects since the 1970s” (Hameed, 2020). Further development and prosperity of a rentier state places competition between private and public sectors. Public sectors tend to gain more power due to the increased support of the government. Private sectors can not compete with the wages that the public sectors are paying its workers, so the private sectors tend to rely on an unskilled foreign workforce. Development of an unskilled expatriate workforce places them below a national elite, who have more attachment to the governments economic structure. Private sectors are now dependent upon the state, diluting thier ability to gain assistance or reform. Masaab Maloosey offers additional literature on this subject in his article, Parasitical elitism in a sectarianized political system with a rentier economy: The power and practice of the Iraqi political elite after 2003, as he states, “Therefore, the elite has a vested interest in maintaining weak government institutions because they abuse these institutions for rent-seeking that favors their clienteles” (Maloosey, 2023). When studying the institution of a rentier state in Iraq, Maloosey describes it in a very clear manner. Sinister officials within a rentier state rely on the dependence of their private enterprises. By creating this power dynamic the government keeps these businesses in check, leaving room for their own economic escapades to succeed.

The nature of rentierism and the creation of a rentier state is a complex instittuiton that was derived from previous colonial politics. Institutions of this origin seem inevitable to cause chaos, and by taking the time to analyze the literature of this subject, you are given a better understanding of how these economic systems work. Rentierism places a series of discursive power structures in order to ensure the power and prosperity of the states economic institutions. During this process, domestic enterprises lose their voice and potential for prosperity, while aiding to the success of the societies elites. All of these aspects of rentierism have helped establish and sustain authoritarian rule in the Middle Eastern region.

Bibliography

The Rentier State, Interest Groups, and the Paradox of Autonomy, Hootan Shambayati 94’

Çetin, T. (2014). Structural and regulatory reform in Turkey: Lessons form public utilities. Utilities Policy, 31, 94–106. https://doi.org/10.1016/j.jup.2014.10.004

“Without Reforms, Iraq’s Oil Boom Could Turn to Bust.” World Bank, www.worldbank.org/en/news/press-release/2023/07/31/without-reforms-iraq-s-oil-boom-could-turn-to-bust.

Hameed, Sameena. “Political Economy of Rentierism in the Middle East and Disruptions from the Digital Space.” Contemporary Review of the Middle East, vol. 7, no. 1, 17 Feb. 2020, pp. 54–89, https://doi.org/10.1177/2347798919889782.

Al-Lloosy, Massaab. Parasitical Elitism in a Sectarianized Political System with a Rentier Economy: The Power and Practice of the Iraqi Political Elite after 2003. 1 Oct. 2023, www.researchgate.net/publication/374896826_Parasitical_elitism_in_a_sectarianized_political_system_with_a_rentier_economy_The_power_and_practice_of_the_Iraqi_political_elite_after_2003. Accessed 2 Dec. 2020.