Monday, February 23, 2015
Bread and Circuses
As has been previously discussed in the posts of my colleagues, there are significant challenges for rentier states. I think what is interesting in the Middle East is that countries that are resource rich, particularly with oil, in some cases then use the money received for this resource to pacify the citizens of the state. This concept itself reminds me of the "bread and circuses" strategy used by the Roman Empire around 100 AD. The challenge with this is that it is unsustainable. Saudi Arabia is, of course, our best Middle Eastern example because of how clearly this strategy plays out with the people through their system of economics, education, health services, etc. What I do think is interesting is that for the people who are receiving these services, the state is seen as very legitimate. Now, the services are not given equally to all citizens so those not receiving them have very different feelings toward the state. While the state can maintain these services, at least a portion of the population will remain loyal and view them as legitimate. However, when the oil runs out and the economy has not developed in other ways, the services will go and I anticipate the people will quickly become disloyal to the state.
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Yeah I completely agree. Like I had posted, it's an unsustainable solution. End of the day oil won't last forever and if they (mainly Saudis) don't make sure to diversify their economy, the temporary pacification of the people will wear thin.
ReplyDeleteOne question that I often find myself wondering is why aren't these states looking to diversify the economy? It is no secret that oil is running out, in fact it is a constant topic of conversation. So, why are these countries not seeming to respond? Are they so entrenched in the status quo that they do not know how to switch gears? Does every generation think they will ride it out and leave it to the next to figure out? I read that Saudi is buying farmland in Africa to try and hone agriculture and a few other attempts here and there, but nothing seems substantial. It is interesting and would be intriguing to look into.
ReplyDeletePeighton - they are trying to diversify their economies, at a greater pace now than before. UAE has for a long time been trying to establish itself as a financial center and Saudi Arabia is also aware of the problem (see this fairly recent article, for instance:http://www.theglobeandmail.com/report-on-business/international-business/african-and-mideast-business/saudi-arabias-massive-economic-diversification-experiment/article22036313/). Sorry for the massive link, but it doesn't seem hyperlinks work in the comments section...
ReplyDeleteGiven the current low price of Saudi oil I would imagine that they are attempting to diversify now more than ever. Additionally, given a rational economic response to another aspect of the their crisis - decreased demand - they would also currently be losing their foreign currency reserves, which in turn limits their ability to buy goods and services internationally, hence economic diversification would become more difficult to achieve because buying domestically would be the safer option. Saudi Arabia does have the benefit of massive wealth and low oil prices may have shored up demand, so whether or not current oil prices affect the relationship between the rentier state and its beneficiaries in this case remains to be seen.
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