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Economic and political transition in Bahrain: Strong Rentier States and Strong Rentier Societies

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  1. Introduction.
  2. Bahrain - economic success fueled largely by oil rents.
  3. Academic theories of rentier economies.
  4. What sets Bahrain apart from other such econimies.
  5. Joel Migdal's theory of state-in-society.
  6. Beblawi's analysis and what he calls a rentier mentality.
  7. Discussion on mutually reinforcing power and strength.
  8. Benefit for Bahrain from the oil price explosion.
    1. Food subsidies, free or cheap health care, and free education.
  9. The price Bahrainis paid for these benefits.
    1. Investment in economic diversification.
    2. Decline in services.
    3. Decline in quality of health care in the 1990s.
    4. The public education system - less quality than a generation ago.
  10. Traditional rentier state theory.
    1. Bahraini society's response to the economic reforms of Emir Isa.
    2. The case of political and economic transition in Bahrain.
  11. Conclusion.

Bahrain, often overlooked in both academic and media analyses of the Middle East, has a strategic importance hidden by its small size. As home of the American Fifth Fleet, Bahrain hosts a deterrent against Iran from blockading the Straits of Hormuz as it has recently threatened to do. As such Bahrain has a prime role in safeguarding the world's oil supply. Equally interesting from both academic and strategic standpoints, Bahrain's demographics in many ways resemble those of Iraq. Ruled over by the Sunni al-Khalifa family since 1783, Bahrain's Shiite majority has at times exhibited elements of civil unrest, most prominently in the riots Emir Isa bin Salman violently suppressed in the 1990s. These divisions have been exacerbated by ethnic distinctions between Persians, Arabs whose ancestors came from what is now Saudi Arabia, and other Arabs who have historic ties to Iran and are thus more Persian in cultural outlook. The current King (formerly Emir), Hamad bin Isa, has sought to avoid alienating these segments of the population, but unrest remains. Bahrain has undergone tremendous economic success in the past century, fueled largely by oil rents. While it has been a center of trade for more than a millennium, its domestic resources were limited to fish and pearls until oil was discovered in 1932. Bahrain was the first Gulf country in which oil was found, and the British?who indirectly ruled at the time?wasted no time in exploiting it. Following full independence in 1971, the al-Khalifa family used the oil money that was coming in to Bahrain to build a rentier state, with most of the population looking forward to a relatively comfortable life of state employment, free education, and free health care.

[...] The political and economic transition in Bahrain complicates the issue of the relative strength of a rentier state. This paper will explore some of the issues involved in this case study. Most academic theories of rentier economies state that they continue until the rents run dry, then either rapidly transition or simply collapse. On the one hand states such as Kuwait and Saudi Arabia show little sign of running out of oil soon. Thus, they maintain rentier economies funded by the state's oil money. [...]

[...] Nevertheless, this dialogue between state and society?following Migdal's theory of the state in society?shows that rentier states are not weak; they merely have certain obligations to their societies that can be changed to other obligations. The case study above proves the existence of the social contract of rentierism. In most respects, Bahrain's rentier system was typical of most others in the Middle East and elsewhere. At the instigation of the state, society followed the social set-up and demanded very little from the state except benefits. [...]

[...] While Ayubi is correct in assuming that a rentier state has a constant liability in rents, which in his words can leave a state ?panting for both case and legitimacy,?[11] his theory of weakness in Arab states underestimates the autonomy they often have. While the corporatism his work describes may suggest otherwise, his theory rests as the assumption that a strong state exists society?and this is wrong-headed. Joel Migdal's theory of state-in-society provides a better template under which to investigate rentier states. [...]

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