Specific Features of State Governance in the Gulf Monarchies

Political System of the GCC: Introduction

The six countries of the Gulf Cooperation Council (GCC) — UAE, Saudi Arabia, Kuwait, Qatar, Bahrain, Oman — are characterized by a special type of political system: hereditary monarchies with patrimonial features.

Despite the differences among GCC countries, they are united by:

Hereditary power legitimized through religion (Islam) and tradition (tribe/clan system)
Oil wealth as the foundation of the political contract with citizens
Rapid economic modernization with political conservatism
Significant influence of foreign labor force (in UAE — 88% of the population are expatriates)

UAE: Specifics of the Federation

Seven emirates: Abu Dhabi (capital, largest in area and wealth), Dubai (business capital), Sharjah, Ajman, Ras Al Khaimah, Fujairah, Umm Al Quwain.

Role division:

Abu Dhabi: Political power, oil wealth (95%+ of UAE’s hydrocarbon reserves), sovereign funds (ADIA — according to several assessments, the largest sovereign fund in the world)
Dubai: Regional business and trade hub, aviation (Emirates, flydubai), tourism, real estate, financial services (DIFC)

Al Nahyan family (Abu Dhabi): President of the UAE — Mohammed bin Zayed Al Nahyan (MbZ). Heads of key agencies (ADIA, Mubadala, ADQ, Etihad) are often family members.

Al Maktoum family (Dubai): Vice President and Prime Minister of the UAE — Mohammed bin Rashid Al Maktoum (MbR). Also head of Dubai Holding, Emirates Group.

Governance system through personal leadership:

Vision and strategies are formulated personally by the rulers
Rapid decision-making without parliamentary discussions
High predictability of policy during the ruler’s life
Risk: transfer of power can change the policy direction

Saudi Arabia: The Kingdom and Reforms

System: Absolute monarchy. Crown Prince Mohammed bin Salman (MbS) — de facto ruler since 2017.

Interaction of Religion and Politics:

Ulama (religious scholars) traditionally restricted the power of kings
MbS has significantly weakened their influence, enabling reforms (cinema, women driving, mixed entertainment)
At the same time, he has strengthened political centralization and suppression of opposition

For business in Saudi Arabia:

Huge market (37 million people, GDP $1.1 trillion)
Vision 2030 creates vast investment opportunities
Necessity of Local Content Requirements (Iktva — % Saudi nationals in the company)
Risks: geopolitical (Yemen, Iran), legal (criminal liability for criticizing the government)

Specifics of the Political Contract in the GCC

Rentier State: The theory of Hazem Bessiso (1987) and Hassan Beblawi: a state whose income is based on natural rent (oil) does not need taxation of citizens → a different political contract.

“No taxes — no representation” (reverse version of the American Revolution): In the UAE until 2018, there were no corporate taxes at all. Citizens receive:

Generous subsidies (electricity, housing, education, healthcare)
Government jobs with high salaries
Security and stability

In exchange — political loyalty and acceptance of limited political rights.

Oil price crisis as a challenge: The drop in oil prices (2014–2016, 2020) posed the question for GCC: how to fund the social contract without previous income levels?

Answer — economic diversification (Vision 2030, UAE Vision 2031) and cautious introduction of taxes (VAT in 2018, UAE corporate tax in 2023).

Wasta and Informal Governance

Wasta (الواسطة) — a system of personal connections, influence, and referrals in the Arab world. Analogous to “blat” in post-Soviet countries.

How it works: Access to government services, business opportunities, legal issues is often facilitated through personal connections with influential people.

For foreign businesses:

Choosing a local partner with “wasta” is a strategic decision
“Local Agent” (mandatory for certain types of business in mainland UAE) traditionally performed the function of a source of wasta
After the reforms of 2020–2021 (abolition of mandatory local agent for most sectors), the role has changed, but informal relationships remain important