The Nature of the Arab Economies

Most of the Arab economies where the revolts are taking place are based on ‘rents’ from oil, gas, minerals and tourism, which provide most of the export earnings and state revenues (Financial Times, Feb. 22, 2011, p. 14). These economic sectors are, in effect, export enclaves employing a tiny fraction of the labor force and define a highly specialized economy (World Bank Annual Report 2009).

Rent-based income may generate great wealth, especially as energy prices soar, but the funds accrue to a class of “rentiers” who have no vocation or inclination for deepening and extending the process of economic development and innovation. The rentier economy provides few jobs in modern productive activity; the high end is controlled by extended family-clan members and foreign financial corporations via ex-pat experts; technical and low-end employment is taken up by contract foreign labor, at income levels and working conditions below what the skilled local labor force is willing to accept.

The rent-based economy results in a clan-based ruling class which ‘confounds’ public and private ownership: what’s ‘state’ is actually absolutist monarchs and their extended families at the top. These are “closed ruling classes”. Entry is confined to select members of the clan or family dynasties and a small number of “entrepreneurial” individuals who might accumulate wealth servicing the ruling clan-class.

What passes for a middle class are largely public sector employees (teachers, health professionals, functionaries, firemen, police officials, military officers) who depend on their salaries, which, in turn, depend on their subservience to absolutist power.

The concentration of economic, social and political power in a closed clan-class controlled system leads to an enormous concentration of wealth. Given the social distance between rulers and ruled, the wealth generated by high commodity prices produces a highly distorted image of per-capital “wealth”; adding billionaires and millionaires on top of a mass of low-income and underemployed youth provides a deceptively high average income (Washington Blog, 2/24/11).

To compensate for these great disparities in society and to protect the position of the parasitical rentier ruling class, the latter pursues alliances with, multi-billion dollar arms corporations, and military protection from the dominant (USA) imperial power. The rulers engage in “neo-colonization by invitation”, offering land for military bases and airfields, ports for naval operations, collusion in financing proxy mercenaries against anti-imperial adversaries and submission to Zionist hegemony in the region (despite occasional inconsequential criticisms).

[Excerpt of an article by James Petras, a retired Professor (Emeritus)]