The core question of this thesis is: In what way does the government use the oil economy as an instrument in securing political stability in the United Arab Emirates (UAE)?
The political stability enjoyed by the UAE is remarkable. The country has witnessed no major changes in their political institutions during the years of its existence. There has been some tension at the federal level, but not of such a kind that the organisation of political power has changed. In addition, the federation is not experiencing any organised political opposition or any immediate threat of invasion. This, even though the states of the Persian Gulf have experienced a high level of regional conflict and internal disturbances. The Gulf region has had to cope with the most tremendous changes, due to the sudden influx of oil. In 30 years, the UAE has gone from being seven inward-looking, poor sheikhdoms, to becoming a federation of modern oil-rich emirates. The purpose of this thesis is to pursue the rentier phenomenon as a distinctive explanation of the political development in the UAE.
The rentier model attributes the political stability of the Gulf monarchies to the political economy created by oil revenues. There exists a social contract between the ruled and the rulers. The rulers offer the ruled economic welfare in exchange for political support. In this way the government is able to buy off any political opposition that may arise, and the social contract becomes a political strategy to maintain political power.
My intention is to give an in-depth analysis of the UAE as a rentier state. Since the UAE is a federation, I have applied the theory on two levels: The relationship between the rulers and the UAE citizens (the state-citizen level), and the relationship between the ruling families of the individual emirates (the federal level). Two hypotheses are presented on the state-citizen level. The first one concerns government expenditure on welfare goods, and the second one covers the use of foreign labour in the government welfare policies. The oil revenues enabled the government (the rulers) to establish generous welfare programmes, without having to require income tax from its citizens. In addition, the government provides nationals with jobs that the nationals find acceptable, and use foreign labour to fill the gaps in the labour market.
Finally, one hypothesis is presented on the federal level. The federation owns no oil. The natural resources are the property of each individual emirate. The wealthiest emirate, Abu Dhabi, is the major receiver of the oil rent, and subsidies the smaller emirates. In return, the ruling family of Abu Dhabi requires loyalty from the other ruling families. Dubai is the only other emirate with oil, and is therefore a special case. It is the only other emirate that contributes to the federal budget, and thus has some political power.
This thesis strengthens the assumption that the rulers use the oil economy as an instrument in securing political stability in the UAE. The thesis, however, does not rule out other factors that can explain the political stability we are witnessing in the UAE. The fact that I have focused on political economy does not indicate that other factors are less interesting to examine.