MILITARY SECURITY AND POLITICAL STABILITY IN THE GULF

By Gawdat Bahgat

INTRODUCTION

A distinctive characteristic of the Gulf Cooperation Council states (GCCs); Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates: is the prevalence of the rentier economy. These states have historically experienced a low level of political violence due to their enormous wealth. However, since the early 1990s significant internal and external developments have changed the dynamics of the political process in the region and represent a serious threat to the bases of the states.

This study seeks to analyze the challenges facing the rentier states in the Gulf and their response. In addition, an attempt is made to shed light on the steps the West might take in order to secure its national interests in the area. But first, the concept" rentier" needs to be defined.

A system is rentier when it derives a substantial part of its revenue from foreign sources and in the form of rent.[1] Rent is any income not coming from the productive activities of the citizens of the beneficiary state. In such political systems just a small fraction of the society is involved in the creation of the wealth, the majority are only engaged in the utilization of these huge financial resources. Oil revenues, as well as other revenues from the sale of natural gas and from government investments abroad, go directly to the state treasuries. Moreover, oil resources are owned and strictly regulated by the governments. Thus, the nature of the rentier economy is that it concentrates tremendous power in the hands of the government in its relationship with its citizens.

In addition, oil wealth has enabled the GCCs to provide their citizens with state-of-the-art social services such as education, health care, housing, and consumer goods either free or for a minimum charge. Oil monarchies have not felt the need to extract taxes from their peoples thanks to their huge wealth. Enjoying a high level of free or heavily subsidized social services, the citizens of these Gulf states have had few incentives to oppose their governments or even to take part in the political process. Thus a sort of social contract has been forged: Citizens receive substantial material benefits in exchange for political loyalty, or at least political quiescence.

However, since the mid-1980s the ability of the rentier state to fulfill its share of the bargain has diminished. Two important developments have changed the socio-economic and political conditions under which "the social contract" between the state and the society had been agreed on. On one side, the collapse and stagnation of oil prices since the mid-1980s have eroded government revenue. On the other side, in response to regional military and political threats, the GCCs have chosen to buy a huge amount of expensive weapons as a means to defend themselves. Consequently, public expenditures have skyrocketed. This decrease in government revenues and increase in its expenditures have put the previous political equation into question. The governments of the six Gulf states have responded by allowing a certain level of political participation which can absorb the growing public dissatisfaction and, at the same time, not threaten the tremendous power these regimes enjoy. In other words, a new "social contract" is in the process of being written reflecting the new internal, regional, and international dynamics.

CHALLENGE # 1: STAGNATING OIL PRICES

In all the GCCs, oil is the biggest single component of GDP and the largest source of government revenue. Not surprisingly, oil has dominated the economies of the GCCs and shaped their political systems. Because of their enormous wealth, these governments have been able to improve the standard of living for their citizens with little or no financial restraints. Kuwait, Qatar, Bahrain, the UAE, and Saudi Arabia ranked respectively the highest in the Middle East on the Human Development Index which combines life expectancy, adult literacy as well as real GDP per capita.[2]

Given this strong dependence on oil, the ability of the GCCs to sustain a high level of public spending is influenced heavily by the change in oil prices in the international market. Over the last few decades oil prices have been subject to a high level of fluctuation reflecting both market forces and policy actions. The price for crude oil at the wellhead was $2.51 per barrel in 1950 and for more than two decades remained stable with only a slight rise.[3] The outbreak of the 1973 War interrupted the oil supply and consequently resulted in an increase in oil prices. The Organization of Petroleum Exporting Countries (OPEC) was able to raise the price threefold in a very short time. The Iranian Revolution and the beginning of the Iran-Iraq War in 1979-1980 had a similar impact and by the early 1980s oil prices had reached their peak. By 1983, however, the market began to soften and prices have steadily declined with a short-term rise in 1990 after Iraq invaded Kuwait and more recently in 1994 with the mobilization of Iraqi forces close to Kuwait's border. If inflation is taken into account, current oil prices are barely higher than they were in 1973.

Rising oil prices do not seem imminent. "No more oil market windfalls are in prospect this side of the new millennium."[4] A recent study published by the United States Department of Energy predicts that oil prices will stabilize in 1995, then rise slowly through the year 2010.[5]

Confronted with this analysis, the GCCs have been compelled to adjust their policies to the new reality. One option is privatization. It is attractive because it offers an alternative to taxation as a means of tackling budget deficits. Thus, a number of Gulf rulers have made pro-privatization statements and their governments have declared the intention to implement privatization programs. The experiment with privatization has varied from one Gulf state to another, with Bahrain taking an accommodative attitude toward a market economy on one side and Saudi Arabia applying heavy government intervention on the other.[6] The other four states have been somewhere in between. However, overall the results have been very modest because the regimes do not want to risk loosing an important power source -- the ability to reward supporters and punishing opponents.

A number of other unpleasant alternatives has been considered such as cutting expenditure, raising taxes, and/or deficit spending. The first two options would undermine the basis of the rentier state. Therefore Gulf regimes have been reluctant to adopt either of them, instead they have resorted to the third one, deficit spending, to fill the growing gap between public expenditures and public revenues. Not surprisingly, all six Gulf states have had budget deficits the last several years.[7] In order to finance this deficit, Gulf states have sought to borrow money both from the domestic market in the form of government bonds, and from the international market (i.e., foreign debt).

Kuwait and Saudi Arabia have been the states most affected by these financial pressures: Kuwait since it was the primary victim of the Gulf War, and Saudi Arabia because of its size, both geographic and demographic. The Kuwaiti economy has suffered serious blows since the early 1980s. These include the collapse of the stock market, Souk al-Manakh, the decline of oil prices, and the Iraqi invasion. The outcome has been a constant budget deficit which has been financed through the sale of assets and by borrowing from abroad. A recent report issued by the United States State Department estimated Kuwaiti domestic and foreign debt in 1994 at $40 billion.[8]

Years of overspending and corruption have combined with a fall in oil prices to bring Saudi Arabia's era of plenty to an end. The kingdom has been running budget deficits averaging $10 billion a year, about 9% of its GDP, since the early 1980s. The government has met these deficits by drawing on its reserves beginning in the early 1980s and by borrowing on the domestic market since the late 1980s. Moreover, in February 1991 the Saudi government went to the international market for loans for the first time in decades. The kingdom is expected to have an external debt of $37.345 billion at the end of 1996, more than twice that recorded at the end of 1989.[9] In addition, public expenditures were cut 19% in 1994, and the government has pledged to cut an additional 6.2% in 1995.

To sum up, the GCCs have found themselves in the midst of an economic crisis since the early 1990s because of a persistent decline in oil prices beginning the previous decade.[10] In response, they drew on the financial resources they had accumulated during the years of the oil boom. With the decline of these reserves, they have resorted to budget deficits which have been financed through both domestic and foreign debts. However, it is important to point out that in comparison with other countries, the Gulf states are not poor. Many governments would love to have their problems. Nevertheless, the current financial picture shows that the (relatively) impoverished royal families will have a difficult time financing the welfare state of the last few decades.[11] Skyrocketing military expenditures have made a bad situation even worse.

CHALLENGE # 2: HIGH MILITARY EXPENDITURES

Oil has been both a curse and a blessing to the GCC states. Oil has provided the governments with tremendous financial resources and consequently the citizens of these states have enjoyed a much higher standard of living than their neighbors. However, because of their wealth, the GCCs have been under continuous threat, particularly from the other two Gulf states, Iraq and Iran. The distribution of wealth and demographic factors have combined to create the appropriate environment for hostility between the GCCs on one side and their two powerful neighbors on the other side as Table I shows.

Both Iraq and Iran are not as wealthy as the other Gulf states but their advantage lies in their stronger armed forces. Confronting this disadvantage, the GCCs have relied on a three-dimensioned defensive strategy since the early 1990s. These three dimensions are: self-reliance, regional balancing, and high-tech armaments. The pursuit of this strategy, particularly the last dimension, has contributed to the weakening of the rentier state.

The GCCs' rulers, with some variation, do not trust President Saddam Hussein. The recent Iraqi mobilization of its troops close to Kuwait's border in October 1994 reinforced their fears. Not surprisingly, since 1991, the GCCs, particularly Kuwait and Saudi Arabia, have given both political and financial support to different Iraqi opposition groups. They would like to replace Hussein's regime, but they have been restrained by the possibility that iraq might disintegrate which would benefit Iran the most. The Hussein regime's survival is dependent upon his ability to have sanctions lifted and to get oil revenues flowing once again into his hands. The GCCs would suffer from Iraqi oil exports through both lower prices and lost market share (Iraq's provisional quota from OPEC in early 1995 was only 550,000 barrels a day. The Iraqi government, however, wants to increase its output to more than three million barrels a day, the level in 1990 before its invasion of Kuwait

In 1991 the rulers of the GCCs felt that !ran had acted responsibly during the crisis over Kuwait. Thus GCC-Iranian relations improved tremendously during most of 1991 and 1992. However, Iran's movement to assert its influence and sovereignty over the three Gulf islands -- Abu Musa and the Greater and Lesser Tunbs -- which Iran jointly administers with the UAE has reinforced the royal families' suspicion of Iranian intentions.[12] Moreover, the growing cooperation between Iran and islamic fundamentalists in Sudan, Algeria, Gaza and the West Bank, as well as the struggle for power within Iran between the extremists and the moderates increases the fear of Iranian hegemony in the Gulf.

In summary, considering the imbalance in both financial resources and military power between the GCCs, on one side, and Iraq and Iran, on the other, the oil monarchies have felt the need to establish a defensive strategy to protect their regimes. It is also important to point out that the six states have had their own differences toward their two giant neighbors at various times. These disagreements have been reflected in the three-dimensioned defense strategy pursued since the early 1990s.

Self-reliance: in December 1990 Sultan Qabus of Oman was commissioned by the other GCC rulers to develop a plan for an integrated military force called Peninsula Shield. It was to consist of 100,000 soldiers, under a unified command and to be stationed at Haft al-Batin in northeastern Saudi Arabia. However, the plan has never materialized. A combination of demographic, social, and political constraints had undermined any potential cooperation between the GCCs in security matters. The population pool of these states is very small. They have to depend on expatriates who may not be reliable in warfare.[13] The division of their populations between Shiite and Sunni and the lack of participation of women in the army add more constraints to self reliance.

For many decades the social contract of these states has been based on the concept of "rentier state" which meant that the state provided citizens with free or heavily subsidized commodities and social services and did not extract any resources from them (in the form of taxes or military service.) In the absence of political participation, citizens took but did not give. Changing one side of the equation would mean, sooner or later, changing the other side.

Finally, the strategy of self-defense assumes that the six states could work together to defend themselves from any external threat. However, this assumption underestimates the internal differences between the members of the GCC, such as the conflict between Bahrain and Qatar over the Hawar Islands, and between Kuwait and Saudi Arabia over the Garuh and Umm al-Maradim Islands. The border dispute between Saudi Arabia and Qatar escalated in 1992 into a military clash. Thus, considering all these problems associated with self reliance policy, the GCCs have tried to create a regional balance of power.

Regional Balancing: In March 1991, the GCC foreign ministers signed a security agreement with their Egyptian and Syrian counterparts called the Damascus Declaration. According to this agreement, Egypt and Syria would provide the military forces to guarantee the security of the Gulf states. In return, they would receive substantial sums in aid and investment funds. However, in just a matter of weeks, the rulers of the GCC changed their minds. The idea of an open-ended commitment to the Egyptian and Syrian economies did not look attractive. Considering the political instability in both Egypt and Syria and the continuous and never-ending alliance and re-alliance in the region as a whole, the presence of Egyptian and Syrian troops might become a threat to the Gulf rulers. Arab regimes have historically not felt comfortable hosting an army from another Arab country. One more reason for their reassessment was the very negative Iranian reaction. Iran, as a Gulf state, did not welcome the presence of non-Gulf forces. Iran also opposed being excluded from security arrangements in the Gulf region. Thus, regional balancing, like self-sufficiency, did not work. The idea of depending on Western forces was more appealing to the Gulf rulers.

High-tech Armament: The failure of the GCCs since the end of the Gulf War to create a collective security system or to sustain a regional force has forced them to increase their dependence on international powers, particularly the United States and, to a lesser extent, Britain and France. This growing dependence does not represent any change in their security policy. What is new is the level of openness and boldness in their relying on Western protection, particularly by Kuwait. The logic is simple: The six Gulf states need protection and Western powers have both the means and the will to protect them. As long as industrial countries depend on oil from the Gulf, they will not hesitate to use the means at their disposition, including military intervention, to prevent any interruption of the flow of oil caused by a hostile regional power (Iraq or Iran).

In the aftermath of the Gulf War, many security agreements had been signed between members of the GCC and Western powers (United State, Britain, and France). At the same time, all the oil monarchies have embarked on ambitious programs to buy as many weapons as they can, and in many cases more than they can absorb. These arms purchases are intended as much to cement the political relationship with the West as to provide for self-defense. After its liberation from Iraqi occupation, Kuwait was reported to have dedicated some $12 billion for weapons purchases over the next decade. King Fahd of Saudi Arabia announced at the beginning of 1993 that Saudi defense spending would rise by 9% since "regional circumstances" required strengthened capabilities. The kingdom has become the largest single customer for American military contractors, larger than the Pentagon. With $30 billion in orders since 1990, it has almost single-handedly kept alive the M1-A2 tank lines of General Dynamics in Ohio and the F-15 fighter plane lines of McDonnell-Douglas in Missouri.[14] Other Gulf states have followed suit.

This strategy, just like the other two (self-reliance and regional balancing), has its own shortfalls. For many years all six states have spent billions of dollars on arms purchases. However, when an actual invasion took place (August 1990) or a serious threat materialized (October 1994) the presence of Western troops, not the purchase of arms, protected them. In other words, the usefulness of this tremendous spending on armaments is questionable. Moreover, a close relationship with Western powers gives credibility to accusations by opposition groups that the Gulf rulers are puppets in the hands of Washington, London, and Paris. Some political activists in the region claim that the West is in the Gulf to protect the rulers, not the people.[15] Finally, these billions of dollars spent on weapons have exhausted the financial resources of the governments and consequently undermined the basis of the rentier state. According to Stockholm International Peace Research Institute, developing countries spent approximately 5% of GNP on defense in 1985; this ratio fell to 3.8% in 1991. In 1985, the share of defense in central government expenditures was 17%; by 1991 the ratio had declined slightly to a little over 16%.[16] The members of the GCC, however, spent a larger percentage of both their GNP and central government expenditures as Table II shows.

These huge government expenditures, combined with a decrease in public revenues due to stagnating oil prices, have undermined the state's ability to fulfill its part of the social contract. Therefore the governments have offered a revised social contract that can be called "liberalization from above."

STATES' REACTION: A LIMITED LIBERALIZATION

The rulers of the GCCs, as well as other leaders in the region, have different definitions and perceptions of democracy. In most cases democracy has been introduced by the state more for its potential utility and less as a human value. For the Gulf leaders, democracy does not carry the possibility of a peaceful transfer of power to a loyal opposition group. Rather democracy; or political relaxation, is meant to absorb public rage and to identify those disloyal to the national consensus as it is defined by the royal families. Thus, it is difficult to describe democracy in the region as a step forward.[17]

A distinctive characteristic of the political process in the GCCs is the lack of a democratic infrastructure. The state dominates civil society. In all six states, women are not allowed to vote and political parties and labor unions are illegal. Other professional and voluntary organizations are closely supervised by the state. Mass media are under government control and censored.[18] The history of representative institutions is short. Over the last few decades only in Kuwait and Bahrain were legislative assemblies elected, and then quickly suspended. There have never been directly elected representative institutions in the other four states (Saudi Arabia, Qatar, Oman, and UAE). However, since the late 1980s increasing political insecurity (due to a decline of oil revenue and increase in defense expenditure) has provided incentives for change. A closer examination of the democratic experiment in the Gulf would illustrate the magnitude and direction of this change.

The birth of Bahrain as an independent state in 1971 has played a significant role in shaping its democratic experiment. Bahrain had long been part of the Persian empire and the majority of its population are Shiite. Consequently the Shah claimed that Bahrain was part of Iran. A referendum was held and the majority favored independence. In return for Iran's acceptance, the Sunni royal family promised power-sharing through free parliamentary elections which were held in 1973. However, Sheikh Isa Ibn Salman Al-Khalifa, who assumed power in 1961 and rules along with his brother who is Prime Minister and his son, the crown prince, dissolved the assembly and chose to rely on Saudi support and protection. In 1992, a petition was submitted to the Amir demanding the restoration of the National Assembly through direct and free election. In response, the government created a thirty-member appointed consultative council.

In 1981 the Sultan Qabus Ibn Said Al-Said of Oman, who overthrew his father in a palace coup in 1970, appointed an advisory Consultative Assembly. It was dominated by the government and had little power. In 1991 caucuses of prominent citizens in each of the country's fifty-nine provinces nominated three citizens per province for a new consultative council to replace the old one. The Sultan selected one nominee per province. In 1994 the Sultan named an expanded eighty-seat Council that will sit through 1997. The Council's role is to comment on legislation and voice citizens' concerns. It can not review foreign and defense policy issues or to interrogate ministers in those areas.

In Qatar the 1970 Basic Law calls for the creation of an elected advisory council. However, no elections have ever been held. Instead Sheikh Khalifa Ibn Hamad Al-Thani, who came to office by deposing his cousin in a palace coup in 1972 and was ousted by his son Hamad Ibn Khalifa in June 1995, appointed the entire forty-member council which has a very limited influence. In 1991 prominent citizens signed a petition calling for democratic reform. They have been harassed and detained.

The United Arab Emirates became independent in 1971. The confederation comprises seven unequal emirates. Abu Dhabi is by far the strongest. According to the 1971 constitution, the rulers of the seven emirates collectively form a Supreme Council, which elects a president and vice-president from among its members for a five-year term. Sheikh Zayed Ibn Sultan Al-Nuhayyan of Abu Dhabi has been president since 1971. The Federal National Council, a consultative assembly, is composed of delegates appointed by the seven rulers and holds little power.

Being under almost continuous threat from its strong neighbor Iraq, the Sabah family, which has ruled Kuwait since 1756, has felt the necessity of mobilizing its constituency by allowing a certain level of political participation and freedom. Thus, right after independence in 1961, an election was held to choose members of the Constituent Assembly which drafted a new constitution. The 1962 Constitution vests executive power in the Amir. In addition, a National Assembly was established and had the right to initiate and veto legislation. The previous Amir, Abdullah Al-Salim, suspended the Assembly in 1976 after MPs criticized his selection of ministers. His successor Amir Jabir Al-Ahmad Al-Sabah, in office since 1977, reopened the Assembly in 1981 but suspended it again in 1986 after it called for public inspection of the country's financial records.

The Iraqi invasion in August 1990 reinforced the need for accountability. Moreover, in order to mobilize the Kuwaiti opposition against the Iraqi invasion and to satisfy Western governments, the royal family promised to restore democracy and to hold elections upon liberation.[19] The elections were held in October 1992 but only "first-class" males, who were over twenty-one and could prove that they or their ancestors had lived in Kuwait before 1920 and had maintained a residence in the country until at least 1959, were allowed to vote.[20] These restrictions meant that only about 15% of the population was eligible to vote. Opposition candidates won thirty-one out of fifty seats. Crown Prince Saad was re-appointed as prime minister and the royal family held on to the key foreign affairs, defense, interior, and information posts. However, considering the impact of the invasion and the Western focus on Kuwait, the Assembly was permitted to investigate sensitive issues such as the military budget, security legislation and financial corruption.

Finally, given its large share of oil production as well as its huge military expenditures, Saudi Arabia has been under tremendous pressure to change the political system toward more accountability. In the aftermath of the Gulf War, petitions were presented to the King from liberals, the Sunni religious establishment, and the Shiite community. They criticized the overproduction oil policy and called for cuts to raise the price. They condemned the close relations the Saudi government had with Western countries, particularly the United States. The Saudi role in the Arab-Israeli peace process was attacked as well as financial corruption and the lack of accountability on the part of the government.

The Saudi royal family is unique in its composition. Abd al-Aziz Ibn Saud, founder of the Kingdom, died in 1953, father of some 80 children. The four rulers who have followed him have all been his sons. The present King, Fahd, is due to be succeeded by his half-brother, Crown Prince Abdullah. Next in line is the King's full-brother, Minister of Defense Prince Sultan. This political establishment felt the need to respond to the unprecedented public criticism of its domestic and foreign policy. Since the early 1990s, the King has issued a number of royal decrees by which a "Basic System of Government" was established. In line with these changes, an agreement was reached between the government and the Shiite community which decided to stop publicizing governmental violations of human rights. In return, the interior ministry allowed dissidents to return home safely, released an undetermined number of imprisoned figures and reissued passports to others.[21] in addition, the King set up fourteen regional assemblies for each of the Saudi provinces, presided over by a prince from the royal family. They are expected to act as provincial versions of the Consultative Council which is composed of sixty appointed members. The Council's role is to debate policy decisions, review budgetary proposals and offer advice on domestic and foreign policy. With two-thirds of its members holding advanced degrees from Western universities, it was expected that the Council might inject a fresh liberal approach into the traditional Saudi political system. For the time being, this has not materialized.

Not surprisingly, opposition is increasingly outside the political system. One of the leading opposition groups is the London-based Committee for the Defense of Legitimate Rights (CDLR). This organization was founded in 1993 by a group of Saudi notables to act as an independent human-rights commission and to enforce what the founders saw as declining Islamic standards in the wake of the Gulf War. The CDLR hoped to take advantage of the fact that the regime is short of money, unable to pay its bills or to keep its people happy in the way that they have grown accustomed to. Other regimes in the GCC face a similar dilemma.

This review of the democratic experiment in the GCCs shows that real power rests in the hands of the executive. The legislative assemblies enjoy only symbolic power. At the same time, growing popular dissatisfaction, which started about a decade ago and was reinforced by the Gulf War, has put the "national pact" into question. Given the absence of agreed-on rules of the political game and the lack of institutionalization of the political process, signs of political instability can he deducted. The Gulf region, with its huge oil reserves and abundant financial resources is too important to be left alone. The West has significant national interests to defend.

THE WESTERN RESPONSE

The Gulf region is a vitally important part of the modem world because of its immense oil capacity. Given the dependence of the world economy on oil, the area has witnessed a permanent involvement by international powers wishing to secure their national interests.

Low oil prices, compared with other sources of energy, have reduced the momentum to conserve and diminished incentives for developing other sources of energy. Thus, oil represented 39% of energy consumption in 1990 followed by coal, natural gas, nuclear power, and other energy sources such as hydro-electricity, geothermal, solar, wind, and biomass.[22] Moreover, over the next few decades, oil is expected to keep its prominent position as the world's main source of energy. World oil consumption is projected to grow by 1.3% per year between 1990 and 2010.

The industrialized countries of the Organization for Economic Cooperation and Development (OECD) are expected to continue to be the [23] largest oil consumers. The United States becomes more dependent on imported oil every year. In 1994, U.S. imported about 45% of its oil, compared with 30% in 1984. By the year 2000, the United States is expected to import about 56% of its oil, a fourth of which will come from the Persian Gulf.[24] The European Union accounts for almost 18% of total world oil consumption, but less than 1% of world production. Japan is the largest user of Saudi and UAE oil.

In summary, the demand for oil is going up in the Western countries and the supply is being fulfilled by a rise in production by the GCCs. Considering the fact that production in the United States has been declining and fields in the North Sea have matured, the world economy has become increasingly more dependent on Gulf oil. In addition, the OECD's share of proven oil reserves at the end of 1994 was 10.6%, compared with the GCCs' 46.1%.[25]

This increased dependence on Persian Gulf oil reinforces concerns about energy security. Security does not mean achieving greater self-sufficiency in oil, rather it "lies in the avoidance or mitigation of a sudden, substantial, and potentially prolonged rise in the world price of oil."[26] Within the past two decades, world oil prices were influenced by what came to be known as oil-shocks. The first shock was in 1973 when the Arab-Israeli war triggered the Arab oil embargo. The second coincided with the iranian Revolution in 1978-79, and the third one came with the Iraqi invasion of Kuwait and the subsequent Gulf War. Sharp increases in oil prices were associated with each of these events.

In another attempt to raise oil prices, Saudi Arabia persuaded the OPEC members in their June 1995 meeting in Vienna to hold the group's total production at 24.52 million barrels per day till the end of 1995, a target which has been in effect since 1993.[27] As a result, oil prices could rise by $2 to $3 in 1996. However, a large increase is not expected over the next several years.

A gradual rise in oil prices does not worry the industrialized countries as much as an interruption in the oil supply. Thus, oil security policy seeks to avoid any sudden large interruption in the supply of oil. Since the world oil market is an integrated one, disruptions in any significant area are reflected at once in changes everywhere. In addition to an increase in oil prices, these changes include increases in consumer prices, higher unemployment rates, and a general decline in world production. In other words, without the assurance of a Persian Gulf free of serious conflicts or political upheavals, an oil supply interruption of sizable proportion is possible.

To prevent such a scenario, Western powers have taken different paths in their relationships with the region. A very popular solution has been increasing arms sales to the Gulf states. This policy benefits the industrialized countries in two ways, gaining a steady supply of oil and recycling petrodollars for weapons and profit as Table III illustrates.

Moreover, since the early 1990s Western powers have been debating different alternatives to assure a constant oil supply, free from Iraqi and Iranian threats. In addition to economic and political isolation, what came to be known as "dual containment", other military options have been considered. These include the establishment of a zone in southern Iraq below the 32d parallel, in which ground forces would be restricted similar to the no-flight zone there. Another step is storing tanks and other heavy armor to support a division (about 15,000 troops) in Saudi Arabia, the United Arab Emirates, and Kuwait. Joint periodic land and air exercises between Western and GCCs troops have taken place.

The success of this strategy is questionable. In the short term, the six Gulf states, and oil supplies, seem to be secure. But these measures seek to prevent war more than to promote peace. The likelihood of the collapse of the regimes in Iraq and Iran is declining. Moreover, for both President Rafsanjani of Iran and President Hussein of Iraq, no better successor is in sight. The GCCs can not best ensure their security "if they continue to be at loggerheads with the two major powers in the Gulf."[28] Over the long term, regional security will depend as much on stable interregional relations as on external alliances and neither should be seen as a substitute for the other.

The key for Western countries with respect to access to oil supplies is stability and predictability. The best way to guarantee the stability of these states is through institutionalized political procedures, not arbitrary power. The dilemma is that the process of initiating participatory mechanisms is destabilizing in the short term. Thus, in order to reduce the potential of internal turmoil, Western countries should support democracy and modernization. They should oppose the immense violation of human rights practiced by the Gulf states against their own citizens. The best safeguard of long term stability in the GCCs is the expansion of autonomous civil society institutions. The West has to walk this fine line between securing its short term economic gains and the long term safety of its oil supplies. That means a cautious approach, recognizing and avoiding the dangers of pushing too far. too fast or too little, too late. No doubt it will be a delicate process.

NOTES

1. Hazem Beblawi and Giacomo Luciani, The Rentier State (London: Croom Helm, 1987), p. 11.

2. UN Development Program, Human Development Program (New York: Oxford University Press, 1994), p. 102.

3. Oil and Gas Journal, Energy Statistics Sourcebook (Tulsa, OK: PennWell Publishing Company, 1993), p. 382.

4. Middle East Economic Digest, "In Search of New Growth Strategies," 7 January 1994: 2.

5. Energy Information Administration, International Energy Outlook (Pittsburgh. U.S. Government Printing Office, July 1994), p. 11.

6. In May 1994 King Fahd endorsed privatization, but the process has been very slow.

7. Gregory Gause estimated the deficit in 1993 as follows, Kuwait $3.2 billion, Saudi Arabia $7.4 billion, Bahrain $170 million, Qatar $940 million, UAE $708 million, and Oman $170 million. See F. Gregory Gause III, Oil Monarchies (New York: Council on Foreign Relations Press, 1994) p. 149.

8. Department of State, Country Reports on Economic Policy and Trade Practices (Washington D.C.: US Government Printing Office, February 1994), p.468.

9. Middle East Economic Digest," OPEC Economies: More oil, deficits and debts" 38 (2 September 1994): p. 6.

10. According to the World Bank the average annual growth rate from 1980 to 1992 was -3.3% in Saudi Arabia, -3.8% in Bahrain, -4.3% in the UAE, and -11.2% in Qatar. See The World Bank, World Development Report 1994 (New York: Oxford University Press, 1994), pp. 162, 228.

11. The Economist suggests the appearance of "signs of pre-revolutionary stress." See The Economist, "Challenge to the House of Saud," 333 (8 October 1994), p. 41.

12. In 1993 Iran unilaterally extended its territorial waters to a 12-mile limit, placing all three islands well within Iran's redefined territorial sovereignty.

13. In 1992 they represented 27% in Oman, 31% in Saudi Arabia, 32% in Bahrain, 61% in Kuwait, 75% in Qatar, and 76% in the UAE. See The International Institute for Strategic Studies, The Military Balance 1994-1995 (London: Brassey's, 1994), pp. 124-141.

14. "Saudi Arabia, Its Purse Thinner, Learns How to Say 'No' to U.S.," New York Times, 4 November 1994.

15. F. Gregory Gause III, Oil Monarchies, p. 141.

16. Stockholm International Peace Research Institute, World Armaments and Disarmament, (New York: Oxford University Press, 1993), p. 392.

17. For a similar conclusion see Ghassan Salame, Democracy Without Democrats? (London: I. B. Tauris Publishers, 1994); Jill Crystal. "Authoritarianism and its Adversaries in the Arab World," World Politics 46 (January 1994), 262-289; and Gudrun Kramer, "Liberalization and Democracy in the Arab World," Middle East Report 22 (January 1992), 22-26.

18. For recent documentation on the lack of democratic practice in the GCCs see Department of State, Country Reports on Human Rights Practices for 1994, (Washington D.C.: US Government Printing Office, February 1995.)

19. This promise was made at a meeting of 1,200 prominent Kuwaitis representing all the political forces held in Jidda, Saudi Arabia, in October 1990.

20. In 1994 the National Assembly took action to give the right to vote to male children of naturalized males, provided that they were born after their fathers were naturalized.

21. Youssef M. Ibrahim, "Saudi Officials Reporting Accord With Shiite Foes," New York Times, 28 October 1993.

22. Energy Information Administration, International Energy Outlook 1994, p. 1.

23. Ibid., p. 15.

24. Agis Salpukas, "Long-Term Oil Strain Is Seen," New York Times, 31 October 1994.

25. British Petroleum, Statistical Review of World Energy, (London: British Petroleum, June 1995) p.2.

26. Edward R. Fried and Philip H. Trezise, Oil Security, (Washington D.C.: The Brookings Institution, 1993), p. 4.

27. New York Times., "OPEC Retains Production Level and Puts Off Other Decisions." 21 June 1995.