The Beijing Consensus and Its Relevance in the Arab Gulf

ISSUE BRIEF 10.04.18 The Beijing Consensus and its Relevance in the Arab Gulf

Michael McCall, American University of Beirut

The Arab Spring presented the Gulf contrast to Western social contracts in Cooperation Council (GCC) states with a which state legitimacy is based on popular stark choice about their social contracts, sovereignty, typically expressed through particularly with regard to their economic electoral politics, both the Chinese and GCC development ambitions. On one hand, a social contracts are predicated on economic Western model combining economic and quasi-guarantees. Since 1989, the political liberalization has historically legitimacy of the Chinese Communist Party dominated the discourse on potential has been staked on delivering consistent avenues for reform, especially on the heels economic growth. Given that all GCC states of popular demands for democratization accrue the majority of their income through throughout the Middle East and North Africa oil revenues, they represent “the example (MENA) region since 2011. On the other par excellence” (emphasis in original) of hand, the Chinese model of authoritarian the rentier model.1 developmentalism may be a more With growing links to the global appealing mechanism for future political economic system, and especially considering and economic development to many in the the increased use of information and Gulf states—especially the political elites. communication technologies since the Even though the United States has long mid-1990s, GCC states considered political maintained a dominant presence in the reform a necessity for placating both an Gulf, is the Chinese social contract model increasingly globally minded population actually more applicable to the social and and external economic pressures as economic dynamics of GCC states than the their interactions with Western countries Western orthodoxy of political liberalism and increased.2 Conditions were favorable for The interests that bind unbridled free market policies? If China’s a gradual move toward political liberalism GCC states and the unique development model can inspire in GCC countries, especially after the West are not based GCC countries, what conditions of the GCC end of the Cold War. The creation of on shared values of context make it a feasible model? the Majlis al-Watani in the early 2000s The dominance of the U.S. in the global facilitated Bahrain’s implementation of liberalism, however, order after the Cold War left the Western a representative parliamentary process but rather on common model of development—characterized that included opposition groups, making economic goals. by free markets and democratization—as it a successful case of partial political the preeminent path toward economic liberalization (or, at the very least, political prosperity, and the Gulf has long remained decompression) in the Gulf.3 Yet since the a bastion of American hegemony in the Arab Spring, GCC regimes have moved Middle East. The interests that bind GCC in the opposite direction, delaying the states and the West are not based on implementation of liberalizing reforms. The shared values of liberalism, however, but fall of multiple leaders in the MENA region rather on common economic goals. In posed an existential threat to the ruling RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 10.04.18

elites; their very existence was at stake. As a less concerned with utilizing economic countermeasure, GCC regimes doubled down policies as a means to establish social on both their authoritarian tendencies and stability. Prioritizing economic growth over their ability to offer economic incentives. the implementation of political reform, the Saudi Arabia increased salaries and Chinese model is a proven mechanism benefits for public employees, the United for a ruling class to retain political control Arab Emirates introduced social welfare while fundamentally reshaping a country’s redistribution, and other states simply economic character. The opportunity to handed out cash incentives and increased reap economic and diplomatic rewards the size of their already bloated public while retaining an authoritarian status quo is sectors. The most powerful demonstration particularly attractive to regimes wary of the of the GCC’s commitment to maintaining implications of political liberalization, such the political status quo, however, was the as the GCC states. Ali Shihabi, founder of 2011 Peninsula Shield Force intervention the Arabia Foundation, whose views reflect in Bahrain, which firmly cemented the the ambitions of the Saudi state, directly impossibility of nonviolent revolution referenced the attraction and utility of the within the bloc. Chinese model on the 29th anniversary While it is easy to dismiss these post- of the suppression of the Tiananmen 2011 developments, made in response Square movement, opining: “Yes, they to public pressure, as politically and lost freedoms but gained a better life of Prioritizing economic economically counterproductive in the prosperity, education, medical care, security, growth over the long term, is there a comparable precedent etc. What is better?”5 implementation of that has actually been successful in Finally, the Chinese model is far less implementing similar initiatives to shore up explicitly prescriptive compared to the political reform, the social and political stability? The Chinese Western model. Officials can tailor and Chinese model is a model of development (alternatively experiment with its implementation, taking proven mechanism known as the “Beijing Consensus”) features local political and economic conditions for a ruling class to certain qualities that offer particular appeal into consideration. Under Prime Minister to authoritarian states. Suisheng Zhao, Lee Kuan Yew, Singapore aggressively retain political control professor of Chinese politics, defines the promoted foreign investment in order to while fundamentally model as a “non-ideological, pragmatic, take advantage of its strategic location reshaping a country’s and experimental approach to spur both in Southeast Asia,6 for example, whereas economic character. social stability and economic growth while China utilized its massive population to not compromising the party’s authority to transform itself into a manufacturing hub. rule.”4 Borne in the aftermath of the 1989 While the precise mechanism is different, Tiananmen protest movement, the impetus both approaches shared the same goal for its development was to placate popular of economic development and deeper demands for political reform by providing integration into the global economy. economic opportunities. In practice, it has Differences exist between the Chinese proven remarkably successful at promoting context of development and modern GCC social stability, with no imminent existential countries, the most notable of which is the threat to the rule of the Communist Party size of their relative populations. GCC states developing in the decades since the have substantially fewer residents than Tiananmen movement. China, whose immensely large population Simultaneously, China’s economic served as a source of low-cost labor and strategy has integrated the country as one provided China a competitive advantage of the major actors in the global economic in the global market. Therefore, the system. The Chinese model should not comparative advantage GCC states must be considered a direct competitor to the employ to gain an economic edge in the Washington Consensus, as the former global marketplace should differ. encompasses an emphasis on social stability A jump in global oil demand post-2000 as well as an economic framework. The (primarily driven by increasing Chinese Washington Consensus, comparatively, is manufacturing) bestowed windfall profits for 2 THE BEIJING CONSENSUS AND ITS RELEVANCE IN THE ARAB GULF

GCC states, especially after 2003. Although driven by the Arab Spring posed a direct current account balances have decreased threat to the traditional claims to legitimacy in recent years as oil prices have again GCC monarchies enjoyed—namely historical dropped, GCC states still possess sufficient tradition and rent distribution. Sustained, capital surpluses to effectively underwrite balanced economic development shifts sociopolitical stability in the medium term. the basis on which regimes are evaluated Qatar, for example, maintains 203 percent by their citizens; by establishing economic of its GDP in net financial assets controlled prosperity and increased opportunities as by the government, and Saudi Arabia holds the rationale for continuing the status quo, a 104 percent of GDP in similar assets.7 These regime can establish a revised social contract funds can be manipulated unilaterally and preclude substantial changes to the without resorting to direct taxation, lowering political structure. the expense of political capital typically Since 2011, political currents have pushed necessary for structural overhauls. During the GCC states to revisit their contracts the pre-2011 period in which oil rents were with their respective populations. In many plentiful and political threats were minimal, cases, the result has been retrenched there was no obvious need to reform the authoritarianism instead of increased political economic structures in the region. Now, openness. For example, al-Wefaq, Bahrain’s the sheer amount of capital that GCC states largest political opposition group, has been have at their disposal may be sufficient in banned in Bahrain, while the Saudi monarchy Since 2011, political enabling fundamental economic reform has substantially centralized power in the in lieu of the unique high-control, high- hands of Crown Prince Mohammed bin currents have pushed population context in which the Chinese Salman. Likewise, the potential threat to the GCC states to economy grew. regime stability precludes the likelihood revisit their contracts The availability of energy rents provides of most, if not all, political rulers adopting with their respective GCC states with the economic resources reformist agendas, staving off the only populations. In many needed to launch major development avenue for a peaceful transition toward programs and investments, though different inclusive politics in the region. The ultimate cases, the result has GCC states have benefited disproportionately goals of opposition protesters in the been retrenched from natural resource endowments. As Middle East, which included the overthrow authoritarianism global energy consumption slowly transitions of governments in Libya, Egypt, Yemen, instead of increased away from dependence on fossil fuels, and more, left little room for political economic diversification into alternative compromise. Therefore, GCC states were political openness. sectors has become a growing concern relatively united in their goal to suppress for Gulf countries.8 The post-2014 global domestic manifestations of the Arab Spring. oil collapse in which prices dropped from Kuwait, with its comparatively representative $105 to below $40 per barrel before slowly parliament and limited perception of threat recovering has only increased pressure on toward protesters, represents the exception Gulf monarchies in this regard. While GCC to this rule. The legislature remains intact states still maintain high levels of foreign at the pleasure of the emir, who ultimately reserves to support current spending levels, maintains elite control over any political without a new source of state revenue, the reform process. generosity of the rentier state cannot be Unwilling to pursue substantive maintained indefinitely. Though this is not an political reforms, Gulf regimes provided immediate concern, a future requirement to alternative concessions, mainly in the begin extracting revenue from the population form of short-term financial inducements through taxation rather than unearned like raising state employees’ salaries, to resource rents is the single-most prominent placate immediate grievances.9 However, factor that will force a renegotiation of the the simultaneous emergence of large-scale existing social contract. protest movements with extensive demands Politically, for the Gulf states, the in Saudi Arabia, Oman, and especially China model provides a renewed basis of Bahrain accentuated the need to review the legitimacy. Post-2011, opposition sentiment social contracts between the ruling class 3 RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 10.04.18

and citizens; all states affected by the Arab two models that complements the unique Spring encountered this same dilemma. context of the Arab Gulf may be emerging. Saudi Arabia effectively tends to combine The pressures on Gulf monarchies demand a economic reform policy and financial revised social contract; including elements inducements with political consolidation, of the Chinese model of development is with the impact reaching even members a potential route to ameliorate current of the royal family.10 In the public sphere, deficiencies that affect social stability. This the new anti-terror law decreed in 2013 would allow the regimes to regain legitimacy potentially criminalizes political speech.11 on a new footing, while the population These restrictive and exclusionary policies would enjoy novel economic opportunities. were accompanied by an inclusive economic policy: the Vision 2030 campaign, which aims to spur economic development and ENDNOTES diversify the economy, ambitiously seeking 1. Hazem Beblawi and Giacomo Luciani to reform the fundamental structure of the (eds.), The Rentier State, Routledge Library Saudi economy through foreign investment. Editions: Politics of the Middle East (London The campaign seeks to reduce unemployment and New York: Routledge, 1987), 53. and increase the role of the private sector in 2. Anoushiravan Ehteshami and economic development. Ultimately, a core Steven Wright, “Political Change in the motivation for the campaign is to provide Arab Oil Monarchies: From Liberalization to Saudis with opportunities to become more Enfranchisement,” International Affairs 83, deeply embedded in the global economy. no. 5 (2007): 913–32. The Vision 2030 plan explicitly mentions the 3. Ehteshami and Wright, “Political desire to increase foreign direct investment Change in the Arab Oil Monarchies,” 922. and strengthen Saudi Arabia’s position on the 4. Suisheng Zhao, “The China Model: Global Competitiveness Index.12 Despite not Can It Replace the Western Model of being designed with the intention of following Modernization?” Journal of Contemporary a Chinese model of reform, this combination China 19, no. 65 (2010): 419-436. of authoritarian entrenchment and intensive 5. Ali al-Shihabi (@aliShihabi), integration into the global economy, “Tiananmen that aborted a movement asking especially in the wake of a major protest for more liberties gave China 29 years of movement, has much in common with the record growth and prosperity that brought Chinese model after 1989. hundreds of millions out of poverty. Yes, The canonical cases of development they lost freedoms but gained a better life of that define both the Western model and the prosperity, education, medical care, security, Chinese model rely upon contextual factors etc. What is better?” Twitter, June 4, 2018. that are alien to the GCC; neither will be 6. Kuan Yew Lee, From Third World to merely copied directly. The former, however, First—The Singapore Story (1965-2000) rests upon a belief that political liberalism is (New York, NY: Harper Collins, 2000), 80–81. a necessary companion for global economic 7. Luiz Pinto, “Sustaining the GCC integration, while the latter provides a Currency Pegs: The Need for Collaboration,” potent rationale for prioritizing economic Brookings (blog), February 19, 2018, https:// development at the expense of political www.brookings.edu/research/sustaining- liberalization. Given the immense obstacles the-gcc-currency-pegs-the-need-for- to the institution of political reform in the collaboration/. GCC, especially after 2011, a localized version 8. Kristian Coates Ulrichsen, of the Chinese model has preferable traits, “Repositioning the GCC States in the given its proven track record in maintaining Changing Global Order,” Journal of Arabian social stability under an economic-oriented Studies 1, no. 2 (2011): 231-247. social contract. Combined with neoliberal 9. Mehran Kamrava, “The Arab Spring economic influences from the West that and the Saudi-Led Counterrevolution,” Orbis have driven campaigns like Vision 2030 in 56, no. 1 (2012): 96-104. Saudi Arabia, a symbiotic combination of the 4 THE BEIJING CONSENSUS AND ITS RELEVANCE IN THE ARAB GULF

10. Toby Matthiesen, “A Purge in Riyadh,” Foreign Affairs, November 8, 2017, https:// www.foreignaffairs.com/articles/saudi- arabia/2017-11-08/purge-riyadh. 11. Frederic Wehrey, “The Authoritarian Resurgence: Saudi Arabia’s Anxious Autocrats,” Journal of Democracy 26, no. 2 (2015): 71-85. This issue brief is part 12. Mohammad bin Salman, “Saudi Arabia’s Vision 2030,” Saudi Gazette, April of a two-year research 26, 2016, http://saudigazette.com.sa/ project on pluralism in article/153680/Full-Text-of-Saudi-Arabias- the Middle East after Vision-2030. the Arab uprisings. The project is generously AUTHOR supported by a grant Michael McCall, is an MA candidate in political from the Carnegie studies at the American University of Beirut. Corporation of New York. He holds an M.A. in international relations from Leiden University, and is an assistant editor for the Sociology of Islam journal.

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Cite as: McCall, Michael. 2018. The Beijing Consensus and its Relevance in the Arab Gulf. Issue brief no. 10.04.18. Rice University’s Baker Institute for Public Policy, Houston, Texas.