The merchant elite and parliamentary politics in Kuwait: The dynamics of business political participation in a rentier state Anastasia Nosova A thesis submitted to the Department of Government of the London School of Economics for the degree of Doctor of Philosophy, London, September 2016 Declaration I certify that the thesis I have presented for examination for the PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without my prior written consent. I warrant that this authorisation does not, to the best of my belief, infringe the rights of any third party. I declare that my thesis consists of 86,376 words. 2 Abstract When applied to the Gulf region in general and Kuwait more specifically, the rentier state theory stipulates that the political relations between state and business are determined by the rent. Thus, business essentially ceases to represent a strong political force and withdraws from the formal political field in exchange for wealth provided by the state. However, the evidence from Kuwait’s recent history suggests that there is great variation between the patterns of political engagement in Kuwait’s merchant families. Some families have been continuously active in the country’s parliamentary politics and political field more broadly; their political action has not always been pro-government and, in general, the merchant community in Kuwait still possesses powerful means to negotiate government distribution patterns and to influence political decision- making. Thus, the main research question posed in the Thesis is the following: why do we observe merchants’ active political engagement in Kuwait counter to the prediction of the rentier state theory, and what can explain the variation of merchants’ political activity? The Thesis will analyse and compare Kuwait business politics along the dichotomies of passive versus active engagement and voice versus loyalty towards the government. Through this analysis I will define the factors which explain why some merchant families engage in parliamentary politics, while others do not, and why at times the merchant community allies with the opposition, and at others with the government. I will further examine what impact this political engagement by business has on the country’s economic reform policies. The analysis will establish that, although rent matters, the political action of business in Kuwait and its variation is defined by the country’s semi-parliamentary political system, while factors such as rent-seeking, ascriptive features, relations with the ruling powers and the changing nature of the country’s political field are essential intervening variables. 3 Table of contents List of tables and graphs ............................................................................................................... 7 Acknowledgements ....................................................................................................................... 8 Note on transliteration and translation ........................................................................................ 10 List of Acronyms .......................................................................................................................... 11 Introduction.................................................................................................................................. 13 Literature review and the evolution of rentier state theory ..................................................... 17 Research question .................................................................................................................. 32 Argument ................................................................................................................................ 33 Overview of methodology and sources .................................................................................. 37 Structure ................................................................................................................................. 42 Part I: The historical background and the major features of the business sector in Kuwait ....... 44 Introduction ............................................................................................................................. 44 Chapter I: The evolution of the merchant community in Kuwait from the pre-oil times to the establishment of the modern political system ............................................................................. 44 1.1 Introduction ....................................................................................................................... 44 1.2 The history of Kuwait’s merchant community and ruler-merchant relations before oil ..... 45 1.2.1 The emergence of the merchant elite and the political system in pre-oil Kuwait ...... 45 1.2.2 Merchant opposition and contentious events in the beginning of the 20th century ... 48 1.3 The formation of the oil economy and political system ..................................................... 53 1.3.1 The rivalry for oil revenues: merchants, Sheikhs and Britain in the 1950s ............... 53 1.3.2 The political development in the 1950s-1960s: merchants and the Movement of Arab Nationalists ......................................................................................................................... 58 1.4 Conclusion ........................................................................................................................ 64 Chapter II: The major features of the business sector in Kuwait ................................................ 65 2.1 Introduction ....................................................................................................................... 65 2.2 The development of private capital and its relations with the state after oil: the establishment of state-dependency and vulnerability ............................................................. 66 2.3 Social structure of business: elitism and monopolistic nature .......................................... 74 4 2.4 Merchants vis-à-vis the broader population: structural autonomy and socio-economic conflict ..................................................................................................................................... 82 2.5 Conclusion ........................................................................................................................ 91 Conclusion to Part I ................................................................................................................ 91 Part II. Chapter III: The active vs. passive variation of business political participation............... 93 3.1 Introduction ....................................................................................................................... 93 3.2 Explaining political action .................................................................................................. 94 3.3 Outlining the explanandum ............................................................................................... 98 3.4 Analysing explanatory factors through comparison ........................................................ 116 3.4.1 The ascriptive factors of origin and sect .................................................................. 132 3.4.2 The factor of business sector and competition ........................................................ 134 3.4.3 The factor of availability of other means ................................................................. 138 3.4.4. The factor of availability of constituency and social capital .................................... 142 3.4.5 The factor of political affiliation and ideology .......................................................... 149 3.5 Conclusion ...................................................................................................................... 152 Part III: The “voice” vs. “loyalty” variation of business political action: merchant politics in times of contention .............................................................................................................................. 155 Introduction ........................................................................................................................... 155 Chapter IV: Merchants in the 1989 constitutional movement ................................................... 158 4.1 Introduction ..................................................................................................................... 158 4.2 The continuity of contentious patterns and the role of the parliament ............................ 159 4.3 The 1985 parliament and the reasons behind the constitutional crisis .......................... 162 4.3.1 Structural economic factor ....................................................................................... 162 4.3.2 The ruling family fight .............................................................................................. 163 4.4 Merchants throughout the 1980s prior to the beginning of the pro-democracy movement ............................................................................................................................