After the Sheikhs: The Coming Collapse of the Gulf Monarchies (24 page)

The exact mechanisms of ruling family enrichment vary in the other Gulf monarchies, with some—such as those in Kuwait, where stipends are more modest—being more transparent than others. Nevertheless in all cases their wealth has continued to grow largely unchecked, regardless of economic downswings or recessions. In the most recent
Forbes
magazine royal rich list—published in 2009—Abu Dhabi’s Khalifa bin Zayed Al-Nahyan is estimated to be worth $18 billion, while Saudi Arabia’s Abdullah bin Abdulaziz Al-Saud is estimated to be $17 billion. Close behind is thought to be Dubai’s Muhammad bin Rashid Al-Maktoum at $12 billion, while Qatar’s Hamad bin Khalifa Al-Thani is estimated to be worth $2 billion, Oman’s Sultan Qaboos bin Said Al-Said about $700 million, and Kuwait’s Sabah Al-Ahmed Al-Jaber Al-Sabah about $400 million.
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However, given that these estimates were produced soon after losses resulting from the credit crunch, the figures today are likely to be a little higher.

For many years the most noticeable manifestations of this wealth were overseas, with the various ruling families buying and building stately homes in Britain, Spain, Morocco, and other locations in addition to hundreds of other properties including game reserves, penthouse apartments, and farmsteads. This continues today, more or less unabated, with most Gulf monarchs and other powerful individuals seeking both solid foreign investments and safe overseas boltholes. A good recent example is the Abu Dhabi ruler’s new palace in the Seychelles. Having personally spent $2 million on buying up land in the Seychelles, the UAE’s presidential office has also spent $15 million on improving the country’s water piping. Meanwhile the UAE’s federal government has also pledged more than $130 million in aid to the island nation, has provided it with fast attack patrol boats, and has pumped in $30 million to help alleviate government debts.
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More recently, however, the relative discretion of overseas palace-building seems to have been abandoned, with dozens of new palaces now being built at home. In Oman, for example, despite his public image of modesty and the country’s clearly limited resources, the aging Qaboos is
understood to own at least eight palaces including the heavily guarded Royal Court at Seeb and an extensive waterfront palace in his hometown of Salalah. The palaces also have berthing facilities for super yachts, of which Qaboos is thought to own at least five, including the
Al-Behar
, which was the largest yacht built in Italy during the 1980s, and the 150 metre long
Al-Said
, which was constructed in Germany and houses a helipad, a swimming pool, and space for an orchestra. In Bahrain, the ruling family has been accused of building several new palaces and coastal resorts in recent years on land that was previously public. In early 2010 a group of opposition politicians united across sectarian lines to demand an investigation into such corruption. They collaborated on a report that accused the ruling family of having ‘illegally appropriated one tenth of Bahrain’s scarce public land’.
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Similarly in Abu Dhabi the ruling family has spent the past decade or so colonising almost all of the emirate’s smaller outlying islands, often then building ‘sea palaces’ complete with outdoor swimming pools and extensive berthing facilities. These are now heavily defended, with most having armed patrols along their beachfronts and in some cases Patriot missile batteries discreetly installed. Some of the roads, sewerage facilities and lighting on these islands have been installed by the Abu Dhabi Municipality, despite the land now clearly being in the private hands of the ruling family. Just a few years ago most of these islands were public land, where nationals and expatriates alike could camp and hike. One particularly striking development has been on Futaisi Island, owned by a lesser member of the ruling family, Hamad bin Hamdan Al-Nahyan. Having already built a golf course and a fake fort on the island, in 2011 he began to carve his name ‘Hamad’ in giant letters into the surface of the island. Despite Futaisi being home to mangrove swamps and teeming with gazelles and other wildlife, each letter on the island is a kilometre long and deep enough to be filled with water to allow motor launches to navigate. With the whole name spanning three kilometres it is clearly visible on satellite mapping images. Even more ostentatiously, given that it will be located on the main Abu Dhabi island, is the new UAE Presidential Palace. Although being built by the UAE’s Ministry for Presidential Affairs, it will de facto become the main seat of Abu Dhabi’s ruler and crown prince, given their dominance over the federation. Spanning a secure 150 hectare site, the giant compound will contain several smaller ancillary palaces and be comparable in size to
Muammar Gaddafi’s Bab al-Azizia government-cum-residential compound in Tripoli. The construction contract was awarded to a Greek company in 2007 with the value of the deal remaining secret due to a confidentiality agreement signed between the contractor and the Abu Dhabi government.
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Nevertheless its total cost is believed to be at least $490 million.
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Poverty and real unemployment

Although perhaps less visible, a more immediate concern—especially for the poorer Gulf monarchies of Bahrain, Oman, and to some extent the more populous Saudi Arabia—is the now evident breakdown of their capacity to provide the most basic facilities and economic opportunities for their citizens. As well as suffering from a declining ability to keep offering subsidies and the structural problem of voluntary unemployment, these states are increasingly experiencing a widening wealth gap within their national populations, with rising involuntary or real unemployment, and in some cases even citizens living in conditions of poverty. As with the personal fortunes of the ruling families, the latter issue has been another highly sensitive, even taboo, topic of discussion in the region for many years. It has been dangerous for the Gulf monarchies to admit that there are now substantial numbers of indigent nationals in their countries after decades of hydrocarbon exports and sizeable government revenues.

In Bahrain’s case, unemployment in 2005 was thought to be as high as 15 per cent,
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although official figures have usually been lower. In early 2011 the official unemployment rate was still less than 4 per cent
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while independent studies in mid-2011 claimed it was about 15 per cent. Similarly in Oman, recent independent studies have estimated the rate at 15 per cent.
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Total unemployment in Saudi Arabia, most of which is probably now involuntary, is the subject of even more speculation, with estimates ranging from 10 to 20 per cent among adult males, especially among the youth. In 2009 official statistics were produced indicating that 27 per cent of men under the age of thirty were unemployed, while employment opportunities for young women remained extremely limited.
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Indeed, it was even reported that some Saudi women were having to work as maids in Qatar.
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In late 2010 the Saudi minister for labour stated that 500,000 Saudi nationals were unemployed, promising a gathering
at the Riyadh Chamber of Commerce and Industry that ‘We are going to have to solve this unemployment problem’. At about the same time, however, fresh official figures were released indicating that unemployment had risen to 10.5 per cent, with analysts claiming that Saudi Arabia’s published aims of halving unemployment by 2014 are unrealistic and that unemployment is likely to remain high.
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Unsurprisingly, this is leading to increasing criticism of the government from unemployed Saudi youth or those having to take on menial jobs. At a protest held by unemployed teachers in 2010, their spokesman claimed they were ‘…surprised about the lack of opportunities despite the need for teachers but the ministry was not interested in this’, while a recent Reuters report highlighted the case of those educated Saudi nationals who can now only find work as taxi drivers, private security guards or other low-paid jobs.
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Increasingly, complaints are being directed at expatriates rather than the government, with a now popular—although seemingly inaccurate—belief among many Saudi nationals that foreigners are being paid more than citizens and are taking jobs that used to be reserved for them. According to a
Financial Times
report in late 2010 some Saudi newspaper columnists and social media users were lamenting publicly the ‘…money that they believed foreigners were skimming off Saudis, portraying expatriates as wallowing in luxury while the country struggles with unemployment’. In particular one columnist claimed ‘We are not surprised. Foreigners control all retail business, grocery stores… they are given facilities and priority, killing all job prospects for Saudis… nine million foreigners are bleeding the country dry’.
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Even in the smaller, wealthier Gulf monarchies there are signs that involuntary unemployment is rising, particularly in the UAE where there remains a great imbalance between the more developed emirates of Abu Dhabi and Dubai, and the poorer ‘northern emirates’. In Fujairah, for example, official statistics from 2009 indicated that the emirate’s unemployment rate was 20.6 per cent, well above the UAE’s national average of 14 per cent.
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More significant is that most of the unemployed in the more developed emirates are likely to be voluntarily unemployed, while most unemployed in the northern emirate are likely to be involuntarily unemployed.

With regards poverty and poor living conditions, there is increasing evidence in Saudi Arabia of large numbers of nationals struggling to make ends meet. In a recent
Financial Times
report it was claimed that
‘…many young men cannot afford to marry or buy a home, raising concerns of social unrest and higher crime rates… many foreigners complain of bag-snatching or robbery at knifepoint by young Saudis, as unemployment stokes xenophobia’.
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Meanwhile chief economists at Saudi-based banks have warned that ‘[although] the unemployment rate is not new it has become more of a political concern now. Prices are going up in very critical areas like food and housing. Purchasing power is being quickly eroded’.
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In Bahrain the situation is believed to be much worse, with some 50,000 Bahraini nationals estimated to be on waiting lists to receive affordable housing.
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In some cases Bahraini nationals have had to wait over twenty years before being properly housed. In a report published in 2011, for example, a fisherman’s life was used to typify the poor social conditions endured by many Bahrainis. It was claimed that he had always ‘…shared the cramped, run-down family home in Sitra with his parents, four brothers and two sisters. The four adult brothers slept in one small room. One of his sisters is married with four children, who also live in the family home’. His income was believed to be only about $210 per month, which he complained was barely enough to cover a weekly food bill. Moreover, he had stated ‘…how much he wanted to get married and start a family, but he couldn’t afford a house. Like many young Bahraini men, he couldn’t start a family because he was too poor’.
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As well as their high unemployment rates, the UAE’s northern emirates provide perhaps the most interesting example of poverty in the Gulf monarchies, given the increasingly visible divide between the country’s richer and poorer emirates. According to statistics from 2008, Abu Dhabi’s contribution to the UAE’s overall GDP was nearly 56 per cent, while Dubai’s contribution was about 32 per cent. As such, the five other emirates combined accounted only for 12 per cent of GDP. Even more alarming, perhaps, was that Abu Dhabi’s contribution to the federal budget—from which most development assistance for the poorer emirates is funded—was only 3 per cent of its GDP, while Dubai’s contribution was only half a per cent of its GDP.
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It can be argued that since the UAE’s independence in 1971 the relative GDP contributions of the northern emirates have actually declined.
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The poor conditions have manifested themselves in different ways. Small protests have occurred, some of which have been bought off with promises of increased housing benefits, while others have been quashed by federal security forces.
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In 2006 inhabitants from a village outside Ra’s al-Khaimah blocked roads
to stop trucks getting through. The authorities responded by sending in tanks and then followed up with substantial financial compensation for the villagers. More often, however, nationals of these emirates simply complain of a variety of problems ranging from a lack of basic utilities to housing shortages. But in all cases their remonstrations serve to dispel the myth that all UAE nationals are wealthy and content.

In Ra’s al-Khaimah, for example, residents continue to complain about the water supply being cut, sometimes for several days at a time,
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and ‘major rodent infestations’.
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Some national families also complain of small houses that they cannot afford to repair. Interviewed by a state-controlled newspaper, one UAE citizen claimed that she slept on the floor with her three children, and could only afford to treat the damp and mould by selling her marriage dowry gold. She further claimed that she wouldn’t have been able to afford furniture unless her daughter—a policewoman—was able to help. Having waited since 2008 for a new house, she has visited the housing office daily asking why her name is not yet on the list and demanding that ‘All I want is a house from the Government for my babies… I don’t want a lot of money in the bank’.
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A Reuters report from 2011 painted a similarly gloomy picture, describing the ‘…absence of digital billboards, shopping centres, and hotels that typify Dubai. Instead, desert roads are dotted with clusters of small apartment blocks, car repair workshops and discount retailers. Clotheslines are laden with laundry left to dry in the sun, and diesel generators are placed near commercial and residential buildings, to compensate for power shortages’.
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