Adam Hanieh; Money, Markets, and Monarchies: The Gulf Cooperation Council and the Political Economy of the Contemporary Middle East

Abstract

Money, Markets, and Monarchies: The Gulf Cooperation Council and the Political Eco- nomy of the Contemporary Middle East is a seminal work by Adam Hanieh on the political economy of the GCC countries. The book scrutinises mainly how the fi- nancial surpluses are transferred to the global and regional economy and how the rulers and elites in the region benefit from these corporations through the subs- tantial framework of the critical approach. In general, the book is categorised into eight chapters focusing on the role of the GCC countries in the re-shaping of the capitalist world market. By doing this, there are two distinct ways: the first main objective is to present the position of the Gulf’s political economy in global-Gulf relations as presented in chapters 2-3; the second is to analyse the role of Gulf’s accumulation on wider Middle East region as seen in chapter 4-8. Therefore, it can be said that the study starts by evaluating the Gulf capital primarily from a global point of view, and then closely examines the regional effect and role of the Gulf capital through capitalist partnerships. The first chapter, Framing the Gulf: Space, Scale, and the Global, presents the emergence of the Gulf capitalism and its impact on capital accumulation in the re- gion. This theoretical framing of the capitalist configuration within the global scale constitutes a clear understanding of the Gulf’s interaction with the other parts of the world economy. Thus, the well-established theoretical background provides a theoretical frame to the development of Gulf capital. In this chapter, the noti- on of internationalisation of capital comes into prominence. This notion can be considered with the seeking of a new space within the global capitalist market. Therefore, largest capitalist actors whether they are driven by state or private sec- tor need to go beyond their borders as Hanieh stated: “the largest capitalist firms consider their production and marketing decisions from the perspective of a global marketplace, not only from within their national borders” (p. 10). This is the main starting point of the diffusion of capitalist motive all over the world, that reflects the emergence of Gulf capital within the world economy in general and in their region in particular. Following a theoretical background, the second chapter, Gulf Financial Surp- luses and the International Order, takes into consideration the Gulf region with its position in the global financial system through its financial surpluses and demand of goods and services from all over the world. Hanieh stresses that a massive ex- pansion has occurred in Gulf’s financial surpluses around the last 15 years because of increasing Asian markets and their demand for natural resources from the Gulf region (p. 30). This shows how the Gulf region meets global producers’ demand for hydrocarbons and creates financial surpluses. In this regard, Hanieh argues that Gulf capital has spread across the world in two ways (p. 31). First is the financial system, which leads to the flow of Gulf region’s surpluses originating from mainly the Asian markets over the last decade into the global financial system such as the US and European markets through Gulf-based companies, sovereign wealth funds, and individual investors (p. 31-32). Latter is Gulf’s trade with all over the world. Summing up, Hanieh explains the source of financial surpluses and the financial flows in the GCC in this chapter. The third chapter, Boundaries of State and Capital: Mapping the Gulf’s Business Conglomerates, presents the capital accumulation in the Gulf region by structuring this process on three key sites, namely industry, building environment, and finan- cial markets. Hanieh stresses that the industry sector mainly comprises of manu- facturing commodities such as petrochemical, aluminium, steel, and cement-based on the hydrocarbon industry (p. 65). He argues that these manufacturing activities are vital for considerable capital accumulation in the region and presents some examples of companies from the sector and their ownership status, which are all mainly from royal families and elites having political ties in the region. As for buil- ding environment, he specifies that the rapid transformation of the region has led to the emergence of new activities; which are directly related to the capital accu- mulation of construction and contracting companies, developers, telecom compa- nies, and retailers (p.65). Lastly, Hanieh states that financial markets such as stock markets, banks, private equities, and investment firms, which have an important place in both of industrial and infrastructure sectors, are capital accumulation sites (p. 66). Hanieh approaches the banks from the perspective of capital accumulation with regards to their role in shaping financial markets and relations with capitalist firms. He states that “finance is today a fundamental aspect to the class formation in the Gulf and the projection of GCC power throughout the Middle East” (p. 109). As for the fourth chapter, From Farm to Shelf: Gulf Agro-Commodity Circuits and the Middle East, Hanieh discusses the growing weight of Gulf capital in the food sector and its internationalisation across the Gulf region and wider Middle East through Gulf agribusiness firms. Hanieh focuses on Saudi Arabia and the UAE in this section, as they have 70% and 15% of food production and 60% and 18.5% of consumption shares respectively in the region (p. 116). He remarks that Saudi Arabia and UAE with large land acquisitions, while other GCC countries with small acquisitions, aim to buy overseas lands from mainly poorer countries across Asia and Africa such as Sudan, Egypt, and Pakistan in a situation of win-win for the ca- pitalist class in the GCC countries and these poorer countries (p. 121). From these countries, Hanieh stresses that Egypt becomes the main destination for Gulf agri- business firms in the wider Arab region. However, from the view of rural families, Hanieh states that “with more than one-third of Egypt’s agricultural area made up of rental lands, more than 1 million people lost their rights to farming” (p. 135). As stated in this chapter, the main motivation of these acquisitions was to ensure food security which is a prominent risk in the GCC countries (p.120). Chapter five, The Arab Build Environment, Accumulation, and the Gulf, scrutini- ses examples of the market-based urban planning that aims to build a neoliberal (re)imagining of the urban environment through real estate development, urban infrastructure, water, transport, and telecommunications (p. 146). Hanieh sees the building environment ‘as the urbanisation of neoliberalism’ which promotes investment flows to model cities as ‘spaces of entrepreneurialism, networks, crea- tivity, and innovation’ (p. 150). He presents an important data in a table about real estate projects driven by Gulf capital in the Arab countries such as Algeria, Egypt, Jordan, Lebanon, Morocco, and Tunisia (p. 153). This well-collected data presents the role of the accumulation of Gulf capital in the transformation of Arab urban spaces in the wider Middle East as a Neoliberal transformation. Chapter six, Spaces of Financialisation in the Middle East, examines the financi- alization process of the Arab region by measuring the financialization indicators; and the role of Gulf capital in the regional financial sectors across the Middle East by presenting informative data including the GCC related banks in the Arab re- gion. Hanieh argues that the banks which are driven by Gulf capital “dominate the non-state-owned banking systems in Jordan, Syria, Palestine, Egypt, and Le- banon” (p. 188). By basing on available data, Hanieh gives some examples regar- ding the banks’ features related to Gulf capital to support this argument: (1) GCC shareholders control 20% or more of the bank’s shares, (2) a minimum of two GCC investors sit on the board of directors, and (3) the bank is a subsidiary of another GCC financial institution (p. 188). These examples also show how the cross-bor- der capitalist class has relations with the banking sectors in the Arab region. Furt- hermore, Hanieh states that many Arab countries, Egypt in particular, with their high-interest domestic debt, have transferred their national wealth to the banks related to the Gulf capital (p. 192). In addition to the conventional banking system, Hanieh touches upon the Islamic banking system in the Gulf region, which has the largest share in the world. He argues that although the Islamic banking system is not interest-based, it follows the same path in practice with its non-Islamic coun- terpart because “as with any standard circulation of money capital and the accrual of interest, the original money advanced sees an increase over time” in sharia-compliant products such as murabahah, ijara, sukuk, salam, and istisna (p. 195). In this chap- ter, it can be concluded that Hanieh remarks that whether it is conventional or Islamic banks or any other financial institutions, they all are ways of Gulf capital flows to other countries. Chapter seven, Vision of Capital: The GCC and the ‘New Normal’, presents the Gulf governments’ reaction against the fall of oil prices in terms of the new econo- mic environment for future development. Therefore, this chapter mainly focuses on national economic vision of each GCC country and oil prices by mentioning the public-private partnerships within the new political actors, Saudi Arabia in particu- lar; the government budgets which are cut with a fall of oil prices and its impact on national and migrant workers; and the position of the capitalist class in economics downturns. Regarding the economic vision of the GCC countries for economic diversification, Hanieh argues that there has been a neoliberal norm of governance driven by consultants in Gulf with a local understanding (p. 209), which requires public-private partnerships to mainta