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THE DEATH OF RENTIERISM
IN THE KINGDOM OF
SAUDI ARABIA
by
Brianna Brooke Seymour
A thesis submitted to the faculty of
The University of Utah
in partial fulfillment of the requirements for the degree of
Master of Arts
in
Middle East Studies / Political Science
Department of Languages and Literature
The University of Utah
August 2012
Copyright © Brianna Brooke Seymour 2012
All Rights Reserved
The University of Utah Graduate School
STATEMENT OF THESIS APPROVAL
The thesis of Brianna Brooke Seymour
has been approved by the following supervisory committee members:
M. Hakan Yavuz , Chair 6/15/2012
Date Approved
John Francis , Member
Date Approved
Roxane Farmanfarmain , Member 6/15/2012
Date Approved
and by Kirk Jowers , Chair of
the Department of Languages and Literature
and by Charles A. Wight, Dean of The Graduate School.
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ABSTRACT
The premise of this research is to determine when the end of rentierism will occur
in the Kingdom of Saudi Arabia as well as what actions the government is taking to
prepare for it. After compiling population growth, domestic consumption demand, and
depreciating oil production into four separate future predictive scenarios, the results are
that the end of rentierism will occur between 2022-2033 in Saudi Arabia.
Analysis on the social, economic, and political landscapes was conducted to
illustrate the current social and economic obligations that the government currently has.
Alternatives to petroleum were analyzed, resulting in the finding that there are no viable
natural resource alternatives to oil in order to maintain rentierism.
The primary obstacles to preparing for the death of rentierism were found to be
the extreme dissent within and between the House of Saud and the religious
establishment, and the lack of stated goals with timelines and accountability for
implementing economic diversification goals.
“My grandfather rode a camel.
My father rode a camel.
I drive a Rolls Royce.
My son flies a jet plane.
His son will drive a Mercedes.
But his son will ride a camel”
Sheikh Rashid al Maktoum
Emir of Dubai
CONTENTS
ABSTRACT…………………………………………………………………………...…iii
LIST OF ABBREVIATIONS……………………………..…………………………....viii
INTRODUCTION……………………………………………………………………...…1
THE FORMATION OF A KINGDOM………………………………………………….. 5
Notes………………………………………………………………………….….23
THE SOCIAL LANDSCAPE IN SAUDI ARABIA………………………………….…26
Rentierism in Saudi Arabia………………………………………………………26
The Social Landscape in Saudi Arabia…………………………………………..33
Education………………………………………………………………...37
Health and Welfare………………………………………………………40
Notes……………………………………………………………………………..43
THE POLITICAL LANDSCAPE IN SAUDI ARABIA………………….……………..46
The Kingdom of Saudi Arabia…………………………………………………...46
Custodian of the Two Holy Mosques……………………………………………51
King Abdullah……………………………………………………………51
Crown Prince Nayef………………………………………………….…..55
The Religious Establishment…………………………………………………….57
Conflict Within the Ruling Elite…………………………………………………59
Other Sources of Political Influence……………………………………………..60
Branches of Government………………………………………………...60
Political Influence………………………………………………………..62
Middle East Relations……………………………………………………………63
Notes……………………………………………………………………………..66
THE END OF OIL………………………………………………….……………………70
The Definition of Petroleum……………………………………………………..70
Peak Oil Theory………………………………………………………………….72
Predicting Oil Reserves in Saudi Arabia…………………………………….…..76
The U.S. General Accounting Office Report……………………….……76
Saudi Aramco…………………………………………………………………….80
New Technology, Innovation and Investment…………………………...82
Depleting Oil Fields……………………………………….……………..86
Predicting the End of Saudi Arabian Oil Exports………………………………..88
Notes……………………………………………………………………………..93
OIL CURSE…………………………………..………………………………………….95
Increasing Domestic Consumption………………………………………………95
Are Alternative Resources the Solution?...............................................................98
Biofuels…………………………………………………………………..99
Wind…………………………………………………………………….100
Solar…………………………………………………………………….101
Petrochemicals………………………………………………………….102
Minerals and Mining……………………………………………………104
Hydrogen………………………………………………………………..105
Natural Gas……………………………………………………………..106
Nuclear Power……………………………………………………….….109
Notes……………………………………………………………………………114
THE ECONOMIC LANDSCAPE IN SAUDI ARABIA………………………………117
Challenges to the Saudi Arabian Economy……………………………….……118
Employment…………………………………………………………………….123
Agriculture………………………………………………………….…..125
Industry…………………………………………………………………126
Services…………………………………………………………………127
Avoiding Dutch Disease………………………………………………………..128
Notes……………………………………………………………………………131
PREPARATION FOR THE END OF RENTIERISM………………………………....133
Diversification…………………………………………………………………..135
Ninth Development Plan………………………………………………..135
Privatization………………………………………………………….....137
Sovereign Wealth Funds and International Investment………………...141
Parastatal Companies…………………………………………………...145
Taxation, Zakat and Hajj as Income Diversification…………………………...147
Taxation………………………………………………………………..147
Zakat……………………………………………………………….…..148
Hajj and Tourism………………………………………………………149
Private Sector Development……………………………………………………154
Women…………………………………………………………………154
Manpower………………………………………………………………………162
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Reducing the Foreign Workforce………………………………………162
Energy Security…………………………………………………………………165
Iran…………………………………………………………..................169
Securing Saudi Arabian Oil…………………………………………………….172
Preventing a Restive State…………………………………………......175
Conclusion……………………………………………………………………...178
Notes……………………………………………………………………………182
REFERENCES…………………………………………………………………………188
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ABBREVIATIONS
ARAMCO Arabian American Oil Company
CME Chicago Mercantile Exchange
EIA U.S. Energy Information Administration
ERI Energy Research Institute
ESIS Electronic Share Information System
EXPEC ARC Exploration and Petroleum Engineering Center
FMS Foreign Military Sales
GAO General Accounting Office
GCC Gulf Cooperation Council
IFP French Petroleum Institute
IMS Idea Management System
JORC Joint Ore Reserves Committee
KA-CARE King Abdullah City for Atomic and Renewable Energy
KACST King Abdul Aziz City for Science and Technology
Mbd Million barrels per day
MENA Middle East North Africa
MGS Master Gas System
MRC Maximum Reservoir Contact
NGIT Natural Gas Investment Tax
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NGL Natural Gas Liquids
OAPEC Organization of Arab Petroleum Exporting Companies
OPEC Organization of the Petroleum Exporting Countries
POWERS Parallel Oil, Water and Gas Reservoir Simulator
R&DC Research and Development Center
SABIC Saudi Basic Industries Corporation
SAMA Saudi Arabian Monetary Authority
SAMBA Saudi Financial Group
SAO Security Assistance Organization
SATORP Saudi Aramco Total Refining and Petrochemical Company
SBG Saudi Binladin Group
SEC U.S. Securities and Exchange Commission
SPE Society of Petroleum Engineers
URR Ultimate Recoverable Resources
US United States of America
VLCC Very large Crude Carriers
WEA Wind Energy Association
WPC World Petroleum Congress
WPOP World Peak Oil Production
WTI Western Texas Intermediate
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