Modern Middle East Authoritarianism by Jebnoun Noureddine

Author:Jebnoun, Noureddine.
Language: eng
Format: epub
ISBN: 9781135007300
Publisher: Taylor & Francis (CAM)

The Civil Service

Though the royal family's influence extends to all sectors of the Kingdom, it does not actually manage most of the country's largest companies. This is in contrast to other countries of the Gulf Cooperation Council (GCC), where royal families are involved at every level of economic activity. In the Kingdom the civil service—the non-royal, commoner functionaries and technocrats—control the main state-owned firms and administer some of the government ministries and agencies. Steffen Hertog refers to these parts of the administration as “islands of efficiency, insulated from co-optation and clientelist entitlement,” amounting to a “segmented hierarchical system of parallel institutions that has provided stable and protected spaces for efficient bureaucracies accountable only to the top.”14 Of course, other administrative “islands” not controlled by the royal family, such as certain state ministries, are quite bloated, inefficient bureaucracies, by and large a burden to the country—though they do create employment for the otherwise unemployable.

Saudi Arabia's islands of efficiency include the Ministry of Finance, the Monetary Agency, and the Capital Markets Authority, as well as industrial and mining concerns, mainly Saudi Aramco, SABIC, and Ma’aden. State-controlled companies may be completely owned by the state, such as Saudi Aramco, or only partly owned by it, such as SABIC, Ma’aden, and PetroRabigh. Such firms, often called parastatals, have shares exchanged on the stock market, but they ultimately remain under the full control of the civil service. SABIC, the chemical and steel giant and one of the most important parastatals, is growing exponentially. Established in 1982, SABIC is the Middle East's largest industrial group and among the top six largest chemical companies in the world; in 2010 it achieved sales revenue of SAR 152 billion (approximately USD 40 billion).15

It is important to note that the main Saudi parastatals have no direct input from the royal family. Even Saudi Aramco, the Kingdom's flagship company, has no princes or princesses in its ranks or even on its board. SABIC has one prince, Prince Saud bin Thunayan al-Saud, who is Chairman of the Board, but the real power lies with non-royals, especially with the CEO, Muhammad H. al-Mahdi. It is to the great credit of the Saudi royals that they do not interfere in these high tech companies, having decided that there is more to gain by allowing professionals to run outfits than by putting less competent, politically motivated managers in positions of power.

The corporate vision to make Saudi Arabia a leading industrial power is what brought about Saudi Aramco and SABIC's development. This vision can be traced back to the Minister of Finance under Kings Faisal, Khalid, and Fahd, Muhammad AbalKhail, who began the industrial development of the Kingdom as early as 1975. He established the Saudi Industrial Development Fund (SIDF),16 demanded that foreign banks be locally capitalized and thus involved in the local markets and industry, and established strong regulatory processes through the Saudi Arabian Monetary Agency (SAMA), therefore modernizing local banks and putting them on a par with foreign banks. He also ensured that whatever funds the Kingdom gained from the sale of oil would be invested in short-term U.

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