Segmented clientism : the political economy of Saudi economic reform efforts.

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SEGMENTED CLIENTELISM:
THE POLITICAL ECONOMY OF SAUDI ECONOMIC REFORM EFFORTS
Steffen Hertog
Introduction
Saudi politics sometimes has a circular quality to it: Similar debates and ideas have recurred
time and again; issues fade away just to reappear some years later. The same is true of the
debate on the Saudi political economy: Orthodox “rentier state theory” has been declared
obsolete many times, and each budget crisis in the Kingdom was closely followed by
announcements that the Saudi “distributional” system has reached a breaking point, or is at
least under immense pressure – pressure which leaves no choice but radical reform and a
redefinition of the Saudi “social contract”.
Pressure to reform Saudi economic structures has been mounting indeed, but the outcome of
reform efforts has been highly mixed – apparently without endangering the overall functioning
of the system. Although the socio-economic fundamentals have no doubt changed significantly
since the oil boom years, a true redefinition of the Saudi political economy has yet to happen.
This paper seeks to explain why perceived reform pressures so far have not translated into
significant systemic economic or political reform – or crisis. More precisely, it attempts to trace
the structural reasons why certain economic reform projects were not implemented at all or
only in a highly partial fashion.
The thesis, in a nutshell, is that a pattern of segmented clientelism explains both the resilience
of the current set-up of institutions and political coalitions, and their capability – willing or
unwilling – to scupper cross-cutting reform projects. “Segmented clientelism” means that the
main body of the Saudi polity consists of a rather large number of parallel, often impermeable
institutions which have grown on oil income, are shot through with informal networks and
which coordinate and communicate little. In a path-dependent process of state expansion,
stakes have been created which, depending on the issue at hand, can give effective veto power
to a great variety of factions, royal, bureaucratic and other. An expanded space for debate and

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apparent top-level willingness to reform are by themselves not sufficient for inducing structural
change.
The focus of this paper is more on impediments than on – undoubted – successes in economic
reform, which have occurred in a number of individual areas. And to be sure, on many accounts
of institutional and economic performance, Saudi Arabia outpaces most other states in the
Middle East to start with, whether it is a successful reformer or not. To look at obstacles to
fundamental and trans-sectoral reform is theoretically more rewarding, however.
The paper is relatively short on examples, as it focuses on the broad conceptual framework.
But there are ample illustrations available for each argument, and these will be elucidated in
future work. The order of the essay is as follows: The first section outlines how the ideas here
depart from rentier state theory, followed by an account of their historical background and more
detailed mechanics. A brief outline of several case studies which demonstrate some points is
provided subsequently. In this context, some alternative explanations of the results observed
are discussed and discarded. Finally, in the interest of lean research programmes, any
theoretical innovation has to be justified; hence the essay attempts to explain the value added
of “segmented clientelism” and its relationship to other approaches of comparative political
sociology. It ends with a brief note on the “state” debate in historical sociology and its meaning
for Saudi Arabian reform prospects.
A note on rentier state theory
There is no space here to rehearse the common arguments around the Saudi political economy
or, at that rate, the political economy of resource-rich states in general.
1
This section merely
1
For this see e.g.: Giacomo Luciani, ´Allocation vs. Production States: A Theoretical Framework´, in
Giacomo Luciani (ed.), The Arab State (London: Routledge 1990), pp. 65-84, Terry Lynn Karl, The
Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press 1997), Dirk
Vandewalle, Libya Since Independence: Oil and State Building (Ithaca: Cornell University Press 1998),
Jill Crystal, Oil and Politics in the Gulf: Rulers and Merchants in Kuwait and Qatar (Cambridge:
Cambridge University Press 1995).

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serves to critically position the arguments of the paper towards some aspects of “rentier stat e
theory” (RST), the dominant paradigm of Saudi political economy.
The central tenet of RST is that the main political function of a commodity-rich state like the
kingdom is distribution of wealth, which implies that no effective political power sharing is
necessary. Being “freed from its domestic economic base”
2
through external income, the state
operates on the principle of “no representation without taxation”. Individual strategies of sharing
in the rent dominate political strategies of organization, and distribution is a more important state
function than regulation or economic policy in a strict sense.
It can indeed be argued that there was a certain “window of autonomy” for the Saudi state when
the oil income rose rapidly in the 70s and early 80s, with corresponding freedom to distribute,
create dependent groups and structure alliances. However, demands by societal actors towards the
state have arguably adapted and increased over the last two decades – witness the general tone of
the Saudi press in recent years: whereas criticising the royals is still taboo, one mantra of its
enhanced critical posture is the call for efficient and wide-ranging state services. The repeated
withdrawals of subsidy cuts since the mid-90s also demonstrate that there is (a strong perception
of) societal resistance to curtailed distribution. It appears that the Saudi state cannot mete out its
riches at will anymore, but to the contrary is catering to strong and persistent demands.
Moreover, distribution is not neutral, but discriminatory by its very nature and hence tends to
induce politics, just like redistribution in other states does. There are potential group interests
like in any other systems, say of agriculturalists, industrialists, commercialists, bureaucrats, the
lower urban strata etc. Especially under fiscal strain, the discriminatory nature of a distribution
state becomes clear, and interests of different groups are more salient.
The rentier theory response here may be that “the state” does not mind, it is still autonomous
in its policies as no tax deals are necessary, and distribution is still a one-way interaction. If
certain groups may feel deprived: tough luck! They have little bargaining leverage, not least as
they have been formed by the state itself and their organization is controlled by the state.
2
Luciani, p. 71.

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There is some truth in the “group formation” argument, as we will see. However, it is much
too rigid to believe that taxation, although a crucial form of state-society interaction, is the only
lever which gives a society – or elements thereof – access to and influence over the state and
its agencies. The taxation argument derives from a simplified macro view of Saudi state and
society. Links and alliances between state and societal actors can exist on many levels,
however, and can define the very nature and capabilities of the state.
Co-option of groups in society means that state agencies and actors can get “tied down” in
numerous lopsided, but still reciprocal relationships. A regime is not only potentially dependent on
income, but also on quiescence, cooperation, information and even organization on the societal
side. Stability and basic coherence of Saudi Arabia are built on numerous formal and informal
networks which all want to be attended to. These networks, at least in their sum, often have an
autonomous quality which can prevent coordinated top-down policies, be it of austerity or of
institutional and regulatory reform.
3
A “soft” distributive state like the Saudi one tends to get tied down in society in specific ways:
Kiren Aziz Chaudhry has amply demonstrated the importance of informal coalitions in Saudi
policy-making.
4
Close ties of bureaucrats and businessmen in the 1980s, often based on
kinship, prevented austerity policies and meaningful economic regulation. State capacity and
regulation problems of rentier states are exactly due to their distributional nature, which
provides space for slack and the pursuit of particular interests in state agencies, and frequently
leads to their concomitant penetration by society on a smaller scale.
Historically, the Saudi state has co-opted considerable chunks of society “into itself”, most
saliently through more or less indiscriminate provision of employment. Little consideration
appears to have been given at the time to the impact of such policies on state capacities. Today,
however, the rapidly grown state apparatus often is hard to control or change even for those
formally in charge.
3
How much networks are still centrally and deliberately shaped and steered, and how much they have
developed autonomous qualities – as in, say, penetration of state agencies through kinship networks – is a
rewarding but very difficult question.
4
Chaudhry, Kiren Aziz, The Price of Wealth: Economies and Institutions in the Middle East (Ithaca:
Cornell University Press 1997).

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State autonomy hence appears to be much lower than RST posits.
5
As the Saudi regime is not
willing to suppress on a large scale as some of its neighbours, it needs societal actors and needs
to engage in negotiations in one way or another to keep peace and quiet. Society matters.
Although distribution, as posited by RST, still is a defining feature of Saudi politics, there is
much more need for social, historical and institutional specifics to explain economic policies
and their limits. State-society links and interaction have become more complex than the lean
original RST model licenses. Disaggregation of “state” and “society” is in order, and more
micro-oriented approaches of comparative political science can help here. The state in our
context should not be understood as a unified actor with unified interests, but rather an
institutional conglomerate which, although strongly hierarchical in many respects, creates sets
of different, “local” material stakes within itself and between parts of it and societal actors. It
creates a “political field” in and around which politics is negotiated.
6
The thesis
The hypothesis of segmented clientelism allows capturing such institutional specifics within a
broader distributive framework. Chaudhry has provided a more precise picture of state capacities
and types of state-society links. But she has not captured comprehensively the fact that the state
itself is not only soft and shot through with informal links and structures of authority, but also
strongly segmented: The oil-based growth allowed the parallel creation and expansion of
institutions and networks with various sets of clients within state structures and society.
5
“Autonomy” is a contentious and difficult term. Suffice it to say that there is a difference between the
autonomy to decide certain measures and the autonomy to implement them. Both are lower in Saudi
Arabia than RST would have one expect, and perhaps more importantly, the latter arguably is lower than
the former. Autonomy to implement relates to the issue of “state capacity”, which is similarly contested;
here it simply means capacity to regulate, to enforce and monitor rules in economic life. Broader – and
possibly opposite – meanings like repressive capacity, capacity to satisfy needs (however defined),
capacity to react to crises etc. are bracketed out.
6
For the notion of “political field” see Sami Zubaida, Islam, the People and the State (London: I.B. Tauris
1993), pp. 145-152.

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Before getting into specific mechanisms, terms need to be generally defined: “Clientelism”
here refers to unequal, exclusive, diffuse and relatively stable relationships of exchange and
mutual obligation, both on micro- and macro levels.
7
It is “segmented” because of the parallel
and often strongly divided existence of clienteles, which in many cases are not consistently
brought together or orchestrated at the top of the system anymore.
8
Juxtaposed groups of stakeholders tend to have different patrons within the state and the
political elite, and clientelist relationships are also reproduced within these groups. One may
argue that this is nothing too specific of rentier states thus far. But the fact that the Saudi state was
predominantly a distributive institution meant that there was little need for communication between
different sets of institutions and actors, and hence the horizontal integration of the system was very
low, as “clientelism” denotes vertical structures of communication and exchange. The imperatives
of growth and expansion were allocative, not regulative, hence different institutions and networks
could merrily blossom and coexist side by side. This institutional inheritance from the oil-induced
period of state growth, I contend, explains the fate of economic reform projects and more broadly,
patterns of political negotiation and state capacities.
At its most extreme, the system has created a number of institutional, regulative and distributive
“fiefdoms”, sometimes with strongly overlapping areas of jurisdiction. This increases the
number of stakeholders and channels of formal or informal access, but makes the creation of
“reform coalitions” a formidable task – as opposed to de facto veto coalitions which do not
7
The use of “clientelism” is inspired by the patron-client literature, but as I am also dealing with
aggregates here, it is used much more loosely. This may make anthropologists cringe, but I still find the
term useful to denote inequality of relations and vertical, more or less localized, often exclusive structures
of communication and authority. Usually an exchange of broadly material favours against loyalty of one
kind or another is involved. The relationship normally is more stable and diffuse than a mere market
transaction. It clearly is a more specific term than “group” and more useful for Saudi Arabia than “class”
or, in most cases, “coalition”. For a broad, political understanding of clientelism, see Luis Roniger,
Clientelism and Civil Society in Historical Perspective (Paper prepared for the workshop “Demokratie
und Sozialkapital”, organized by the German Political Science Association in Berlin, June 2002).
8
All systems based on clientage tend to be segmented, but the parallelism of structures, including modern
state structures, is especially stark in the Saudi case.

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have to be organized, but often exist by default in the given structures, if only through diffuse
bureaucratic resistance. As we will see, segmentation can be played out on various levels, and
can create strong de facto resistance to implementation on lower levels even if the regime
leadership appears united.
Segmented clientelism describes the internal structure of the state, but it also describes both the
scattered nature and the simultaneous strength of state-society links. It moreover is reflected both
on a formal level (e.g. in the set-up of ministries and other public institutions, public
employment patterns etc.) and informally (in the manifold personal structures of authority in
public institutions and beyond). In both cases, one can broadly speak of clientelism, as the
functions are similar: individuals are part of a network of distribution and patronage which
gives them a stake in particular sections of the system. Informal structures often provide the
actual glue of the clientelist links, although they can contradict formally assigned functions.
It has to be emphasized though that the Saudi Arabian political economy has moved beyond
mere nepotism and exploitation of personal links (cf. Chaudhry´s account of 1980s rent-
seeking), and there is quite a bit of stable rules and administration, however adequate for
specific policy issues they may be. These stable rules themselves however can be part of the
segmented and particular set-up. The formal/informal distinction is part of the approach
provided here, but not its main thrust.
In terms of policy outcomes, segmented clientage structures impair horizontal coordination of
policies, create a plethora of potential veto players in the process of policy negotiation and
implementation, and make central steering difficult. At the same time, however, it integrates
many actors into the system in a rather fragmented fashion, which reduces the overall pressure
on state and regime, not least as coherent interest formation is vitiated.
Before putting more historical and empirical flesh on a so far rather academic theory, we should
sum up what this approach leaves of RST, the original point of departure. To put it briefly, it
does not deliver the coup de grace to it; it is rather a more sociological complement and
correction. Distribution is still central to the functioning of the system, and it mostly emerges from
the state, access to which has not ceased to be the central price. Distribution is also still used to do
politics, which is more immediately “material” than oriented towards setting abstract political rules.
The approach presented here especially bears out the implicit “group formation effect” of RST, i.e.

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it documents the power the state has to shape groups in state and society through its distributive
policies, beyond the more straightforward “spending” and “taxation” effects.
9
The main correction to RST argued for here is a fundamentally historical one: The creations of oil
wealth – institutions, rules and networks – have their own dynamic and, though perhaps brought
into being more or less by fiat, can decisively constrain future state action. Institutional
developments and reform options are path-dependent; the state does not stay autonomously above
the fray for long. Conventional RST can only deliver a snapshot of what happened when the oil
income hit the kingdom; for subsequent political options and limits, one has to look more closely
at the historical trajectory and entanglements of institutions.
Historical roots of segmented clientelism
Patron-client relationships broadly defined played a large role early on in Saudi state formation.
Sheikhs and notables became the clients of king Abdalaziz and themselves were the patrons for
strata which the state could not access directly. By creating local patrons, regionally or
bureaucratically speaking, state power can be mediated, inclusion be increased and a “softening”
of the state achieved. Especially in early stages of state formation, intermediation can make the
state as an otherwise alien entity accessible. Illiterate peasants or tribesmen e.g. can access the state
via – domesticated – omdahs or sheikhs as brokers. State expansion does not always involve salient
and violent tearing apart of old structures.
10
Of course, intermediation also comes at a cost in terms
of state capacity and nationwide coherence of policies.
9
For this useful differentiation, see: Michael Ross, ´Does Oil Hinder Democracy´, World Politics 53, April
2001, pp. 325-361; The “group formation effect” is the main reason why expectations towards the “new
middle class” have proved empty, as even those with “modern” education (and potentially modernizing
demands) often use traditional, personal, exclusive channels of access or are at least caught up in a system
which segments their class into a plethora of different sub-groupings and institutions. For an example of
implicit “new middle class” assumptions see the otherwise quite useful: Mordechai Abir, Saudi Arabia:
Government, Society and the Gulf Crisis (New York: Routledge 1993).
10
See my paper comparing political tribalism in Saudi Arabia and Libya (“Tribal chaos vs. tribal order:
patrimonial control strategies in Libya and Saudi Arabia”).

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The onset of oil meant a crucial historical juncture of state-formation. The state developed a
much higher ability to engage with its subjects immediately. However, to some extent, old and
new patterns of clientage were articulated into the growing state itself. Expansion of the state
meant cooptation of groups at least as much as it meant enhancement of administrative
capability.
11
The creation of the “dependent bourgeoisie” is an example of a newly created societal clientele:
a business class thriving on state contracts, licenses, subsidies etc., granted through a plethora
of different institutions. The growth of bureaucracy itself in many cases represented the
creation of large-scale clienteles within the state. Employment in different government
branches and agencies represented institutionalised – and relatively equitable – distribution of
wealth at least as much as it reflected functional considerations. It was more “granted” and less
a result of political bargaining over legal or regulatory objectives. Rent circulation became
increasingly sophisticated and created “cascades” of brokers and sub-patrons within
administration and private sector. At this point, the “inability to discriminate clearly among
economic and social goals”
12
did not appear salient, as the state was not in need of economic
policy.
13
Oil wealth provided the substrate for the growth of separate, rather isolated institutional
recesses, which have somewhat malignly been called “fiefdoms”. One important – though not
the only – source of segmentation of the body politic was repeated political balancing between
royal family factions, neatly analysed by Michael Herb for several Gulf cases.
14
It frequently
resulted in the creation of additional posts and institutions; the administration became a site
and provided instruments for family politics.
15
11
Ayubi speaks of a “privatising” effect on state agencies: Nazih Ayubi, Overstating the Arab State:
Politics and Society in the Middle East (London: I.B. Tauris 1995), p. 250.
12
Vandewalle demonstrates this inability with the Libyan example, which admittedly is a crasser one in
terms of lacking state capacity; Vandewalle, p. 162.
13
GL
14
Michael Herb, All in the Family: Absolutism, Revolution, and Democracy in the Middle Eastern
Monarchies (New York: SUNY Press 1999).
15
Gary Samore, Royal Family Politics in Saudi Arabia (1953-1982), PhD Harvard 1983, p. 199.

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Herb has stressed the stabilizing function of such bureaucratic proliferation enabled by oil
riches, but does not discuss its potential impact on state manoeuvrability and capacity. There
are largely impenetrable conglomerates with vast, often parallel jurisdiction like the ministries
of defence and interior. Many top-level bodies have their own health and educational systems
attached; examples include the Ministry of Foreign Affairs, the National Guard, and to some
extent the Ministry of Finance. There is large-scale parallelism of state functions. Institutions
like the Ar-Riyadh Development Authority (ADA) have the requisite high-level backing to
pursue policies in their jurisdiction which are partially independent of what the responsible line
ministry or even the Council of Ministers says.
To some extent, there are even parallel foreign policies occurring which skirt the Ministry of
Foreign Affairs. Due to the enormous financial means available to the royal elite, even welfare
policies are to some degree pursued on a “private” basis.
16
Segmentation of assets is also
reflected in the structure of landholdings in the kingdom; many valuable plots in strategic
locations do not belong to the state anymore, but to individuals.
The institutional sprawl, however, also had a dynamic of its own. It is most closely intertwined
with family politics on the highest level, but institutions run by commoners also developed in
parallel and often acquired an insular quality (examples below). The explanation lies in the
primarily distributive nature of the state and the accompanying vertical structures of authority;
there was no pressing necessity for horizontally integrated policies or regulative “outreach”
into society. Moreover, in technical matters, the integrative capacity at the top of the system
was often weak.
17
The recent salience of discriminatory clientelism
16
Examples include Crown Prince Abdallah´s and Defence Minister Sultan´s engagement in housing
projects, land donations for hospitals etc.
17
Much more on historical trajectories of institution and clientage formation and their logic will be said in future
papers.

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With the demographic explosion and less than optimal oil returns in large parts of the 1990s, it
became obvious that this system slowly declines in performance: Existing stakes of rent
seeking, bureaucratic power, state support and employment were usually defended
successfully, but the discriminatory nature of the compartmentalized system became increasingly
obvious. Relative to the population, the distributive reach of the state has declined and new entrants
have found it increasingly hard to get access; there are growing differences between those who are
well-connected and positioned within the various clienteles and those who are not. Competition for
resources and discrimination have become fiercer.
To be sure, the royal ethics of “care” for the Saudi “citizens”
18
are still strong, and subsidy cuts, if
happening, tended to be directed against those with larger incomes. However, the benevolent
patrimonialism in the kingdom has tended to break down simply by default, due to limited overall
resources.
19
Public employment is by far not sufficient anymore to provide millions of young
Saudis with jobs; there like in other areas of daily life, success in receiving state or other support –
even mundane things like getting a water line fixed or getting your new house quickly supplied
with electricity – often depends on the “wasta” which some have and others don’t.
20
In a situation
of scarcity, when relations are personalized and structures of access segmented, networks tend to
become more discriminatory and exclusive. Rapid social ascendancy as in the 70s and 80s largely
seems to be a thing of the past. The same is largely true of the business sector, where there is little
space for new entrants, who find it hard to get loans and where state support – much thinned out
anyway – is largely apportioned to established players.
18
See e.g. various speeches by the king and the Crown Prince in the Majlis Ash-Shura and on other
occasions.
19
Contrary to the perception that Saudi Arabia is converging on a global neo-liberal path, there is no deliberate
state policy of exclusion or of deliberately condoned inequality through privatisation and economic
liberalisation. The leadership, for good reason, still cares a great deal for all of its subjects. The limited austerity
since 1994 has targeted big actors rather than small fry (agricultural subsidy cuts hit big investors e.g., and
electricity tariffs were mostly increased for higher consumption brackets). Emerging inequalities rather are a
result of soft, clientelist state structures on lower levels and the sheer pace of demographic growth.
20
Personal examples abound; Mai Yamani gives a nice account of personal complaints of young Saudis
who feel shut out of the networks: Mai Yamani, Changed identities: the challenge of a new generation
in Saudi Arabia (London: Royal Institute of International Affairs 2000).

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However, the private sector has matured a great deal since the 1980s and is relatively less dependent
on the state.
21
It demands more opportunities to become active by itself, through privatisation, a
leaner regulative environment and less state interference. This actually seems to be in accordance
with the emerging position of the government that more responsibility for employment generation,
economic growth and service provision has to be delegated to Saudi business.
The growing strain on the state-based distributive system and a general demand for domestic
economic liberalization is the background against which a serious economic reform debate slowly
emerged in the mid-90s. They gained momentum towards the end of the decade under Crown
Prince Abdallah´s stewardship, when he himself publicly declared that the fat years of the oil boom
were over for good and that economic growth would require real effort. The projects envisaged
included a general shaping up of the lethargic bureaucracy, a new labour law, a stock market law,
the privatisation of public services and assets, and other regulatory reform enabling more
autonomous private wealth creation. WTO membership and a new foreign investment code were
slightly more contentious (at least in the private sector) but all the more emblematic aims. The most
symbolic project – though one in which the Saudi private sector was to play only a supporting role
– was the opening up of the upstream gas sector for foreign investment.
In parallel to these generally liberalising efforts, though arguably contradicting some of them, the
government attempted to pursue the “Saudization” of private sector labour markets, which have
been strongly dominated by expatriates. Finally, the most revolutionary and disputed project of all
was an income tax to tap private wealth (of expatriates at least) for state coffers.
The set-up for recent politics: a two-level analysis
The outcome of reform efforts up to now is patchy. Most of the mentioned projects have been
not at all or not fully implemented; several are still in the making, but at least it is clear that
several self-imposed deadlines have passed. The long-term outcome of the reform moves is not
predictable, but I contend that eventual success in implementation will be mixed at best as long
as the Saudi state – and by implication, its structure of clienteles – does not witness a
21
cf Giacomo Luciani´s paper??

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fundamental restructuring. This is because reform moves thus far have got tangled in
segmented state and societal structures – the apparent consensus for reform notwithstanding.
It is time for a closer description of these structures as they have been articulated in recent
years. Within the broader framework of segmentation, the essay differentiates two forms of
clientelism, political and administrative.
The first, political level of analysis deals with big clienteles. It involves larger aggregate groups
or leading actors on a systemic or at least regional level.
22
It is the type of clientelism that is
played out in negotiations and decisions about broader policy issues.
23
The second
(“administrative”) level consists of more personal, micro-political entanglements, mostly between
bureaucrats and businessmen, sometimes perhaps also involving individual princes. It involves
daily dealings of the Saudi administration, also on lower levels, rather than broader political
questions. The boundary between the two is not wholly clear-cut, but the distinction will
nonetheless help us to analyse separate causal processes.
Political clientelism
Political clientelism occurs both within the state and between state and society. One could say
that the Saudi polity consists of various parallel and staggered pyramids of clienteles: partners
and followers of princes and their institutions, ministries, public enterprises, policy-making
22
This includes leading princes, ministers, or (as leading groups or important individuals) “retailers”,
“bankers”, “contractors”, etc. Even on such a rather general level, clientelism usually is a more useful
perspective than class analysis, as it reflects asymmetry, particularism of exchange, the segmental
structure of polity and the potential role of personal patrons.
23
‘Negotiations’ is broadly defined here as any kind of interaction where political interests are uttered
either explicitly or through actions.

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bodies etc., both through formal and informal links.
24
These are not static, and individuals or
groups can belong to and move between several clienteles.
25
Within state structures, there is patronage between elite members (senior princes e.g. protect
and position their offspring and younger full brothers), between elite members and institutions
(senior princes e.g. are known to be close to certain ministers or ministries), and also within
institutions (various forms of bureaucratic patronage and internal segmentation of departments
and sections; patterns of kinship or regional background sometimes play a role here).
A crucial aspect of this set-up, many facets of which are by no means unique to Saudi Arabia,
is that vertical links are much more strongly developed than horizontal ones. The historical
reasons related to distribution-based state growth have been alluded to above. Today just like
in the days of rapid administrative expansion, the authority and power of distribution which
sustain institutions all emerge from the centre of the system, which in itself is segmented to an
extent.
The size of the royal family plays an important amplifying role in this context; the number of
princes in government and business has been steadily rising, and there is a prevailing sense of
personal entitlement for them.
26
Although some of them are committed public servants,
altogether the overlapping of informal structures of (quasi-)traditional authority and formal
bureaucracy can decrease the coherent implementation of official policies and increase the
isolation of agencies. As indicated, the growth in royal bureaucrats has also led to an additional
proliferation of administrative structures.
24
Within broader segments, patrons can be clients of larger patrons, patronage can be wielded by
individuals and groups etc. Spelling out all possibilities would create too many categories and be unduly
formalistic. Of course, in its generality, the concept is a bit bland and limited; it hence has to be spelled
out and historicized from case to case.
25
Such suppleness admittedly makes the concept somewhat fuzzy, but due to the inequality of relations
and the vertical, often exclusive structures of communication and authority, it still combines wide reach
with relative specificity. In some cases, we do have to speak of “coalitions”, but these often have internal
clientelist structures and tend to be more ephemeral, context- and policy-dependent phenomena.
26
Hazem Beblawi, ´The Rentier State in the Arab World´, in: Giacomo Luciani (ed.), The Arab State
(London: Croon Helm 1990), pp. 85-98 (91).

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That institutions in general are working in a rather isolated fashion and mostly communicating
with their superiors in the elite is reflected in the low degree of information sharing between
equivalent bodies: On almost each single economic issue, conflicting sets of numbers are
available from different ministries or other organizations. The Saudi press has been carrying
repeated complaints that concerned ministries were not consulted about policies by other
bodies which should have clearly pertained to their jurisdiction too. Due to the high degree of
formal centralization not least enabled by the royal power of the purse, senior bureaucrats are
more likely to compete for access to the top than coordinate among themselves.
Structures meant for horizontal integration – e.g. inter-ministerial committees – often only
reproduce such cleavages. Although there are centres of administrative excellence
27
like the
Saudi Arabian Monetary Agency (SAMA) or the Ministry of Petroleum and Minerals, these
usually have an even more insular character limited to their sector.
Competition of clients for top-level access incidentally also makes controlling the overall
administration easier, and this is a pattern reproduced on a smaller scale within institutions.
Against this background, rent-seeking and maximizing institutional fiefs often appear easier
and more rewarding for senior bureaucrats than pushing coherent policies. The latter demand
getting true top-level commitment and understanding and often requires building cross-cutting
coalitions which are not easy to engineer. Political carefulness often gets rewarded, as a
premium is put on control. Engaged and critical policy advocacy is often substituted by the
convenient technocratic illusion that policy questions can be depoliticised through scientific
research – which tends to lead to the commissioning of endless studies; “analysis paralysis” in
the words of a Western banker. There is limited capacity at the very top to deal with policy
details, although this is what the formal centralization would demand. This also means that
supervision of technical competence and success through the leadership, even if genuinely
desired there, is strictly limited.
A final variety of large-scale political clientelism within the state is embodied by public
employment itself. Salaries have been gobbling up a growing share of the Saudi budget since
27
‘Insulated agencies,’ in the parlance of public administration researchers; cf. Barbara Geddes, The
Politician´s Dilemma (Berkeley: University of California Press 1994).

16
the 1980s, whereas capital expenditure – more relevant for long-term economic development
– has been progressively squeezed. In many cases, overstaffing in public bodies is so obvious
that the distributive purpose is hard to dispute. Against a background of rising unemployment,
job provision through the state is a highly sensitive political issue. The conflict between job
guarantees in various institutions and imperatives of administrative reform is evident.
28
Not least as the groups of those who profit from employment are much larger than those
employed, state employment already touches upon the second large area of political
clientelism: patronage over groups in Saudi society.
29
This is a vast topic, and for our purposes
we can only discuss patronage over private sector actors here.
On the face of it, a good case can be made for much increased independence and candour of
the Saudi private sector as actor on the Saudi political scene. Institutions like the regional
Chambers of Commerce and Industry and their overarching national council (CSCCI) seem to
enjoy increased say and input when it comes to policy discussions. The private sector has also
successfully used the Majlis Ah-Shura as a conduit of its interests. The financial autonomy of
the Saudi merchants has expanded tremendously due to years of rent accumulation, and their
degree of organisation and managerial professionalism has improved markedly. The state has
a stronger need for the private sector nowadays, mainly for its contribution to growth and
employment, but also in some cases for its expertise in economic matters, for quick and flexible
policy input, and information on sectors which the soft, segmented administration itself cannot
obtain. By now, the most highly qualified Saudis are usually found in the private sector; the
rather egalitarian public sector pay schemes, frozen over many years, are far less attractive for
top graduates than they used to be.
The voice of Saudi business has hence become much more audible, and many complaints have
been made in recent years against obtrusive and obstructive bureaucracy. The state does indeed
dish out much less materially, but still interferes with business through what may be called
predatory regulation (the reluctance to give up control incidentally is one main reason for the
28
Ministries are often forced to take on new graduates with non-relevant degrees from a roster which is
imposed upon them.
29
It is sometimes very hard to distinguish with certainty from clientelism within the state, as society and
state in the kingdom are in many senses deeply interwoven.

17
stalled privatisation process). Privately, some Saudi businessmen also complain vehemently
about the expansion of princes into business, which tends to tilt the playing field against them.
The business-state relationship has become somewhat more equal and certainly more
confrontational, as the cake is relatively smaller and competitors are more.
Is the private sector hence the big opponent of segmented and clientelist political structures,
will it be able to do what the state cannot do anymore? Two reasons speak against it: An
international exit option for Saudi capital, and the fact that even today, Saudi business is too
much a creation of the Saudi system, and still too embedded in it.
As far as Saudi investors have gained real autonomy in terms of capital and expertise, a
globalised economy makes easy exit options available, not necessarily in the West – the Jebel
Ali Free Zone in Dubai nowadays is “full of Saudis”, as a colleague in the Emirates told me.
30
Moreover, although opinions are strong, the corporate coherence of Saudi business – or of its
individual sectors – is still undermined by games of public favours from different sides. Though
these favours often are less immediately material than they used to be, they still create
individual or small group clients in Saudi business. Examples include public works tenders and
other contracts which are less than transparent, individual licenses, but also favourable
regulatory decisions and support policies, discretionary information on public policies etc.
Personal links between leading businessmen and administrators or royals loom large here. The
system gets vastly more complex and opaque through the occasional involvement of persons
who are beyond the reach of the Saudi judiciary.
The lack of legal security and the unevenness of playing fields can be reason for complaints,
but they can also contribute to the fragmentation of the private sector. As the number of actors
who matter in Saudi business is relatively small, this effect is reached rather quickly. Those
who seek individual gain can actually profit from local intransparency and segmentation. There
is no need for a grand conspiracy theory here: segmentation and favouritism can reproduce
30
This capital flight issue actually is one of the relatively few direct points of leverage for the international
political economy over domestic economic policy matters in the kingdom.

18
themselves quite well without a grand scheme of divide and rule in the background. One is
nevertheless led to speculate that many intransparencies are tolerated for good reason.
31
A related point undermining the coherence of Saudi business as a whole is that the Majlis Ash-
Shura and the CSCCI have often been used by big, established business actors – precisely those
relatively few who are likely to be well-connected.
32
This has been changing only slowly. In
business like in other areas, there has been a certain ossification of the Saudi scenery: the
private sector has seen few new entrants since the 1980s, and there has been little M&A activity
or sectoral consolidation. Entrenched monopolies and oligopolies are hard to come by. The
“dependent bourgeoisie” on the highest level is still very close to the state and its leadership.
Most family conglomerates are involved in many sectors and company boards at the same time,
indicating privilege and, one suspects, making their policy interests somewhat more diffuse.
There has not been very much meaningful Small and Medium Enterprise (SME)
33
development
which would make markets more dynamic and contested, and interests potentially less
individualized.
At the end of the day, the private sector up to now has appeared to be the strongest collective
actor when it came to orchestrating veto coalitions, e.g. against income tax plans (see below),
attempts to remove national privileges in commercial distribution, or hikes in electricity rates.
34
Generally, the private sector is willing to speak, but hardly willing to openly confront the
system which has brought it into being. How coherent it or its sectoral components are as a
lobby depends on the issue at hand and on how strongly its interests are individualized and
segmented by the Saudi political economy. To briefly return to RST, it is less distribution as
such, but the structure of ties and groups involved in distribution which determines political
action.
31
Of course the positions of the private sector really have to be discussed from issue to issue; this is only a
general caveat that the political coherence of business cannot be taken for granted in a clientelist setting.
32
There has been a certain change in recent years, however, in that more policy-minded figures have
entered the boards of chambers and their sectoral committees, not all of them from the very highest
stratum of business.
33
As opposed to the sprawling, low-margin and low-innovation micro-enterprises in commerce and
services.
34
This is reminiscent of the veto against fiscal austerity in the 1980s; cf. Chaudhry.

19
Administrative clientelism
The discussion of clientelism in business is tangent to the last aspect of the overall argument
to be addressed here: lower-level or administrative clientelism.
35
The difficulties which Saudi
economic reforms have faced cannot be completely understood without looking at the fabric
of the Saudi state itself; the way its bureaucracy operates and interacts with society on a daily
basis. Even larger interests and group delimitations are often rooted in the micro-politics of
Saudi administration. Administrative structures have not been sufficiently analysed so far by
RST and its epigones, although they are intimately related to the distributive nature of the state.
They determine state capacities and define important aspects of the state-society relationship.
As already adumbrated, the functional integration of most Saudi administrative agencies is low.
This is true for inter-agency relations, but also for agencies themselves. Historically, there were
few pressing incentives for cogent information-gathering and regulation – functions which tend
to meet stiff societal resistance and require major effort if not coercion. There is strikingly little
information available on important sectors like agriculture or retail, on businesses in general,
or on personal incomes, which could e.g. be used for taxation. Only recently have there been
efforts to enhance business regulation; the courts are generally perceived to be weak and there
is no such thing as a competition policy.
36
Society has not been very strongly penetrated by the
state in these regards, as with oil the historical necessity to undertake such painful tasks was
removed.
35
‘Lower-level’ is not lowest level: a stiff hierarchy means that below upper management, in many
agencies there is little leeway for personal discretion (and actually often little to do in general).
36
Regulatory institutions generally tend to be weak in distributive states; Vandewalle, p. 8.

20
When legislation and regulation are drawn up in ministries, outreach efforts are usually pretty
limited, although the Majlis Ash-Shura and the increasing inclusion of the chambers of
commerce and industry have brought considerable improvement at least for more important
projects.
37
Altogether, state-society communication on a policy level has traditionally been
rather limited; where it occurred, it was more of a personality- and issue-driven phenomenon
than result of well-established communicative structures.
At the same time, on an individual level, there has been extensive interpenetration of
administration and business (or society). The ubiquitous favouritism which spread with the
growth of the Saudi state has already been mentioned. Unclear, overlapping regulations and
jurisdictions
38
often provide leeway for personalized dealings on lower, less political levels,
involving not only contracts, but also licenses, certificates, registrations, utilities, business
information etc. Considerable inventive talent has been invested in providing rent-seeking
opportunities to oneself and one’s kin, friends or clients; inflated or fictitious sub-contracting
proved specifically popular. Clientelist fiefs and segmentation can exist even within ministries;
in this context, it also occurs that some administrative units have disproportionate influence
and budgets because of the personal standing of their bosses.
The “wasta” needed for many interactions with Saudi administration follows the broader
segmentation: a plethora of applications and documents is necessary to open a business; many
different agencies have to approached, sometimes issuing conflicting requirements.
39
Even if
no nepotism is involved, the system can prove quite cumbersome. But although this inhibits
the functioning of markets, it also helps to keep foreign competitors in check, and gives the
37
As a prominent Majlis Ash-Shura member told me, there are no more laws just drawn up by a small
number of consultants and bureaucrats in the back room of a ministry; interview with Abdalrahman Al-
Zamil, Riyadh, June 2003.
38
In the current apparatus, responsibilities are often diluted between agencies. Water management is a good
(and vital) example which is located somewhere in the vacuum between the ministries of agriculture,
electricity and water, and municipalities and rural affairs.
39
One could argue that many of these and other links are not ‘clientelist’ in a strict sense, as there is no
clear hierarchy between the parties involved, who rather act like partners or friends. However, the broader
structure in which such relationships are embedded tend to be pretty hierarchical, and by and large
societal partners are inferior to the bigger institution involved.

21
“insiders” a stake in the system as it is. It helps to reproduce informal and exclusive networks,
based on favouritism and secrecy, which inhibit broader group formation. The general secrecy
in which the Saudi bureaucracy operates is integral to the segmentation of clienteles and
institutions.
Business attitudes to such procedures may be ambiguous, but most bureaucrats involved
certainly have an interest in defending them. Although bureaucrats, especially on lower levels,
have little aggregate active policy power or agency, a tremendous diffuse veto and obstruction
capacity can emerge from their ranks. Even if there is genuine commitment to structural change
on senior levels, higher bureaucrats often prove powerless against a diffuse mass of employees
which can hardly be sacked and have little incentive to perform in a basically non-meritocratic
setting – strong hierarchies notwithstanding.
Reform coalitions, as far as they exist, are often top-heavy; but the combination of over-
centralization and limited capacity at the top together with an effective lack of sticks and carrots
means that diffuse resistance can be quite effective. Mid-ranking bureaucrats have even been
observed to conspire against engaged colleagues who were willing to push certain standards of
performance and output.
In addition to the broad obligations the Saudi state has incurred through political clientelism,
it gets bogged down on a small scale through administrative clientelism, especially when it
comes to implementation of policies which have been agreed on a higher level. Whereas
overarching interest aggregation, dispute resolution and policy communication are frequently
deficient and state and society appear juxtaposed on a larger scale, the two are often closely
intertwined on a micro scale.
Case studies
In what follows, some case studies illustrating the above processes are sketched very roughly.
40
Focusing on WTO accession issues, the foreign investment law, Saudization and plans for a
40
At the time of writing, much of the substantive research on these studies has been done and are in parts planned
for subsequent publication.

22
personal income tax, the cases will exemplify how policies are played out in a segmented
clientelist setting. As will be seen, strong top-level backing is needed for any significant policy
project, as the system is hierarchical and potential interest groups tend to be fragmented. Input
from society is only selective and the system does not offer an integrated field for negotiating
policies. When it comes to implementation, policies tend to lose momentum on lower levels
and, if they have a transversal nature, get lost between “fiefdoms” and informal networks. In
most cases, the overburdened leadership has limited follow-up capacity.
WTO accession
The decision to apply for WTO (then GATT) accession was taken in 1993, at a point when it
was becoming obvious that membership would soon be nearly universal. It surely seemed to
be a prerequisite for being a serious international economic player. However, the Saudi
authorities did not seem fully aware of the extent of regulatory changes that would be have to
be discussed – if not necessarily implemented fully – in the course of the accession process.
The principle of non-discrimination, implying the opening of sectors to foreign or domestic
competition, the abolitions of monopolies and exclusive agencies etc. went against the tradition
of Saudi business policies.
The private sector was in large parts unenthusiastic about the implications of WTO
membership. Its interests were determined by stakes in formally legitimate rent-seeking (e.g.
exclusive retail “agencies”), but, it appears, also by stakes of many individual actors in
administrative clientelism, which explain part of the resistance against WTO-induced
transparency. The lukewarm response to the WTO idea demonstrated that significant parts of
the Saudi private sector still have a rather cozy position the in current system; it has highlighted
the still considerable importance of various protection mechanisms and favours.
The lack of debate and information on WTO within the kingdom demonstrated the absence of
a powerful public forum to settle policy debates. As far as debate occurred, it did so in a
dispersed and patchy fashion in different fora. The push behind the accession appeared rather
timid for a long time; there were no broad developmental elites pressing the issue; and no strong
coalition partners in society. WTO negotiations also appeared to show the limited capacity of
the Ministry of Commerce, which appeared to be responsible for WTO matters in a rather

23
isolated fashion and failed to reach results for a long time – the successful conclusion of
negotiations was repeatedly announced, only to be delayed again briefly later. The Majlis Ash-
Shura was allowed to enter the debate only very late in 2003, and there appeared too little
adjustment of other agencies and regulations to shape up the legal environment. Too much
seemed to be at stake, with too little coordinate capacity for any important adjustment to happen
quickly. Only in autumn 2003, the important bilateral WTO negotiations with the EU were
concluded, and by now US-Saudi negotiations seem to be at a very advanced stage. How far
eventual membership will really force changes in business and regulative practices in the
kingdom remains to be seen (the evidence from neighbouring cases like Egypt or Jordan is
mixed at best).
Foreign Capital Investment Law
At least as much as WTO membership, the foreign investment law of April 2000 appeared to
be largely a top-down project. The Crown Prince had put his full weight behind it and although
it was issued somewhat later than announced, the active gestation period of the project seemed
limited to a period of not more than two years, quite brief for Saudi standards. Still, its initiation
demonstrated the existence of political factions and clienteleles within the state, although in
this case, the most obvious case was one of reform-oriented patronage: of the Crown Prince
over Prince Abdallah bin Feisal bin Turki, the later head of the Saudi Arabian General
Investment Authority (SAGIA). As one Saudi banker had it, the law was a “personality-driven
project”
41
.
Significant parts of the private sector again were sceptical about the undertaking, which by
allowing 100% foreign-owned ventures was likely to erode Saudi privileges in a number of
markets, and by putting remaining protected sectors on a “negative list” for periodical review
created a possible gateway for further foreign encroachment (especially in the commercial
sector). Although one hears conflicting statements on the issue, Saudi business was certainly
not the driving force behind the law and did not appear as a unified actor. It was, however,
granted opportunity to comment on drafts of the law, which were circulated in 1999 and 2000.
At least in some sectors, administrative clientelism tended to create stakes in intransparency
41
Interview with chief economist of a Saudi bank, Riyadh, May 2003.

24
and lack of competition, whereas foreign entrants were perceived as likely to undercut
established favouritist structures through superior technology and management. At the very
least, Saudi businesses were clients of various forms of regulatory protection.
Strong political leadership was needed to push the issue, which was probably induced by the
oil price crisis of 1998/99. The law brought with itself the creation of an additional institution
– SAGIA – which was responsible for regulatory follow-up and for dealing with future
investors. The resistance of most other Saudi institutions was epitomized by the first draft of
the “negative list”, to which ministries in the course of drafting had added so many additional
sectors that the Supreme Economic Council under the Crown Prince eventually intervened to
curtail it.
SAGIA, though a genuinely reform-oriented body, has often proved unable to break into the
turf of other institutions
42
which still can create enormous obstacles on the ground for foreign
investors who need documents and clearances from a plethora of opaque and slowly working
bodies. The ideal of creating a “one stop shop” in SAGIA has not been fulfilled (puckish
commentators call it the “one more stop shop”). This shows how implementation of cross-
cutting policy projects is likely to get bogged down in old patterns of segmentation and in the
vertical structures of authority in and around the Saudi state. Saudi business often acquires its
competitive edge through access to exclusive networks which help to “get things done” within
this system, operating through networks and brokers in numerous agencies. Administrative
clientelism in institutions like the Ministry of Interior – which has a broad administrative reach
even into business – means that many markets are far from being “level playing fields”. Foreign
actors often have to tap the networks of local Saudi intermediaries.
SAGIA represents an attempt to skirt the bureaucratic thicket, similarly to the Supreme
Commission for Tourism and even the Supreme Economic Council itself, which was founded
in late 1999 as a kind of mini-cabinet for economic policy issues, skirting the bigger and more
sluggish Council of Ministers. Beyond these major bodies, numerous additional committees
42
In this it is different from otherwise comparable reform bodies in places like Brazil and Tunisia, which
had the power to undercut other agencies. In Saudi Arabia, these apparently have much more staying
power; for Brazil see Geddes; for Tunisia see Eva Bellin, ´The Politics of Profit in Tunisia´, World
Development 22, No. 3, pp. 427-436.

25
have been called into being for new policy questions. Some of these bodies are lively, insulated
from the rest of bureaucracy and do more than reproduce existing cleavages.
43
Such institutions
can indeed help in finding clarity over issues of principle, but often do not effect the necessary
changes in existing bodies and the administrative nitty-gritty which stays unchanged,
uncoordinated, segmented and opaque. State capacity cannot be created by fiat, or at least not
without great effort and hurting large numbers of stakeholders in the existing system. The
creation of new bodies in the course of reforms may reflect a historical rule of thumb: since the
onset of oil wealth, the Saudi system has mostly changed through expansion. This has its limits.
Saudization
State employment is perhaps the area where the limits of expansion have become the most
obvious. The sensitive issue of rising Saudi unemployment has become so pressing that it has
even found its way into the semi-official Saudi press. Saudization of labour markets is a notion
which has been around for more than two decades. Only in recent years, however, have serious
administrative moves been made to force the private sector to contribute to job creation for
Saudi nationals (currently, around 7 million expatriates are resident in the kingdom, a majority
of them actively employed; an estimated 90% of private sector labour is expatriate).
The government attempted to impose annually rising quotas of Saudization on private
companies, ceased issuing new work visas in certain areas of employment, and stipulated the
complete Saudization of others, including vegetable markets, gold souks, and taxis. There
appear to be political divisions among the leadership about pace and instruments of the policy,
and different princes are known to be pro and con. This may have contributed to the rather
declaratory nature of at least the first few repeated attempts of imposed Saudization. The
measures in the second half of the 90s seemed to have little will or capacity of enforcement
behind them. When enforcement progressively happened, it tended to be selective.
Administrative clientelism allowed some businesses to skirt the regulations, whereas others,
often foreigners, were penalized. A prominent technique somewhere in between was to reduce
43
The jury is still out on many of them; the new sectoral regulators e.g. are as yet empty shells. This
however is also part of a typical pattern of announcements not being followed through on the level of
implementation which requires restructuring (which may be painful), attention to detail, capacity
building and often coordination between various bodies on lower levels.

26
the number of overall employees by outsourcing certain tasks; not by coincidence the
companies who did the outsourced work tended to be particularly well-connected.
44
Such
accounting tricks and the use of wasta meant that the private sector opposition to a theoretically
costly policy in the “soft stage” of Saudization was muted, as individual strategies of finding
one’s way were often preferred.
When pressure for meaningful Saudization from both elite and society increased, the loopholes
became fewer, and the resistance of the private sector became more vocal. Implementation is
still patchy and rules are badly communicated to the sectors concerned, reflecting both the
customary low coordination of involved agencies and their limited outreach capabilities. But
whatever the eventual degree of implementation of the policy, it seems to have demonstrated
that the specific setting in which actors move influences the political salience of issues and the
will to act on them collectively. Administrative clientelism seems to individualize strategies.
Income tax
The project of an income tax on expatriates was one of the few issues which met a remarkable
collective response: it was clearly rejected. The tax was meant to diversify public revenue away
from volatile oil income. Most schemes under debate were aimed at expatriates first, but for
many Saudi observers, a tax on nationals loomed in the background. It is an issue at the very
heart of the RST debate.
45
Two attempts to introduce a tax have been made in 1988 and 2003. Both failed. Attempts to
redefine the distributional system, it appears, are most likely to induce a broad veto coalition,
as a fundamental systemic feature of the rentier state, is in question, a feature in which almost
everybody regardless of his particular position has a stake.
44
Interview with senior banker in Riyadh, November 2003.
45
Recently, collection of certain fees and revenues has been outsourced to private companies in some
municipalities; I hope to be able to research this possibly paradigmatic development in the near future:
How are these agencies perceived by various constituents, how far can they act autonomously? This is
an issue reaching far beyond Saudi matters.

27
In 2003, it was the Majlis Ash-Shura which brought down the proposal; the business
representatives there played a prominent role, as a tax on their expatriate employees was a
potential indirect cost factor. The implicit exit threat of Saudi capital helped to drive the point
home that under current political circumstances, the income tax idea is dead. Transparency of
government finance was an important implicit issue, probably more so than representation, as
the general sense was that nobody is willing to contribute money to a system which does not
generally open its books. In this case, even those with a relatively privileged position tended to
agree. The private sector is more alienated – and vocal – in this regard than it used to be.
46
Summary of findings
There would be many more examples to elucidate aspects of the segmented clientelism thesis,
including issues of legal transparency, labour and company laws, and various privatisation
projects. More examples could be fielded to illustrate the role of royal actors and high-level
spheres of influence, specific patronage structures within the state and state and society, and
the interplay of formal and informal structures.
I hope that several basic points are clear by now nonetheless: Strong top-level backing is
needed for an important policy project to enter serious debate; there is not too much “bubbling
up” of projects either from the hierarchical and segmented bureaucracy or from a society which
is also still fragmented in many regards. The private sector, although enjoying more voice,
channels of communication and autonomy, is still tied up in a system of partial protection,
perks and favours, both formal and informal. Its input is selective.
47
Access in segmented
46
Conversely, open books are anathema for Saudi business itself, which hedges its information tightly.
Should a tax materialise one day – perhaps a sales tax instead of one on personal income –, the state
would be challenged to develop information-gathering and enforcement capacity which, as the lack of
data on most sectors shows, it does not have (to be sure, there is an Islamic “Zakat” tax on Saudi business,
but the uneven and oblique application of its rules rather supports the point).
47
It looks a bit worse here than it is due to the choice of case studies, which were selected as they
demonstrate several phenomena at once. On other, more limited, legal issues, demands and input of Saudi
business have been more clearly articulated and were more strongly oriented towards regulatory reform
and state withdrawal. The point is that its stance depends on the issue at hand as there are many stakes
in the existing structures, and hence a broader political position is slow to emerge.

28
clientelism is often via specific and parallel channels, not general, aggregate or public ones. As
indicated above, this tends to inhibit class formation and the emergence of more “political” as
opposed to “distributional” interests, as visible in the policy debate. Segmented clientelism in this
sense has a stabilizing effect. Although there is an exit threat for private capital – whether
concerted or not – this does threaten the system with imminent collapse, and is executed rather
silently.
Broader state-society communication about policies has improved, but there is still no
comprehensive framework for it. The Majlis Ash-Shura with its current powers is still one
among many institutions. Although it serves to articulate interests of at least certain parts of
society, it is not powerful enough to act as central clearing and “pacting” institution for really
difficult decisions. Up to now, it has helped to give some legitimacy to moderately contested
projects, but it is at the same time another layer of decision-making which – as several of its
members admitted to me – can slow things down even more.
48
Nevertheless, when crucial high-level players agree, reform decisions are sometimes taken. But
when it comes to implementation, at least cross-cutting projects run the risk of getting stuck
between several agencies and spheres of jurisdiction and influence. Most parts of the Saudi
administration have not historically developed high capacities to consistently regulate business
(or society in general), and due to their insular quality do not coordinate much. Many are still
groupings of clienteles as much as functional units.
The formal centralisation in the Saudi state – an aspect of the vertical structures of power built
up around the royal family as “arch-distributor” – rather increases the implementation
stalemate, both due to the overburdening of leaders with tasks of decision and monitoring and
their role as senior patrons with numerous clienteles they cannot or do not want to hurt.
This often leaves considerable de facto autonomy to holders of “fiefs” below them to distribute,
regulate and manipulate on a small scale. They have less leeway for meaningful reform projects
which would require powers of restructuring and setting rules – often rules which other
institutions would have to adhere to. There are several policies not discussed here which
48
Interviews with Saudi bureaucrats and Majlis members in Riyadh, May and June 2003.

29
arguably were successful at all stages, including implementation, most prominently the
corporatisation and partial privatisation of Saudi Telecom.
49
But these were those which could
be acted out under high pressure on a limited field, with not too many stakeholders and agencies
involved.
It should be said that the distributional structures and social services in Saudi Arabia are on many
accounts still an outstanding success; the Saudi regime could largely avoid becoming a “fierce”
regime like some of its neighbours. The overall stability of the system is remarkable, and the
emerging exclusion from economic and social networks is a relatively benign phenomenon
compared to what is going on in other parts of the Middle East. This essay merely argues that
clientelist stability has come at a price for the manoeuvrability of the Saudi state.
A note on alternative explanations
Segmented clientelism is a complex argument and objections may be raised that it is actually
too ideographic, post hoc and multi-faceted to have much explanatory power. I would contend
that for one, social reality, though rule-bound, is messy, and I deliberately chose to move into
disaggregation. Secondly, all individual explanations provided above are actually rooted in a
bigger pattern of segmented, oil-based institution- and clientele-building. What is perhaps more
important methodologically is to engage with two conceivable alternative explanations for
meek reform results.
50
‘The Saudi leaders could if they wanted, they are just too careful.’ Proponents of this view
often emphasize the importance of consensus in Saudi political culture. It is true that usually
senior princes want everybody on board. It is a somewhat moot point to which degree this is
their choice in each instance or how much the extensive Saudi system of stability management
simply demands it. But the cases above do anyway show that the leadership has actually tried
to push certain initiatives, even if there was some resistance, and failed, at a cost to their
49
Other successes include the privatisation of ports management, making SABIC a world player in
petrochemicals, and managing and expanding the industrial cities of Jubail and Yanbu.
50
I am happy to receive further proposals for alternative explanations of all of or parts of reform politics.

30
credibility. If they withdraw from projects or do not push for them anymore, perhaps this is
also an expression of their carefulness, but the problems their projects run into in the first place
are better explained by segmented clientelism than by the political culture of the leadership
alone.
51
A broader counterargument against a culturalist explanation is that it was the political economy
of oil which enables consensualism and a game of positive pay-offs for everyone in the first
place. As late as the 19th century, senior princes were in the habit of killing each other. The
same is true about the closely related argument about a “culture of care and inclusion”: There
is some merit to it, but it does not explain the whole pattern of reform politics and is in itself
in need of explanation.
‘It is all a result of senior-level infighting.’ This would be a strongly curtailed version of the
segmented clientelism argument, looking only at its upper end. But again, projects have
become bogged down on lower levels, and the power base of senior actors derives from the
segmented institutions and groups they control – groups they also have to cater to.
52
There is
strong anecdotal evidence that Saudi bureaucrats are not easily forced to perform. How much
senior level segmentation matters compared to lower level state structures – some of which are
perhaps tolerated as a result of senior level disunity – may become more transparent if Abdallah
emerges as a full king. A serious acceleration of reforms on the ground would reduce the power
of my broader structural argument. I suspect however that soft state structures, administrative
clientelism and low capacities cannot be swiftly removed by a unified leadership either, as this
would mean redefining crucial parts of the system.
51
A similar argument is that reform moves are only meant as public relations exercises. This may be true
to an extent, but it is clear that on several instances senior princes have put their reputation as
policymakers on the line with specific projects, and it is hard to deny that demographic and other
pressures have created an interest in economic reform and decreasing the burden on the distributional
state.
52
For a particularly strong general argument of how societal structures of authority can grow into the state
and incapacitate it, see Joel Migdal, Strong Societies and Weak States: State-Society Relations and State
Capabilities in the Third World (Princeton: Princeton University Press 1988).

31
To summarize, my claim is that lack of momentum in economic reform is not (only) a
personality and top-level issue, but more of a structural phenomenon explained by the
institutional history in the kingdom. Putting it crudely, fiefs are more than just their holders.
Broader theoretical alternatives
The essay has been pretty Saudi-specific so far. Finally, a few words are in order on the
relationship of the present approach to broader theoretical perspectives in political science.
The case against simply using conventional RST for analysing Saudi economic policy has
already been made. But comparativists beyond the confines of Middle Eastern Studies may
chide me for not simply using and elaborating corporatist or neopatrimonial approaches.
Admittedly, Saudi Arabia is a strongly authoritarian, highly centralised system where societal
and functional groups are controlled and arrayed by the state: a prime suspect for corporatism.
But this approach is less useful, I think, for capturing the limits of autonomy of the Saudi state,
and to analyse the specifics of oil-based institution building.
53
Moreover, the Saudi state is
certainly not a unitary and insulated actor.
54
So if politics has more of a network character, why not employ neopatrimonialism? Much of
what I describe fits neopatrimonial models, where politics dominates economics and personal
relations – as opposed to abstract class relationships e.g. – explain a great deal of politics. But
rules and formal policies do matter in many areas in Saudi Arabia; despite limited state
capacities, the level of “stateness” and bureaucratic legality is higher than in many other
developing countries.
55
53
Martin Carnoy speaks of groups with distinct economic positions which are orchestrated by a powerful,
independent state; this does not quite fit the Saudi picture. Martin Carnoy, The State and Political Theory
(Princeton: University Press 1984), p. 39.
54
Bureaucratic authoritarianism may also be a candidate for theoretical subsumation, but it is too obviously
development-oriented and predicated on needs of „production states“.
55
Still, one could argue that segmental clientelism in many regards is a sub-case of neopatrimonialism,
which is not a very specific model.

32
This chapter is not an exercise in coming up with just another theory; it is more a specific
combination of different approaches – rentier and distributive state theory, patron-client
analysis, neopatrimonialism –, without adopting any one totally. Saudi Arabia altogether is
rather specific, but certain aspects of it can be very neatly compared. One major objective of
this exercise was indeed to bring the kingdom back into the remit of general comparative
politics; and some results are very interesting also from a general perspective. The challenge
will be to find other, very roughly similar examples of segmented clientelism, to see which
aspects may be generalized.
56
Segmented clientelism in the “state” debate
The biggest value added of the findings here may be that they can empirically illustrate some
of the themes which have occurred in the debate about “the state” which has been raging in
political science for almost 20 years now. First, they may help to differentiate separate aspects
of state “autonomy”, qualifying and specifying a concept which has often been used too
loosely. As far as economic policies in the kingdom go, one should distinguish decisional
autonomy of the leadership – which can be rather high if unity is reached – and implementation
autonomy, which is pretty low in case the policy has some kind of regulatory or cross-cutting
character.
57
Generally, as Peter Gourevitch has pointed out, a far reach of the state does not mean it is
autonomous in its actions, and “more” state also means more interests in its actions.
58
This is
as true for an expanding distributive system like Saudi Arabia as it is for any other state and in
that sense limits the use of conventional RST.
This essay also was an attempt to historicize the rentier state, and show its development options
and limits over time by analysing the consequences of path-dependent institutional
56
Syria, Iran and Venezuela may be candidates.
57
The term state „capacity“ is discussed in footnote 5.
58
Peter Gourevitch, Politics in Hard Times: Comparative Responses to International Economic Crises
(Ithaca: Cornell University Press 1986), pp. 230, 231.

33
development. In quite a different context – a comparative analysis of state-led industrial
development in mostly non-rentier states –, the sociologist Peter Evans has made a general
argument similar to the present one: “The class structure that emerged as a result of state action
changed, in its turn, the political condition for future state action.”
59
Substitute “structure of
clienteles” for “class structure” and this summarizes the bind in which the Saudi state finds
itself.
Future of the Saudi state?
The last two paragraphs take the liberty to venture into some general speculation about the
future conditions for economic reform, derived from Gourevitch’s and Evans´ work:
Gourevitch has used Western historical examples to show that increased struggle over policy
leads to stronger organisation of interest groups. This may be necessary for new reform deals
to materialize.
60
One may add that fragmented or segmented societies are less likely to produce
strong sectoral and functional group organizations. Groups in Saudi Arabia, it appears, are not
united and autonomous enough to negotiate a new deal, and the policy debate is not yet
comprehensive enough: budgetary transparency e.g. is still a public no-go area, although it
would have to be part and parcel of many reform policies (incidentally, it is also the central
issue on which almost all of the otherwise wildly heterogeneous critics of the leadership agree).
Evans directs our attention to the state side of the deal: To create powerful developmental
coalitions, he holds, a state has to develop new types of links to society.
61
The mechanisms for
this do not appear to be there in present day Saudi Arabia. There is no sufficiently even field
for negotiation, aggregation of interests and, crucially, legitimate dispute settlement which
would enable necessary reform deals which usually are painful for parts of society.
62
The state
would not require institutionally and personally segmented downward links, but policy-
59
Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton: Princeton
University Press), pp. 35f., 228, 238f.
60
Gourevitch, p. 232.
61
Evans, p. 228.
62
Thanks for this idea go to Giacomo Luciani; it emerged in one of many discussions in Riyadh.

34
oriented, more equal ones. Only then, I suspect, would retrained bureaucrats on lower levels
be able to redefine their very vocation and become part of a bigger project.