The theory of crony capitalism tells us that when the private sector is dependent on the government, the ruling elite can decide who gets deals and who prospers. This ensures the ruling elite’s hold on power by creating private-sector networks that revolve around them, like spokes of a wheel. Dependency of the business class on the rulers helps to remove an otherwise potentially serious threat of regime change. Crony capitalism is only possible when there is not a lot of competition and conflict within the private sector, which allows the rulers to adjudicate between groups with great flexibility. However, as the economy grows, the ruling elite finds the private sector harder to control, and adjudication between competing national groups becomes a lose-lose situation for those in power. This was exemplified in the competition over the second telecommunications license in Saudi Arabia in 2004, where ten of eleven groups in competition each employed a different prince to make their case to the rulers. In the end, the group without a prince got the contract, showing that the ruling family felt constrained by the competing interests within its own power base and did not feel comfortable showing favoritism to any particular faction. Once the situation becomes lose-lose, the rulers end up being forced to create an objective and transparent process to adjudicate private sector competitions, which imposes constraints on their own behavior and may lead to increased regulation and transparency elsewhere in the government. By applying the theory of crony capitalism to the GCC states, I seek to explain the puzzling relationship between the autocratic governments and the expanding private sectors. What insights can we glean from the lens of crony capitalism? What explains the variance we see in the different countries of the Gulf? My study encompasses all six GCC states, with two qualitative case studies providing a special emphasis on Bahrain and Qatar. Through in-depth field research, including interviews with leading business families in the two countries, I document the conditions under which we have seen regulation evolve in the GCC countries, and what this evolution may mean for the economic and political future of these regimes. As I am currently in the region conducting this fieldwork, I hope to present my work and receive feedback from my colleagues at the annual MESA conference in Boston this November.