The Islamic Republic of Iran is often identified as a theocracy but seldom characterized as a rentier state. This paper is an attempt to problematize Iran’s oil-centred rentier state and its correlation with authoritarianism. The paper’s theoretical standpoint is equally distanced from cultural essentialism (Iran’s culture as the main obstacle to democracy) and conventional structuralism (economic determinism – undermining the intersection of political economy, history, culture and human agency). The paper adopts a critical political economy approach to the study of democratization in Iran. This paper is divided into three sections: The first section is a critical study of conventional and more recent theories of rentier state and its correlation with authoritarianism/democracy. The second section examines why postrevolutionary Iran is a rentier state. Iran’s oil export has declined due to the targeted economic sanctions. However, it still holds the fourth largest oil resources and remains among the top ten exporters worldwide. Iran’s economy relies on substantial external rent and state remains the principle recipient and distributor of the external rent. 60% of Iran’s annual budget comes from oil revenues and Iran’s Oil Stabilization Fund has compensated 90% of the annual budget deficits. The third section demonstrates how and why the oil revenue has strengthened authoritarianism in Iran. Oil dependency has increased under the Islamic Republic. Oil rents created a new class of ruling oligarchy whose survival rests on the status quo. The paper examines politics of petro-populism under former President Ahmadinejad whose government received the highest oil revenues in Iran’s history and is known for one of the most corrupt administrations. The threefold findings of the paper are based on critical literature review, data analysis and field research. First, oil is not the only explanatory factor for authoritarianism; autocracy existed long before the discovery of oil in Iran. However, rentierism has immensely reinforced autocracy. Second, rentier state is a double-edged sword: it consolidates authoritarianism but it also contributes to socio-economic development and the expansion of middle class who often pushes for political reform. Rentierism has nurtured its own enemy from within. Third, rentierism is not a destiny. The paper examines case studies (Norway, Mexico, etc.) and three different strategies to move beyond rentierism (privatization, populist re-distribution, and decentralization of oil revenues). It shows whether and how theses experiences and strategies help Iran move beyond politics of rentierism and petro-populism.

Rentier states vary significantly in their commitment to and implementation of diversification programs, despite growing evidence supporting their economic necessity to sustain growth in fuel-rich countries. As early as the first oil boom in the 1970's, Saudi Arabia and Oman started designing and implementing diversification programs. While becoming increasingly dependent on natural resource revenues, other countries like Algeria and Libya have lagged behind in mapping out a diversification strategy. Given that diversification creates a trade-off between economic stability and potential political competition created by a shifting economic structure, what determines a rentier state's willingness to promote economic diversification and implement a long-term development strategy? If oil gives rentier regimes the latitude to pursue spending strategies to remain in power and secure their continued access to rent, what then determines the choice of such strategies? Because they are politically costly and difficult to implement, diversification programs can shed light on the political factors that determine allocation decisions in rentier states, and explain to some extent why some countries fail to avoid the resource curse. Yet the topic of diversification remains largely understudied, and little is known about the factors that lead some countries to implement such programs while others do not. This paper focuses on the intra-regime power dynamics that determine the observed variation in diversification patterns, and proposes a theory that links the structure of power in autocratic regimes to the adoption of diversification programs, conditional on the size of natural resources. Specifically, I argue that autocratic political power is structured at two levels determining the extent to which rulers will be inclined to promote diversification programs: (1) the state and non-state business elite level, and (2) the ruler's inner circle level. The configuration of power distribution at those two levels structures the incumbent's incentives to promote diversification. To test the theory, I compare diversification programs in Saudi Arabia and Libya between 1960 and 2010. With comparable oil qualities, large reserves, autocratic regimes, tribe-based societies and small populations at the time of oil discovery, Saudi Arabia and Libya have followed dramatically opposite diversification patterns that can be explained through the analysis of power distribution within each regime. By looking at the political factors that drive diversification strategies, this paper aims to uncover a powerful mechanism by which oil can affect the economic development and political stability in autocratic rentier states.

The proposed paper offers a differentiated analysis of the social, economic and urban development that the Sultanate of Oman has accomplished in the course of oil modernization over the last 40 years. The aim is to focus on the societal and political context behind the modest yet visionary (i.e. “sustainable”) transformation process Oman has undergone, and to examine the Sultanate’s way of meeting the ideals and values of modernization (in its western understanding) without denying its own traditional values, practices and lifestyles. For this, Oman is widely recognized as being moderate in its pursuit of development goals relative to most of the other GCC countries. Yet, the country is also tackling urgent socio-political, economic and urban challenges that have emerged from global interactions, particularly in the capital area of Muscat and against the background of the dynamics of international migration to the Gulf. Muscat represents a longstanding cosmopolitan place due to its historical significance as an important hub in the Indian Ocean sea trade; it is still the countries’ nodal point for its main economic activities. Hence, Muscat hosts the majority of the foreign labor force of the Sultanate. However, intensifying efforts to replace foreign labor with nationals in the process of ‘omanization’ has caused tensions, which has forced the consideration of current challenges such as social heterogeneity, integration, the “right to the city”, the production of space and society etc. from different as well as critical angles. The paper presents results of the authors’ own in-depth empirical research activities which have been conducted in Oman since 2009. Methodologically, the research data are of a qualitative empirical nature, reflecting different perspectives of nationals and non-nationals living in Oman.

The dominant narrative on oil in the Middle East usually explains the formation of the oil producing state in terms of a simple relationship between economics and politics. Countries such as Iran suffer from a heavy reliance on oil revenues which often leads to authoritarian rule and little prospects for democracy. Theories of the state more specifically have tended to focus on questions of sovereignty or executive power. As a result, they overlook the large-scale technical projects of building energy networks that have often represented the most widespread, complex and localized forms of state power and authority. Is it enough to think of oil as simply a natural resource that affects political systems, social and economic orders, and state formation from the outside while simultaneously blocking the possibility for more democratic forms of politics? What if we were to follow the oil itself and map the socio-technical arrangements in which it gets produced, transported, and sold? The origins of some of the most important battles concerning the Iranian state’s demand for sovereignty over its oil resources emerged within specific controversies over the exact nature of Anglo-Iranian oil and its life span, production rates, and reserve estimates. Based on archival research in Iran and the UK, this paper takes seriously the materiality of oil to reveal how the Iranian state was shaped in important ways by the battle to control Iran’s oil precisely at sites of technicality and petroleum knowledge gathering. Article 14 of the newly revised 1933 concession stipulated that the Anglo-Iranian Oil Company (AIOC) held the “obligation to place at the disposal of the Iranian government the whole of its records relative to scientific and technical data.” The risk for the British side was that other countries would follow suit and make claims in terms of national sovereignty, such as in Mexico. AIOC’s representation of its science and technology greatly underplayed the role of interruptions posed by local political communities and all the work and collaboration required to learn about the behavior of the oil. By placing at the center of the analysis the ways in which techniques of representing and standardizing oil accumulated, operated, and circulated at multiple sites in southwest Iran, Tehran, and London, I reveal that in practice, the powers of AIOC and the Iranian state were worked out within a specific and local history, precisely through the management of technical and scientific information about oil.