The states of the Gulf Cooperation Council (GCC) have emerged as powerful global players in recent years. The breadth and depth of Gulf States’ enhanced engagement in global issues extends from energy governance to the politics of climate change and the debate over reforms to the global financial architecture. This has propelled them into the global arena largely on their own terms, but has not been accompanied by any substantive identification with the notion of ‘global governance.’ State-centric visions of inter-state cooperation, rather than attachment to normative concepts of global governance, still motivate GCC policymakers to project their interests globally, primarily in order to bolster their domestic and regional position. Nevertheless this engagement is taking place within a rapidly globalizing environment in which complex interdependencies have emerged that bind the Gulf states to global structures and provide the parameters for their engagement within the international community. This paper expands on these interdependencies and explores the practical implications of Gulf perspectives on, and engagement with, global issues and the shifting governance of globalization. It highlights an important distinction between economic globalization, which is embraced, and its political and cultural dimensions, which are resisted. Gulf perspectives focus on the ‘governance of globalization’ rather than normative attachment to concepts of global governance, which suggest a hierarchical order that undermines state sovereignty. Greater conceptual clarity over Gulf States’ perceptions of global governance contains much of relevance for studies of comparative politics, international political economy as well as foreign policy analysis and theories of globalization. The first section of the paper will explore the historical and contemporary processes through which the concept of global governance is filtered, and documents the contestation of that term in regional discourse. This leads to a second section on emerging linkages between the GCC states and major developing nations that are creating new coalitions of convenience with a shared interest in reshaping frameworks of global engagement. This reflects a broader global realignment and addresses the broader rebalancing of global geo-economic power. The final part of the paper focuses on three key issues – the partial embedding of ‘global values’, financial architectural reform, and energy governance and the politics of climate change – to operationalize and map the nature and intent of Gulf states’ involvement in the governance of globalization on a practical and real-life (rather than theoretical) level.

The MENA region experienced significant economic growth in the 2000-2008 period, fed by increased oil revenues, remittances and net equity inflows, including a surge of intraregional FDI. During the 2000s, analysts argued that the GCC countries had learned important lessons from the resource-curse cycle of the 1970s and 1980s, namely to invest most of their windfall hydrocarbon revenues, to diversify into non-hydrocarbon-dependent investments, to encourage private sector growth, and to spread their risk geographically. MENA’s investment to GDP ratio increased by 5 percentage points, and GCC intraregional investment to the developing countries of the region rose from $4.7 billion in 2000 to $21.5 billion in 2007. The GCC countries accounted for one-third of total FDI (in dollar terms) to the Mediterranean countries from 2003 through 2007, but most GCC investment in the region actually took place among its own members, and the bulk of investment favored services over goods production. The absolute magnitude of investment was not as great as the increase in remittances or in reserves due to oil revenues, and FDI to the MENA region, outside the GCC itself, was actually a small proportion of all GCC capital outflows, just 11 percent as compared to 73 percent to the West. Furthermore, the distribution of FDI inflows within the region was uneven and consistently favored Saudi Arabia, which received about 33 percent of global FDI flows into the Arab region in 2007 and 2008, and 31 and 38 percent, respectively, of total inter-Arab flows in those years. The MENA region as a whole showed surprising resilience when confronted by the crises of 2008 and 2009, growing by 5.1 and 2.4 percent in those years, and by January 2010, stock market indices were approaching pre-crisis levels. Aggregate inflow of foreign direct investment to the diversified economies, which had been 8.1 percent of GDP in 2008, fell to 4.3 percent of GDP in 2009, but remained positive. On average, GCC GDP shrank by just 0.6 percent in 2009, and current accounts remained in surplus. Overall output was sustained by the non-oil sectors, a consequence of heightened investment in domestic economies in the 2000s, and rapid increases in anti-recessionary government spending. On these grounds, the World Bank and other analysts expect the GCC to lead MENA growth in the post-crisis years. This paper will consider whether intra-regional investment is up to the challenges raised by these expectations.

The policy of Saudization of jobs and replacement of non-Saudis with Saudi manpower was initiated in the Fourth five-year development plan, covering the years 1985-1989 and this policy was continued in the Fifth, Sixth, Seventh, and Eight Development Plans. Government posts have been successfully filled with Saudi nationals since the oil boom, to the extent that they reportedly accounted for 78 percent of the government sector. However, Saudization in the private sector has virtually failed. Although 57.1% of total expenditure earmarked for development agencies was allocated to human resource development during the Seventh Plan, covering the years 2000–2004, the employment of Saudi manpower in the private sector still remained at the low level of 35.5 percent. Hertog tries to find the reasons of policy failure from the micro-analysis. He argues that the failure of this policy shows how the state’s capacity to implement economic policy for solving urgent long term economic problems is challenged by the segmented “spoke and hub” bureaucratic system, and patron-client relations among princes and bureaucrats and brokers. However, this micro analysis has some limitations to explain the real macro-picture of this policy failure hidden behind retierism. In the 7th National Dialogue in Buraidah, Minister of Labor Ghazi al-Qusaybi mentioned that “his ministry had to succumb to the demands of a large swathe of the society which opposed his ministry’s policy of minimizing foreign recruitment, mainly because of the Kingdom’s economic boom.” His comment has a lot of meanings regarding the relationship between the Saudi labor market and rentierism. As he mentioned, economic boom based on the huge inflow of oil revenues is superficially main barrier to implement Saudization policy. However, this mention gives us some basic questions regarding correlation between Saudi labor market and oil rent. In my view, the failure of Saudization policy is deeply rooted in the legacy of rentierism. Historically, rentierism of the Kingdom has contributed to the development of “rentier mentality” and inefficient educational system which discourages the inflow of local labor forces into the private sector. In addition, Saudization policy exposes the Saudi government to potential political risks which cause negative outcome of “group formation effect,” one of main mechanism of rentierism, because the replacement of expatriates with local workers in the private sector may lead to the formation of labor unions. In my research, I will demonstrate the negative effects of rentierism on Saudization from a historical perspective.