Sovereign risk: Gulf sovereign wealth funds as engines of growth and political resource

ABSTRACT

The economic reform agenda moving across the Gulf Cooperation Council states precipitated by the end of a decade-long run of high oil prices, high population growth rates, and costly demands on the provision of generous state services and subsidies has had some unexpected consequences. The reformulation of state-society relations, especially with regard to ideas of how to create economic growth and how to model a future social contract, challenges the accepted literature and construct of rentierism. This essay focuses on one distinctive site of these shifting relations between rentier states and their citizens: the sovereign wealth fund (SWF). SWFs are based upon the shared rents from oil production, but as they have evolved they are also becoming transformative in new national development strategies. Some SWFs now veer from traditional practices of safeguarding wealth to more experimental and high-risk strategies that claim to be able to diversify national economies from oil dependency, while also promising high returns. The current moment of late rentierism heightens questions of ownership and of the state’s role as guardian or steward of society’s wealth. Using SWFs to examine state-society relations and rentierism across the Gulf, this article focuses on the Saudi case.     

State change in Chile, 1973–1988

All of the Southern Cone military regimes of the 1970s articulated a commitment to a neoconservative program of state change. Nowhere, however, was the commitment translated into policy with greater zeal, speed, and consistency than in Chile. What differed in Chile was less a lack of resistance to neoconservatism than the capacity of the economic team to ignore or override that resistance due to the extreme concentration of political power achieved by General Augusto Pinochet. The Chilean experience consequently underlines the importance of institutional arrangements for understanding variations in policy outcomes. Karen L. Remmer is a professor of political science at the University of New Mexico and associate editor of theLatin American Research Review. Her research interests revolve around the interface between politics and economics in Latin America with special reference to the policy impact of regime change.