As the jackboot comes down hard in Bahrain on Wednesday, it’s worth asking what happened to the ‘modern’ ambitions of the Gulf monarchies who are providing military, financial and political support to the ruling Khalifa family.
A good question for the vanguards of Gulf financial modernity: sovereign wealth funds.
So we’ve been finding this recent paper by Gordon Clark and Ashby Monk of theOxford SWF Project, who have drawn on contacts at Gulf funds, pretty useful. It’s well worth a read.
They’ve hit on a very topical distinction:
From our field research, it would appear that the Gulf States assumed that breaking with the past by adopting the SWF institution was preferable to remaking their inherited institutions. By this logic, the SWF is symbolic of a commitment among the Gulf states to adopt the instruments of advanced financial management to facilitate the modernisation of what were otherwise semi-feudal states. The SWF is more than just a tool for managing resource wealth; it is a step towards modernity and economic development…
According to official literature and formal communications, the process of SWF adoption appears to be going extremely well. On the surface, these funds are operating like any other globally-oriented financial institution… Upon deeper examination, interviews with current and former financial market-oriented employees at Gulf States’ SWFs have identified a variety of problems with these official characterizations.
For those wondering when the Gulf Cooperation Council turned into a Middle Eastern version of the Warsaw Pact, it might be a familiar sensation of things not being what they seem.
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