At the beginning of this century, Qatar's settled population was 27,000; by the mid-1980s it had grown to over 350,000 (Lorimer 1908–15, vol. 2: 1532; Qatar, Central Statistical Organization 1987:10). From a sleepy pearling village, Doha had become an ambitious capital of shining buildings and palm-lined boulevards. Oil was at the heart of this change. By mid-century Qatar's dependence on oil had replaced its earlier dependence on pearling. Oil production rose rapidly, from 2000 b/d in 1949, the first year of exports, to a peak of 570,000 by 1973 (el-Mallakh 1979:41). In the late 1980s Qatar was exporting about 250,000 b/d.

As in Kuwait, important domestic political transformations accompanied oil, key among them the emergence of new groups, new coalitions and new state institutions. Qatar's pre-oil economy and society resembled Kuwait's in its dependence on pearling and the ruler's consequent dependence on the merchants; but it also had important differences: a weak trade sector and a concomitantly weak grouping of merchants. These differences had political consequences. Oil's broad impact was the same; its revenues prompted similar economic, social and political policies wherever they occurred. But variations also emerged, within the constraints set by oil, as a result of the pre-oil differences. In Qatar these variations produced a ruling coalition in which the Shaikh far more thoroughly dominated the merchant community, and in which he ruled in a more troubled alliance with his large and often contentious family.

Kuwait and Qatar have presented an enigma: the endurance of almost anachronistically stable monarchical regimes in the presence of overwhelming social and economic change precipitated by oil revenues. Yet, as the preceding chapters have shown, these regimes survived precisely because of those transformations. The sources of capital and the mechanisms through which revenues enter the economy are key to understanding the political forms that have emerged in the last few decades. Beneath the apparent political stability and continuity lie sea changes. This study has sought to identify these changes, to analyze the impact of external oil revenues on politics, and to explain the key transformations that occurred: the emergence of new coalitions (the transformation of the regime) and new institutions (the transformation of the state).

The most important regime change has been the withdrawal from formal political life of historically influential economic elites. Oil revenues freed rulers from the need to tax the population and consequently from their historical economic, hence political, dependence on economic elites – in the Gulf, the merchants, the group which had, before oil, pressed its claims most effectively against the state. Oil halted ongoing economic, social and political processes, and catalyzed a new elite arrangement in which the traders renounced formal political influence in favor of a guarantee of economic survival: a trade of power for wealth.

This is a book about oil and politics. It analyzes the impact of external revenues on the formation and destruction of domestic political coalitions (the transformation of the regime) and state institutions (the transformation of the state). The book analyzes both the impact of external revenue sources on ruling coalitions and state institutions, and the important variations that occur within the broad constraints set by oil: general outcomes, but also differences in those outcomes.

Kuwait and Qatar are the vehicles for exploring the transformations that oil sets in motion. Each state individually is a longitudinal study, a comparison of politics before and after oil. Together they form a paired comparison over space.

The study is based originally on a year's fieldwork in the Gulf, and on several subsequent trips to the region, as well as on research in London's India and Foreign Office records. Because of the paucity of published material on the two states, particularly Qatar, the book relies heavily on primary sources, archives and interviews. The book presents an argument, but because of the limited secondary material available on these countries, it also embeds that argument in detailed comparative historical case studies, weaving the argument through the text. While practical necessity required this treatment, it is also hoped that the attention to historical detail and contextual richness provides the reader with a more textured, more nuanced understanding of the processes analyzed.

The one historical gift geography gave the tribes of the Gulf before oil was a gift of default: an outward orientation. Regional subsistence has always depended on the vagaries of long-distance trade routes. When trade was good, small settlements emerged to rival each other in carrying the traffic. When trade withered, routes shifted, or droughts deepened, then central regulation weakened, alliances changed, rivalries turned to war and tribes moved, with belongings and dependants, on camels and boats, up, down and across the Gulf. Until well into the modern period, the history of the Gulf has been one of ceaseless migration in search of trade and fresh water. As a result, the tribes of the region have always oriented themselves less to their original tribal ranges than to the fringes of the Gulf and the trade beyond.

Although Kuwait and Qatar were not populated by the ancestors of today's inhabitants until recently, transitory trade settlements there date back to ancient times. In Kuwait, ruins on Failaka island show settlements from perhaps 1000 BC. Archaeological evidence indicates that Qatar, too, was inhabited in prehistoric times; implements have been found dating back to 4000 BC. The Gulf's integration into the modern world economy began in the sixteenth century when the Portuguese captured several Arab ports, including Hormuz and Muscat. Portugal's presence meant a decline not only in their trading wealth but also in their political independence.

A few short decades ago Kuwait and Qatar were British dependencies, little known outside the Middle East. Today their oil resources and strategic location astride the globe's principal energy routes have brought them the attention of the world. In the intervening years Kuwait and Qatar have experienced a radical but apparently smooth transition from pearling to petroleum, poverty to prosperity. Oil revenues have fueled the development of new economic structures, new welfare systems and radically different and materially better lives for their inhabitants. Yet these rapid changes have been accompanied by remarkable political continuity at the apex of the systems: these two countries continue to be ruled through monarchical institutions of long standing. Despite the obituaries regularly written for these regimes, their rulers have survived the arrival and departure of Britain, the trials of independence, the challenge of populist Pan-Arabism and radical Islam and, finally, the demands of oil wealth.

This continuity has been achieved because of oil, not despite it. However, apparent stability on the system's surface has been accompanied by powerful transformations in the distribution of power just below the surface. The development of oil in the postwar years has led to the withdrawal from formal political life of the merchants, the group which historically pressed its claims most effectively on the state. Merchant claims have not been put forward because of a tacit arrangement between the rulers and the trading families: a trade of wealth for formal power.

On 2 August 1990 Iraqi forces invaded Kuwait. The Iraqi occupation and subsequent Gulf War between Iraq and US-led coalition forces, which culminated in the restoration of Kuwaiti sovereignty in February 1991, reshaped domestic politics throughout the Gulf. Its greatest impact was on Kuwait.

The Iraqi invasion caught Kuwait by surprise. Although the history of Iraq and Kuwait had long been troubled, relations appeared to have been improving in recent years. Throughout the Iran–Iraq War of the 1980s, a de facto alliance had been forged between the two states, with Kuwait supplying Iraq with $ 13 billion in direct support as well as logistical and diplomatic aid. Following the end of the Iran–Iraq War, Kuwaiti leaders hoped to translate that improved relationship into a new treaty that would finally end the still unresolved dispute over borders. Several meetings in early 1990 were held to discuss border issues as well as the other troubling issues in the relationship: the Rumaila oilfield and Kuwait's outstanding loans to Iraq. Meetings were still being held in Jidda at the end of July 1990 and, although they were not going well, there was nothing to indicate something so massive as an invasion afoot.

In the early hours of 2 August 1990, 150,000 Iraqi troops crossed into Kuwait. The amir and members of the ruling family fled to Saudi Arabia.

In the interwar period, Kuwait's merchants crystallized into a new political force. By the early twentieth century the merchants had gradually evolved into a homogeneous and unified economic and social elite. Their political power, which flowed from this economic and social power, was institutionalized in a series of informal and semiformal mechanisms – marriage and majlis – that granted them access to the palace. In the interwar period, a combination of severe economic pressures and political opportunities, including open divisions within the ranks of the ruling family, led the merchants to reorganize politically, culminating in a briefly successful demand for parliamentary representation in the Majlis Movement of 1938. Up to this point the struggle between the rulers and the emerging bourgeoisie was following a classic pattern. Then, just when the merchants' political influence was at its peak, oil arrived. This new economic force transformed the emerging struggle between the merchants and the ruler and gave rise to a new pattern of politics.

The merchants' interwar political interventions were failures in that they did not secure enduring, formal access to decision-making. However, these acts, in conjunction with the disputes within the ruling family which they helped fuel, had unintended consequences. In terms of alliances, the political action of the 1930s reinforced a sense of community among the merchants. Later in the century this corporate sense was crucial in helping merchants pass on to their children and grandchildren privileged access to the new oil-generated wealth.

A visitor to South Yemen in the years immediately after independence would soon realise that this was an embattled republic, at once cut off from many of the interactions that states normally experience and at the same time itself committed to radical changes in other states. Few airlines bothered to call at Aden, in contrast to the busy passage of colonial times. The port was almost paralysed, and the great passenger liners no longer landed their droves at Steamer Point. The shops of Tawahi and Crater which had relied on tourism and the British base were depressed. Consumer goods were short. No new buildings were under construction and existing ones were in increasingly poor shape. Few lifts worked. There was no foreign private investment, and foreign aid from governments or multilateral agencies was minimal. Entry into and exit from the PDRY was difficult. A dramatic caesura in South Yemen's commercial and political relations with the outside world had taken place. From 1976 onwards, it became an offense for a Yemeni to speak with a non-Yemeni without official approval.

The signs of the republic's own militancy were also not hard to see. On the mile-long avenue of Maala, hitherto housing the families of British servicemen, placards hung outside the offices of guerrilla groups now officially welcomed in Aden – the PFLOAG, the PDFLP and the PFLP. Without such public display, but equally enjoying quasi-diplomatic status were representatives of other guerrilla and opposition groups – Eritreans, North Yemenis, Iranians, Iraqis, Chileans. A visitor to a hotel might find himself accosted by men claiming to have liberated large swathes of southern Ethiopia, or by the representatives of an underground grouping from Saudi Arabia.

A revolutionary decolonisation

On 30 November 1967 British rule in South Arabia ended, and a new independent state, the People's Republic of South Yemen, came into existence. The termination of British authority had been preceded by negotiations between the United Kingdom and the guerrilla group that now assumed power, the National Liberation Front, and, at the moment of independence, Britain recognised the new state and offered it some economic aid. Nevertheless, the transition from colonial rule to independence in South Arabia was, by the norms of decolonisation in most British colonies, an exceptional one. It had been preceded by a four-year period of guerrilla war against British rule and that of the British-supported Federation of South Arabia, as well as by fighting between the rival nationalist groups, the NLF and FLOSY. It had culminated in a revolutionary uprising against the established rulers of the hinterland. Public contact between the Front and the UK authorities had begun only three weeks before independence itself.

In condensed form, it can be said that four major factors had contributed to this outcome in the South Arabian arena. First, following the British occupation of Aden in 1839, the colonial power had, during the late nineteenth and twentieth centuries, established control of a fragmented territory and created a new administrative entity, South Arabia. It had later sought to establish there a unified governmental structure, the Federation of South Arabia. The tensions involved in building this state, and the several changes in British policy, had occasioned uncertainty and considerable opposition amongst the local population.

When the PDRY celebrated the twentieth anniversary of its independence in November 1987, pride of place amongst the invited delegations was given to the representatives of the USSR, and the PDRY authorities were keen to emphasise their commitment and gratitude to the Soviet Union for all that it had contributed to the consolidation of the post-1967 regime. The alliance with the USSR was in many ways the most important component of the PDRY's foreign policy and, despite some tensions and disagreements in the relationship, there was no sign from 1969 onwards that any leadership in Aden had seriously contemplated major alterations in it. The USSR was essential for the security of the regime, and as a source of political and socio-economic guidance. On their side, the Soviet leaders were committed to the PDRY as the closest of their Arab allies and as one of the ‘states of socialist orientation’ that, together with Nicaragua, Mozambique, Angola and Ethiopia, were potentially socialist states. Soviet leaders and writers had their reservations about the policies pursued by the PDRY internally and were not above giving hints as to how they thought Aden should approach certain problems: this was evident enough in the speech of welcome made by Gorbachev to YSP Secretary-General ˓Alī al-Bīḍ when the latter visited Moscow in February 1987. Nonetheless, the USSR had made a longterm commitment to the regime in South Yemen that neither pressure from the west nor the internal conflicts of the PDRY itself were sufficient to interrupt.

The NF's decision to establish and develop relations with the socialist countries in the post-independence period was, at one level, a straightforward one.

At the moment of independence in November 1967 South Yemen was granted diplomatic recognition by the major industrialised countries of the west – Britain, the USA, France, West Germany and Japan. Its entry into the UN on 14 December 1967 was unopposed and was welcomed by, among others, the representatives of the UK and the USA. In October 1969 it joined the International Monetary Fund and the World Bank. Yet from the beginning, its relations with the OECD states had an ambivalent character: while South Yemen continued to conduct the majority of its trade with these countries, and to maintain diplomatic relations with most of them, it was in sustained conflict with them on political issues. This was not so much due to the legacy of the pre-independence years: though some issues of conflict with Britain inherited from this period remained, they gradually subsided and were not prominent features of South Yemen's post-1967 foreign policy. Nor was it due to conflicts over developments internal to South Yemen itself- the country remained, as it had been before independence, of limited intrinsic interest to the developed countries of the west: there were few disputes over investment, citizens of these countries, or the political character of the regime. Most criticism of developments within the PDRY came from Amnesty International, the independent human rights organisation, which was repeatedly critical of judicial and prison procedures in South Yemen.

This study is intended to be a contribution to three distinct areas of investigation – the modern history of the Arabian Peninsula, the foreign policies of Third World states, and the international consequences of revolutions. Each is an area on which a substantial amount has been written in recent years, and it is hoped that the analysis in detail of twenty years of South Yemen's foreign policy will contribute to this literature, to a better understanding of this part of the Middle East, and to more documented study of some of the broader, comparative issues involved.

The literature on the Arabian Peninsula, and on the Yemens in particular, has expanded greatly since I first began working on this area in the late 1960s. There is now an international community of people writing on this region to whose labours I owe a special debt of thanks, both for the research which they have published, and for the encouragement which the very existence of a wider community of scholars provides. While part of the Arab world, the two Yemens have distinctive characteristics and recent histories that make the analysis of their policies challenging and rewarding. Among these are the relation of social upheaval to foreign relations, especially important in regard to the two Yemens; the tense relations between oil-producing monarchies and the, until very recently, oil-less republics; and the specific impact on the Peninsula of regional issues – not only the Arab-Israeli dispute, but also those of the Horn of Africa and of the Persian Gulf.