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Diversified but Marginal: The GCC Private Sector as an Economic and Political Force
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- [00:01]
A
Right, thank you very much. Can you pipe down at the back? Thank you. If we can all turn our mobile phones off, then I won't have to shout at you when they ring in the middle of what I'm sure will be an excellent presentation. I'm Toby Dodge, I'm the interim director of the Middle East Centre and this is a joint meeting held by the LSE Ideas Kuwait Program and the Middle East Centre. So this is cooperation in action. But more importantly, Dr. Stefan Hertog, who has been at the LSC since 2010 and was before that at the Kuwait Program at Sciences Po in Paris. But more importantly, I think you'll agree that he's written, I think, probably the best book I've read on Saudi Arabia since Greg Gorse published his book on Saudi Arabia, which is called Princes Brokers and Bureaucrats. And I think it's both a theoretically sophisticated but an empirically incredibly rigorous piece of work. Stefan will talk for 35 to 45 minutes and then we'll have questions and discussions till just before 6. We have to leave the room at 6, otherwise the next people in will shout at me and I won't enjoy that. And so, Stefan, without further ado, thank you very much.
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B
Good. So let's see whether that works. Any comment on that? I sent the slides. Some additional slides were added. Let's just find out. So here, forthcoming events. Actually, one of the speakers here, the next one. Oops, where's the pointer? No, is there a pointer? F. Gregory Goss III is F. Gregory Goss III who's in the audience right now and what's going on? And he's going to talk New midi's Cold War and he'll be. Be chaired by none other than myself. I don't know what this. Did I turn on some color. Sorry, is it. Is it. Is it actually a different PowerPoint? Ah, that makes so much sense now. So I can elaborate on the forthcoming events for 25 minutes, but. Okay, good. Yeah, that looks more familiar. Good, great. So, on familiar ground, diversified Buck margin of the GC private sector as an economic and political force. The talk is based on a paper that I wrote for the Kuwait Program that. I don't know whether any hard copies are left here, but it's available on the website of the Kuwait Program under that title, so you can just download the PDF if you're interested. Got a warning. It's rather wordy, it's like 60 pages or so long, but it's got a nice detective summary and graphs that grab up some of the Arguments Nicely interested in all of the macroeconomic subtleties that I'm trying to discuss. The GCC private sector does look like a very impressive socioeconomic actor at first glance, both in terms of comparing it with its own history and in terms of comparing it with other business classes across the Middle East. It employs 80% of workers in the Middle east region. It provides the majority of local capital from although that has recently been reversed in some cases because governments have been spending huge amounts of money on fixed assets during the recent oil boom. It has very deep overseas capital resources. We don't have precise numbers, but some people say that there's a trillion dollars or more in terms of private overseas investment, which is something that gets at both international leverage and arguably also local power in terms of being able to decide whether to repatriate that capital or not giving the private sector bargaining leverage. The local government. It is at the center of all GCC government's diversification strategies. So I went through all of the five year plans, Visions 2020, Visions 2025, Visions 2030. Everyone's got a vision in the Gulf nowadays and they're all centered, at least, at least rhetorically, around privately driven development. So there's a big burden put on the local private sector as the standard bearer of diversification and increasing of public service delivery. Education, all kinds of things that the government used to do are now increasingly supposed to be delivered by private actors. It has diversified new sectors that used to be highly state dominated. Telecoms, heavy industry, petrochemicals, steel, utilities, electricity, water are now not actively being sold off, but are opened to private investment from local international players. Aviation are now a number of successful private airlines in the Gulf, which would have been probably unthinkable 20 years ago. And it has also matured technologically and managerially. Those large successful family companies are often much more sophisticated than they were 20, 30 years ago when there was just a desk, an old guy and a fax machine. So now they are very sophisticated large operations with significant managerial expertise all across those sectors. But, and that's really the rubber of my presentation and of the whole paper business activities do, if you scratch the surface, still remain very deeply dependent on the state in a variety of ways, and more so than almost anywhere else in the world, business remains economically decoupled from the national population in a way that's more acute again than almost anywhere else in the world, with the potential exception of Brunei. I get into what I mean by that in a minute. As a result, it has actually become marginal in economic policy making. And also national politics more broadly. The merchants used to be a very important collectively organized political constituency in Gulf politics in the early 20th century across pretty much the whole region. And they've really lost a lot of that autonomy. Some reasons for which are explored in existing literature, but I think other reasons for which haven't been explored systematically yet. The roots of that political marginalization I think are based on the peculiar structural position of business in the national economy, where it creates none or very few jobs for nationals, doesn't pay taxes, and also doesn't give nationals any opportunity to share in the private wealth through publicly listed investment. Because almost all of the world in the Gulf, all of the family wealth is privately held. The forward looking argument and conclusion of the paper is that business can only regain a more central political role if it establishes organic economic links with the national population, links that have been lost over time. So it's very much structurally isolated. And I think there are many, many signs of the political consequences that that has had across the GCC the last few years. Here's a graph showing the share of state spending in non oil GDP across the GCC where you see that the share remains a large if not dominant driver of demand. And most of the boom in the 2000s that continues up until the present day was really driven by state spending. There's one slightly odd figure which is the UAE figure, which I think in reality should be much higher. It's probably to do something with the fact that emirate level statistics, emirate level public spending is not picked up by that. But for all the other countries, you've got much, much higher shares of state spending in non oil GDP than in comparable countries like Germany, Singapore, Turkey here. A couple of other countries would look essentially the same. And it hasn't changed during the boom period. It's gone up in a few cases, down and a few others. No systematic trend of the state becoming less important in that era that's supposed to be driven by private growth. Here's the ratio of government to private consumption in the GCC in select international cases. The other contrast is even stronger. Those economies and if you look at more recent figures, it would be even higher. I think this is 2009, recent lookup, 2011, 2012 figures, the ratio has become even higher. So a lot of consumption being essentially any economic activity that is not investment, is driven by government through government operations, government paying salaries, government providing public services. If you look also econometrically of what drives private economic growth, of what drives the private part of gdp, you see that There's a very small, tight, long run correlation between state spending and the size of private sector gdp. Now that's the case in many other countries around the world. But the causality in other countries usually is different. In a country like say the uk, there's a correlation between the size of the private sector and state spending in the long run. But that is also because taxes extracted from the private sector finance state spending. So the two mutually constrain each other. But because there's no such taxation feedback loop, only very, very weak one in the Gulf, it's clear that whatever size the private sector GDP has, if there's a long run correlation to state spending, it's caused by state spending rather than the other way around. So it's a very one sided relationship. It's become a bit looser in the short run. Those two graphs are Saudi Arabia and Kuwait. So from year to year there's not as tight a link between state spending and the size of the private sector as there used to be. But in the long run the correlation is still very, very tight. So after three, four, five years the two move together very tight. And you can show that through a variety of econometric time series techniques of analysis, there's been some shift in the channels through which businesses depend on the state. So here's the ratio of capital to current spending in government budgets where you see that in the 1970s governments spent inordinate amounts of money on capital spending on investment goods, on infrastructure, and nowadays they do spend more on current spending, current spending being the consumption of governments, a lot of which is just paying salaries to civil servants. So although recently there's been more investment in infrastructure organized by governments, current spending still dominates, which is essentially a function of so many nationals holding jobs in the public administrations of the GCC countries. And that means that the rents that are spent that are recycled by the government are recycled through different channels. Whereas the private sector used to get rich to a very large extent through direct government contracts for infrastructure, nowadays it benefits more indirectly through the consumer spending of private households, who however do derive most of their income from the state as being state employees. So that means that state dependence is more indirect and there's more competition because business have to compete for consumers who make like diffuse decisions on the marketplace rather than being dependent on getting a particular contract from government. But still indirectly, the whole process is driven by state spending. If you look at the share of private wages in total GDP across the GDCC countries, it's miniscule. Most of the wage share of GDP of the factor payment to the factor of labor is in the public sector sector. So most wages, most household demand are generated by government. So that share of wages and GDP is 7% in Saudi Arabia, for example, for the private sector. And it's something like 40%, 50% in mature economies. I think Bahrain has the highest, it's something like 15 or 16%, still very, very low. So there's not much autonomous private demand generation out of those 7%. Those are 2010 figures. 4% are patriots, patriots. Almost all of which is remitted abroad. So there are almost no Saudis, at least in that year. It's changing a bit with recent labor market reforms. There are very few Saudis drawing a private salary and using that salary to boost domestic consumption. So most consumption is still indirectly state driven. If you break down employment figures by sector and nationality, you see that as far as national employment is concerned, employment of citizens, most of that in most cases is still state employment. It's public employment that's more more pronounced in the very small, very rich countries, Kuwait, UAE and Qatar. It's not quite as romantic in Oman, Bahrain and Saudi Arabia, which have fewer rents per capita, so they can't provide an open ended job guarantee for all citizens in the public sector the way that those small rich countries can. But still there's an inordinately high share of nationals employed by government at on average significantly higher salaries than the few nationals employed in the private sector receive. So nationals work in the public sector with better wages, better work conditions, typically shorter working hours, often a lower work effort than what is required in the private sector. Of course there are exceptions to all of this, that people work very hard and are very productive in the public sector. But the median public sector employee in the GCC is quite well paid, doesn't have a huge amount of work to do according to all productivity statistics that we have. And very few of them, conversely, do have a share, do have a stake in the private sector as employees in the private sector. So growth of business has mostly benefited foreign labor over the last decade. So there's been jobless growth for nationals in the 2000s, huge imports of foreign workers, and the share of nationals and the private labor force actually declining across the region. Local companies tend to perceive the employment of nationals as a burden. And to the extent that it's obligatory through quota regulations or through official rules that limit specific jobs to nationals as a tax, they just see that as something they have to do, not something that they want to do. And there are a thousand ways Avoiding those nationalization quotas and rules. Very, very imaginative techniques that have been developed all across the region, including nationals being formally put on the payroll of companies, actually being paid a salary into accounts in their own name so that the company can print out the bank statement, show it to the Minister of Labor or the labor office to prove that nationals are employed. But then some Bengali running out with a big stack of ATM calls and getting back on all the salaries from all those fake accounts the next day to give them back to the business owner. So very elaborate schemes to avoid employing nationals. Of course there are companies that do employ nationals productively, but they tend to be the exception rather than the rule. There's much popular disenchantment because of that with the business class. There's been a bit of a war of words against the national business class. In the Saudi press, for example, they get a bad rap all over of the time for not employing nationals, for being leeches, for overpricing, for selling bad goods. And I think a degree of populism against capitalists that was not there historically in that region which has a strong pro merchant, pro capitalist tradition. And there are signs of that in the press, certainly in the Kuwaiti press where there's a huge amount of dislike for merchants. Even in a tame Qatari press, the one constituency, one social constituency that always gets a bum rap always tends to be the merchant. They're always price gouges, they don't employ nationals. So there's a clear sentiment, a clear not anti capitalist but anti merchant class sentiment across the gcc. I think that has to do partially with the fact that they employ so few nationals and do it very grudgingly. The best, the most productive jobs for nationals are not usually in private firms, with some exceptions, in particular the financial sector, but they tend to be in state owned enterprises. So if you're a young ambitious Saudi, unless you join a bank, your first preference is going to be to work for Saudi Aramco or for Savic for one of the big state owned enterprises. There's poll data on that, that those tower far above any other potential employer in the private sector. And foreign workers conversely, of course they remit most of their income abroad. So that further reduces the contribution of business to the generation of national demand. I did cover that at that point before and that's particularly acute in the countries where there's a very high share of foreigners in the private sector. So that be the uae, Qatar and Kuwait. Business is also dependent on non fiscal state support. So they get cheap capital often through State development funds, say the Saudi Industrial Development Fund or the Public Investment Fund in Saudi Arabia for strategic projects. They get very cheap energy. They get free or subsidized infrastructure through industrial cities, free zones and arrangements like that. Those are just natural gas prices that are not very legible. But the point is that energy, both transport, fuel, electricity and gas and oil are sold far below international prices and important parts of local industries. So the whole cement industry across the region really is heavily dependent on those kinds of inputs and you can call them subsidized or not, and there's an argument about that, but the fact is that they're provided at very low prices by government. If they weren't, those industries would not exist, including a lot of the basic petrochemicals industries in the private sector. And that tends to incentivize resource intensive low tech development because you can play arbitrage on factor prices on the input of energy, rather than to invest in technology that would give you an edge on the quality or the specificity of your product. And interestingly, I think that's the political tension that's going to come out increasingly in future years. There's rivalry over consumption for scarce energy between residential consumers and industrial consumers. And systematically, because you have gas scarcity in all GCC countries apart from Qatar, there's not enough domestic gas in any of them. Increasingly, the residential consumers win out over the industrial consumers. Industrial consumers don't get gas allocated anymore because the political priority is to provide cheap energy to the citizens rather than to industry. So another point of tension between the citizenry at large and the business class. The contribution of the private sector to knowledge economies and innovation is pretty low by almost any standard. So there's been understandably a strategy of factor intensive growth based on cheap low skilled labor because it's easily available through the open migration regime and cheap energy inputs. And I think that private sector should be blamed for that. It's a rational decision to the input prices that are available, but it does undermine the private sector's contribution to all that knowledge economy strategy that all of the GCC regimes have been talking about. As a result, there's been stagnant or declining productivity, whereas in the rest of the world productivity. So the output per worker or per work hour has been trending up, it's been staggering or trending down all across the gcc. So you get ever less production out of an individual worker. You can only grow the economy by throwing in more workers, importing more of them, and as a result the wages are very low. They reflect marginal productivity or they lie below marginal productivity and those wages again deter nationals from joining the private sector. Here's a statistic on the share of high tech exports and total manufacturing exports. Exports in 2009 we see that there's pretty much none all across the GCC. And I assume that the UAE figure here, 3.27 must be final assembly or re export or something like that. I can't make any sense of that because I don't know any any high tech production in the uae. High tech as defined by the World bank, including semiconductors, aviation technology, things like that. There's some aviation technology now being produced in the UAV. That was not the case in 2009. And again produced in the public sector, not by the private sector, by companies like strata, which are 100% publicly owned. There's almost no research and development in the private sector. RD figures are very, very low in international comparison. And to the extent that there is any technology development, that there is investment in research, this is done most of all by state owned enterprises. The jury is out on whether that's going to be successful or not. But there's a huge amount of resources poured into research by Mubaral, Asabi, Aramco, those kinds of players. There's pretty much none invested in research on the private side. Now the final point I wanted to make about the structural position of business is that it's still very much family based and patrimonial. That on the one hand leads to corporate governance deficits. So many of you will have heard about the story of the Saad Group and the Gossebe family. 15 or 20 billion dollars disappearing in murky investments in the course of intra family disputes where at some point they couldn't even agree on who's the CEO of the family led bank. They had an argument about that in court for a long period. Generally, the companies with the strongest corporate governance and with the strongest commitment to corporate governance tend to be state owned enterprises. If you look at local workshops by those new organizations that have popped up to promote transparent governance and good practices in constituting a company board, the people you find in those kinds of workshops, they tend to be representatives of state owned companies rather than private companies. And because wealth is mostly privately held, the public at large is excluded from investment opportunities in the private sector. So another channel that in mature economies tends to tie citizens into the private sector gives them a vested interest in a thriving private sector doesn't really exist in the GCC because most wealth is privately held and unlisted. Most of the large companies that people buy stocks in and there's a large retail culture of stock investment in the gcc. Those are partially state owned or formally state owned enterprises, you know, all the blue chips, they're all state generated companies or most of them. Just another factor that creates a divide between citizens and business. That means that there's less scope for the kind of class compromise between citizens and capitalists that you famously had in advanced economies where if workers go to the polls and they vote into power Communist party, they get punished for it because business suffers and they're going to lose jobs, the state's going to lose tax income that can finance public services. Those mechanisms don't exist in the gcc. If you look at Kuwait systematically, voters go for very populist members of parliament in the elections. They pursue policies that are very anti business, very anti growth. And as Michael Herb has shown very convincingly, the voters don't get punished for it because almost none of them are employed in the private sector. None of them are going to lose their, their jobs, are going to lose salary increases or anything like that. And all of the public services they benefit from are finers from oil rents, they're not tax financed. So it's actually rational for a Kuwaiti voter to go for populist candidates in a way that it wouldn't be in a country where there's an interdependence between citizens who are employed in the private sector and benefit from tax finance, public services on the one hand and business on the other hand. In line with that dependent economic position and that structural decoupling from the citizenry at large, lobbying of the private sector, even on mundane economic policy issues, tends to be quite reactive and piecemeal. So I've done a long survey of lobbying actions on economic policy issues that will come back to the cross the GCC over the last seven or eight years and mostly when they got together collectively, it was about the defense of privileges, specific subsidies, privileges to hold commercial agencies in the retail sector trying to defeat taxes, trying to get rid of or stall labor nationalization rules like Saudization, Qatarisation, Bahrainization quotas in the private sector, rather than proactive policy initiatives. Of course there's a defensive nature to business lobbying all over the world, but it was particularly one sided and striking. Looking at the GCC track record, chambers of commerce were supposed to represent business. They're dominated typically by big families. They have limited policy research capacity, they don't invest much in that. And they also have limited outreach in the broader business community. If you look at how many people turn up for Chamber of Commercial Comment elections, it's usually just a tiny fraction of the overall business class. So GCC business is isolated from the citizenry at large. And some of those points have already been very nicely developed in a piece by Michael Herb in the International Journal of Middle Eastern Studies a couple of years ago. Citizens get little employment, they get no tax, finance public services, they get limited investment opportunities. And at the same time they increasingly compete with business over scarce goods, including provision of cheap energy, which does play a large role in the distributional system in the gcc. Now how does this play out in the political realm outside of issues of mundane economic policy? And as you expect, they've been increasingly marginalized as political players, which is very interesting if you look at the history of notables of large merchant families as political players were very prominent from the 1920s to the 1960s all across the region. There was a strong Arab nationalist movement in Dubai in the 1950s which very few people remember, that was led by merchants. Dubai, the most apolitical of all places. And a lot of them are very close to Mohan Bin Rashid now and are doing very well for themselves and have completely stepped out of politics. The martialist movement, the movement for a municipal council in Kuwait, 1923, 1938, all Merchant led the liberal nationalist movement in Bahrain up until the 50s. Very strong position of merchants even in that, although it was also partially rooted in labor mobilization in the oil sector. Of course, in that time, especially in the pre oil era, they did provide taxes, they did provide infrastructure, they did provide public services, they built the first power plants, the first schools. They were essential for the local citizenry. To the extent that you could speak of a citizenry, they did provide jobs for them. So it's much more of an organic link between citizens and merchants, even if their operations on an absolute scale were much, much, much smaller. Now, all across the gcc, systematically the marginalized and part the of even in the kind of lame tame controlled parliaments in say Oman, very few merchant representatives all across the region. Repeatedly merchants invest millions in election campaigns and they get booted out in favor of former technocrats or people like in the Saudi case with a Muslim Brotherhood who tend to be kind of middle class state employees. So marginalization topic shows politics. If they're present in politics, then they're government clients. They get appointed to upper chambers, they get appointed as ministers, as advisors, they don't get voted into office. Typically in Kuwait there's still a handful of business people, but it used to be a parliament with a very, very strong business constituency. They're not there anymore. They're also becoming marginalized, I think increasingly, although with the time lag, as social elites, as notables, as community representatives, they're not as respected in the community. When there's an issue in a city quarter, someone wants to reach out to the emir to get the street repaired or to get a school built. The local notable elites of merchants used to be the go to people and they've lost that function to a very large extent. It depends on the country. The social status of business elites in the UAE tends to be still higher for a country example than I think is in Qatar. They're on a less attack than they're in Kuwait. But there's been a secular trend of decline even of their social status and of the level of respect paid to them as social elites in the whole region. And partially that is just natural, naturally resulting from the emergence of mass politics. We've had mass politics emerging all over the developing world and those old social needs losing out some ground. But I think some of it is also specifically because they don't have a shared economic interest with citizens at large anymore. So you don't have to scope for a class compromise between citizens and business as you have it in tax based countries where citizens are typically employed in the private sector. So that's just a very, very schematic representation of the typical fiscal sociology of a tax state. So you have government here that is financed through the private sector. So private sector is taxed. Citizens they select or determine have some kind of systematic formal influence over government. Government spends on the citizens, does nice things to them, provides public services and it does things for business. It provides pro business regulation or provides infrastructure or subsidies or whatever business needs. Private sector employs the citizenry and citizenry also generates consumer demand for the private sector. Someone's got to buy the stuff that they produce, the goods and services. Now here's an authoritarian state and I think probably you are the best example. The purest case. Citizens don't really select a determine government. Private sector doesn't generate any revenues for government. Private sector doesn't employ or provide industrial opportunities for citizenry. So a lot of those organic linkages are severe. What you have is a government that's on top that you play an arbiter between the two with less constraints than a typical tax state. And what the UAE government does is that provides a lot of distribution spending for the citizens and it engages in pro business spending and regulation, not least because the members of the private sector close to government or part of government in the UAE in particular. So Dubai would be the purest example. And Michael Herb has a nice case study on that, although I came up with a nice error diagram. Now what happens if you have a participatory volunteer state, one in which the citizenry does have some say over government? Like in Kuwait, they can't pick government, but they can vote into power a parliament that could at least prevent anything from happening as it has been doing very successfully over two decades now. Now what happens there? Government doesn't need the private sector for this. Citizenry has an influence over government. So government is systematically biased in favor of distribution spending and there's nothing for business. And that's really the story of Kuwait, where for two or three decades there's been a huge raft of private sector economic reform initiatives that have systematically founded parliament. Kuwait is decades behind on economic regulation and privatization initiatives compared to the rest of the gcc because things have been stopped by and large by parliament and to some extent also public sector unions. So if you severe those links, but you still have that, I think you get systematically populist politics. Now what's the future? I think heading towards the last slides, I forgot to put numbers in here. But the majority of nationals all across the GCC continue to have no significant stake in private sector growth. And I think in the long run zero sum distribution conflict between citizens and business is set to grow because demand and state resources will become larger, fiscal breakeven price will creep up, states will have to draw their overseas reserves and governments regimes will have to make a judgment call of what to spend money on pro business spending or distribution spending to the population at large and in a fiscal crisis. And it will happen at some point or it can be still very, very far down the horizon. Popular interest will be privileged over business interest. Be willing to bet a lot of money on that. And I think that will happen even in authoritarian rentiers. Because at the end of the day the business class is not needed, it is not structurally necessary for those systems to maintain themselves, whereas they need minimal toleration, minimal support from the citizenry at large. And you have the precedent of the 1980s and 1990s when spending on contracting, on infrastructure, on things that business profit from, was systematically squeezed and spending on salaries and broad based subsidies was preserved to the extent that Saudi Arabia, for example, incurred debt to the tune of 100% of GDP by the late 1990s there was practically no capital spending. It was at some point 3 or 4% of total government spending. All the rest was just salaries and subsidies for for the citizenry at large was very bad for the national infrastructure. There were a lot of pothole drills, a lot of things that didn't work anymore. Business, particularly the contracting sector, suffered very, very strongly. But the political priority clearly was to maintain broad based distribution spending because you need to keep your citizens minimally happy in a way that you don't really need when it comes to poster shelf. Keep the business class happy. Now, can business do anything about it? I think it can, but it could be costly. There would be a need to accept taxation, at least in principle. There could be a more forceful push towards corporate governance reform and giving up exclusive control of assets. Right now you don't have many initial public offerings. When large families sell off stuff, it tends to be peripheral parts of their business. There are very few core family businesses that have been listed. But most of all, I think this is the crucial link this would have to step up employment of nationals. Some of this has been happening under government pressure, but I don't think the business class has really bought into that as something that is actually necessary for its long term political survival. And of course, to some extent this is also the government's fault for creating an open migration regime when nationals have to compete with cheap labor from Southeast and South Asia who are willing to work for 100 or $200 a month. So businesses should focus more on technological upgrading, building, investing in local human resources, even if that's costly in the short run. But this also requires policy changes beyond the control of business. For example, reduction in public sector overemployment. All of the GCC regimes have created a huge amount of surplus jobs in 2011 in the wake of the Arab uprising. Just to spread the patronage even more Broadly, Bahrain announced 20,000 new jobs in the Ministry of Interior alone in 2011, which was, I think, only slightly less than half the total stock of official public sector employees at the time. And something like 10% of the complete working age population was supposed to be employed in the Minnesota interior. Exclude the Shiites. Every Sunni then was pretty much supposed to be working for the Ministry of Interior next year. Of course that takes nationals out of the circulation, that that's not going to make them seek private sector jobs. So as long as you have very generous public sector employment and an open migration regime, it'll be very, very hard to make an economic case for employing nationals on a large scale in the private sector. Now. Stronger local employment and taxation would reduce business profits in the short run. But it could give business a much safer, more autonomous political position in the long run. And of course, to some extent it's a collective action problem. It might be in the interest of all of the companies collectively to employ more nationals, but the individual incentive on a company level is to do as little of it as possible. It's just a classical Olsonian free rider problem. Now, in the long run, if there was this reintegration, bringing citizens back into the fold the way they were in the pre oil era would mean that Gulf merchants could become a true bourgeoisie capable of negotiating with the state and with other social forces and also on behalf of other social forces. And this would arguably be the best weapon against the kind of parliamentary populism that they're facing. Very much so. In Kuwait, the merchants families that were instrumental in creating the parliament are cursing. The parliament would pay almost anything to get rid of the parliament in Kuwait. Nowadays, even if you look at some of the weaker parliaments in Bahrain or even the appointed Masha Zahshura in Saudi Arabia, there is, you know, an anti business sentiment that keeps on popping up time and again. Now, if this going to happen, I'm doubtful. But at the same time, I don't want to demonize business because what they've been doing is to react to rational economic incentives. But I don't think that at this point there's quite an awareness in the business class of how relatively isolated there are and what the structural forces behind this isolation are. And I would hazard a guess that this was the last slide. Yes. And so we still got some time for the Q and A, quite a bit actually. So thanks a lot for listening.