Making sense of buyer's power

In economic theory monopsony is a market structure in which one large buyer controls big portion of the market and thus exercises bargaining power.

After 2017, China has overtaken United States to become the largest oil importer. China in last year imported 239.2 billion $ worth of crude oil from 15 different countries.

India is third largest oil importer after US and China and roughly imports 125 billion US dollars worth of crude oil every year.

The rising purchasing power of private buyers in China and India has positioned both countries close to having monopsonic power in the oil world.

In last week of April a high level delegation from Chinese National Energy Administration visited India, to discuss forming a block of energy importing nations.

This block will also be beneficial to other Asian importers as this will reduce the Asian premium.

Asian premium
Owing to the dependence of Asian nations on Middle Eastern countries to supply oil, these oil exporting nations charge a premium on their exports to Asian countries. West in contrast need not to pay such extra amount.

India and China have repeatedly raised their voice against this so called Asian premium but to no avail.

Efforts are underway to make Japan and South Korea-world’s fourth and fifth largest oil importers- part of this block. The emergence of this energy hungry block could tilt the power away from OPEC.

Why Saudi Arabia matters to Pakistan

As the crown prince Muhammad bin Salman completed his two day Pakistan visit, the debate about Pakistan joining the Riyadh’s camp, against Tehran, for financial largesse dominated the public discussion. Pakistanis are vying cost and benefits of Saudi financial assistance. Both countries are linked by financial assistance, religious ties, energy markets, and defence agreement. Pakistan needs Saudis for various reasons.

Enhancing CPEC image
During the visit the crown prince announced a 10 billion$ refinery and an oil city in Gawadar, Baluchistan under CPEC. The city will have facilities for storing oil for its onward transport to China.

In fact, the prospect of Saudi investment has already helped divert global attention from the controversy regarding Chinese debts incurred by Pakistan, its economic crisis, and the possible connection with ongoing CPEC projects. Saudi investment can project Gwadar as an investment destination, encouraging Arab African and Asian nations to become part of CPEC.

The investment is an effort by crown prince to diversify Saudi economy and reduce its dependence on oil under vision 2030. Saudi Arabia is still largest oil exporter and rules the oil markets with its ability to drill oil at lowest cost in the world i.e. 4 $ per barrel.

Sovereign wealth fundThe public investment fund of Saudi Arabia has planned to increase its size to 2 trillion dollars till 2030. The country is hungry for investment opportunities especially in the field of science and technology, petrochemical and refining, mining, and entertainment.

Overseas Pakistanis
Saudi Arabia hosts 2.6 million workers from Pakistan, who send remittance worth 4.5 billion dollars every year. These remittances prove to be a valuable support for cash starved Pakistani economy.

Balance of payment (BoP) crisis
Pakistan frequently faces balance of payment crisis and therefore needs foreign support. Saudi Arabia has frequently helped Pakistan in dealing with its foreign payment difficulties. Though, critics claim this easy to get support held Pakistan away from taking hard measures to rectify its recurring BoP crisis.

Help deal with international powers
Saudi Arabia with its deep pockets, massive oil reserves, and considerable investment clout has say at international fronts and can help Pakistan sway international opinion in its favour e.g. In the midst of Kargil saga, at the time when New Delhi was blowing hot and cold, Pakistan asked Bandar bin Sultan for arranging US pressure on India. Bandar bin Sultan, erstwhile Saudi Ambassador to USA, was most powerful foreigner in US at that time.

Middle East influence
Millions of Pakistani labourers work in Middle Eastern countries. Saudi Arabia through tribal connection and religious ties hold considerable influence in Middle East and help Pakistan deal with these countries.

Religious clout
Saudi Arabia wields enormous influence on people among religious class through its huge investment religious institutions, mosques and madrassas related to Wahabism doctrine. Moreover, Hajj visas also offer an opportunity to Saudi Arabia to develop a rapport with Pakistani religious class.

Tribes in the Arab world and politics

Tribe is social group based on kinship. Members are related to one another through blood relationship.

Tribal ‘asabiyya’

According to Ibn Khaldun ‘Asabiyya’ is the reason of royal authority. ‘Asabiyya’ is Ibn Khaldun’s terminology for ‘Group feeling’ or ‘Group cohesion’. According to his theory the more ‘assabiyya’ a group or tribe possesses the more they will be able to overpower others and thus acquire royal authority.

According to this theory tribes/ groups living in rural areas are more likely to acquire ‘assabiyya’ over the course of time while the city dwellers will lose ‘asabiyya’.

Tribal Rivalry

If inter-tribal tension is generated, it is very difficult to subdue it. This tribal rivalry can run for centuries. This inter-tribe rivalry helps promote ‘assabiyya’ within the tribe. The most important societies in today’s world that are tribal based are located in Arab countries.

The most important tribe in the Muslim world is the tribe of Quraish. Qusayy bin Kilab, member of Quraish tribe and ancestor of the Holy Prophet (upon whom be Allah's peace), founded a city state in Makah and made excellent arrangements for the welfare of the pilgrims coming from all over Arabia, with the result that the Quraish were able to gain great influence among the Arabian tribes and lands. Later on tribal rivalry between two branches, Banu Hashim and Banu Umayyad, of Quraish emerged.

The fierce sectarian schism among Muslims can be attributed to the tribal rivalry, between these two branches of Quraish. This rivalry has outlived many centuries. Later on this rivalry translated itself into sectarian tension.

Use of tribal kinship in acquiring and maintaining political power

The growth of tribe is independent of state. When tribal chief of one tribe marries lady from another tribe; it creates an alliance with that other tribe. In ancient tribal society when polygamy was common this was a perfect way to acquire political power.

The present Arab royals became kings through cementing ties with other tribes through marriages. King Abdul Aziz of Saudi Arabia, for instance, married many women in order to secure alliances with other tribes. As tribal chief these royals have political authority over whole tribe.

If the tribe is scattered in different countries then the chief can have tribal influence beyond his territory. Qatari emir, for example, has tried to grab the leadership of Banu Tamim tribe, as he is member of Al Thani family which is sub-tribe of Banu Tamim tribe. People of Banu Tamim tribe are scattered in many countries including Saudi Arabia, Iraq, and Qatar etc. In this way the emir tried to acquire influence beyond his territorial borders.

Another way of consolidating political power is to appoint tribal members and members of ally tribes to politically important posts. In the times of weak state authority tribal rivalry and tribal alliances, which are centuries old starts rising. As tribal institution is older than state in Arabian Peninsula, the state needs support from tribes for its structure. ‘Saudi Arabian National Guards’ is one example of dependence of state on tribal affiliations.

The ‘Saudi Arabian National guards’ are structured on tribal lines. Members from different tribes loyal to House of Saud have been recruited in ‘Saudi Arabian National Guards’. This institution helped ‘house of Saud’ to maintain its political power through uniting their tribal allies.

Some instances of tribal influence

Anazah tribe is the largest and most ancient tribe in the Arab world. The `Anazah’ have from an early date adamantly claimed the Al Saud family to be one of their own, probably because ‘Al Saud’ claimed ancestry from Wa'il, and many members of Al Saud claim descent from a branch of `Anazah’.

The ruling dynasties of Kuwait and Bahrain belong to Anazah tribe of central Arabia. Hence royal families of Kuwait, Saudi Arabia and Bahrain are distant cousins of each other. When Al Rashid ousted Al Saud family they took refuge in Kuwait. This was reciprocated by Saudi monarch a century later. When Saddam Hussain conquered Kuwait the ruling Al Sabah family was offered sanctuary in Saudi Arabia.

Although religion takes central place in life of many Arab people, as a result, shia-sunni divide is fierce in the region but tribal connections can often outweigh the importance of this divide. Common ancestry, geography and strict social code that demands allegiance between members, are the factors that binds the tribe.

Elections, when they take place, people cast votes for the candidates from their tribe. These people take pride in casting votes to their tribal chief, member from ally tribe or candidate supported by their clan chief rather than casting their votes on the basis of ideology.

Conclusion

Tribes are the most important social unit in the Arab world as tribes possesses ‘asabiyya’ more than any other social group. The sectarian and religious groups haven’t developed ‘asabiyya’ to the level at which they can counter the influence of tribes. Democracy is only successful in those areas where individuality is emphasized rather than collectivism. Unlike western society, the societies in the Arab countries are collectivistic as against individualistic, and this is the reason of failure of election, in many Arab countries, to bring meaningful democracy. The society needs to evolve in order to enjoy sustainable democracy. The urban life will help tribal ‘asabiyya’ to evaporate and only then election will be meaningful.