How much of Bahrain’s wealth has been taken by the Ruler and the Al Khalifa family over the past 80 years? Based on an analysis of the Government of Bahrain’s financial reports, it would appear that between the years of 1926 and 1970, Bahrain’s ruling family received about a quarter of the nation’s wealth. In fact, the amount given to the ruling family per year was always the largest item of recurrent expenditure.
Until 1941, the amount given to the ruler and those on the Civil List was consistently greater than the sum of all other expenditures. Although the amount they receive now is probably less, it is no longer recorded on the budget sheets, and therefore not subject to scrutiny. In addition to highlighting how much money was (and still is) taken by one family, this article also addresses a number of other issues, such as the mystery of the Abu Safah oilfield, and why the revenue allocated to the ruling family disappeared off the accounting books on two separate occasions.
How much does the ruling family receive?
Traditionally the ruler and the ruling family of Bahrain were given money through payment to the civil list. This practice continued until the end of 1949, after which the ruler distributed money from his own allocation called the privy purse. Upon receiving its first oil royalties in 1935, the Bahraini government set up the following system of administration;
The oil royalty would be divided into third, one third going to the Privy Purse of the Ruler, one third to non-recurrent capital expenditure and the remaining third to be invested. (Annual Report, 1955, pg 4)
In 1952 a new 50-50 oil deal was struck, and the government was to receive ’50 percent of the profits of Bahraini oil and duty on oil imported from Saudi Arabia through the pipeline’ (Annual Report, 1956, pg 106). However, due to the fact that Bahrain’s oil reserves were relatively limited, a new deal was struck in 1955. In this new agreement, the government would receive 50 percent of the profits of any oil refined in Bahrain. In all cases, the ruler would personally receive 1/3rd of the oil revenue accrued to the government.
After decades of receiving exorbitant sums of money, the constitution of 1973 contained an article that sought to define the amount received by the Ruler. According to the 1974 budget, this sum was fixed at 6 million Bahraini Dinars (BD) per annum. Somewhat disturbingly, it appears that the figure of BD 6 million per annum actually increased after the democratic reforms of 2001. As I stated previously:
Ebrahim Sharif (incarcerated leader of the National Democratic Action Society) also noted that the amount allocated for the Civil List in 2001 was 8.5 million dinars, which represented an increase of 2.5 million from 6 million. This increased in 2002 to 9 million. On 2003, the amount allocated to those on the Civil List was no longer included on the annual financial report, which meant that Bahrain’s elected MP’s, whose responsibility it is to scrutinize the budget, can no longer scrutinize the amount of money given to royals.
Cooking the Books?
Despite the scandalous amounts of money going to the Ruling Family, there were even more nefarious developments towards the end of the 1950s. Between 1962 and 1970, the official government accounts stop documenting the amount of oil royalties and money going to the Ruler. The figure given for ‘Oil Receipts’ listed under ‘Revenue’ was actually only two thirds of the total amount payable by oil companies to the State (Fig 1). By omitting the amounts paid to the privy purse in the recording of expenditure, reading the financial reports is very misleading. For example, in his review of 1968 Head of Finance Shaikh Khalifa bin Salman Al Khalifa writes;
Educational and health services accounted for the largest single items of recurrent expenditure during the financial year and together they amounted to almost half the total expenditure incurred.
In actual fact, the largest single item of recurrent expenditure that year was the amount given to the ruling family. To put it in perspective, in 1968 the ruling family received almost twice the second highest item of recurrent expenditure (which was education).
The Abu Safah Question
Under a treaty agreed with Saudi Arabia in 1958, Bahrain currently takes half the net revenue from the sale of oil from the Abu Safah Field. Most sources seem to state that this agreement was concluded in 1972, though apparently production started in 1966. Furthermore, an agreement between the governments of Saudi and Bahrain regarding ‘matters of policy connected with the field was made in 1965’ (Shaikh Khalifah bin Salman, Annual Report 1965, pg 3). Al Kuwari (1978) believes that oil revenues from Abu Safa were allocated to the Ruler of Bahrain’s privy purse between 1966 and 1972. He makes this assumption based on a number of reasons, including the following:
4) All oil revenues received by the state and not appearing in the budget were allocated to the privy purse of the ruler.
Al-Kuwari also adds that no officials were able to give him an adequate explanation as to where the money went. If he is correct, then this represents a significant scandal in Bahrain’s history. If funds from Abu Safah were going to the Ruler’s privy purse, the money involved is likely to be huge. In 1975 alone, Abu Safah was generating BD 50 million for the Bahrain government.
So how much do the ruling family get?
Abu Safah and suspicious accounting aside, one thing remains clear – Bahrain’s Ruling Family accrued about 25% of the nation’s revenue between 1925 and 1970. Between the years of 1925 and 1937, this figure was about 50%. What is more, although the privy purse allocation was decreased to BD6 million between 1974 and 2001, it increased following the reforms of 2002 and, as of 2003, it is no longer recorded in the annual government budget or subject to parliamentary scrutiny. So despite Bahrain’s democratic reforms over the past decade, scrutiny of the Ruling Family’s finances remains a secretive affair, an issue that is bound to strengthen the opposition to Al Khalifa rule.
Visit this link for a detailed breakdown of the amount of money received by the Al Khalifas between 1925 and 1970.