Political enablers of energy subsidy reform in Middle Eastern oil exporters

Abstract

Oil-exporting states in the Middle East and North Africa have launched reforms of long-standing energy subsidies thought to comprise an important source of legitimacy for autocratic regimes. The actions challenge enduring academic assumptions of the illegitimacy of retrenchment in polities underwritten by hydrocarbon rents. Here, I argue that a series of converging trends provided political cover for the reforms, including fiscal stress from low world oil prices, escalating regional instability, international environmental pressure, as well as untenable growth in domestic consumption of exportable commodities. While the reforms signal an important shift in state–society relations, the new policies appear to be designed to update — rather than jettison — rent-based autocratic governance.

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Fig. 1: Selected Gulf and MENA countries’ energy subsidy reforms alongside international oil prices.
Fig. 2: Energy price changes in Iran.
Fig. 3: Electricity and water price increases in Abu Dhabi and Saudi Arabia.
Fig. 4: Growing domestic oil demand takes a greater share of producers’ total output.

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Correspondence to Jim Krane.

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Krane, J. Political enablers of energy subsidy reform in Middle Eastern oil exporters. Nat Energy 3, 547–552 (2018). https://doi.org/10.1038/s41560-018-0113-4

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