Post-2014 adjustment policies in the Arab Gulf and beyond
The drop in oil prices in 2014 and the price crash triggered by the COVID-19 pandemic in 2020 have had major repercussions for the Middle Eastern political economy. For these events, the chapter discusses both the empirical relevance of policy adjustments and academic approaches to political economy apt for analysing relevant adjustment policies. First, it explores the oil price declines as a potential game changer for the political economy in the Middle East. The authors claim that structural changes in the global energy market make it unlikely that oil prices will climb above USD 100 per barrel again in the foreseeable future. Second, it outlines the most prominent concept for analysing the political economy of the Middle East: rentierism. Third, it scrutinises two repercussions of decreased oil prices for the Middle East. For the Arab Gulf, oil-rent abundance has flipped to scarcity, and for Egypt, Jordan, and Lebanon, the energy bill has reduced significantly. These form the new context in which policy adjustments are taking place. Fourth, it outlines a heuristic framework on how structural changes caused by oil price declines translate into policy change. The authors introduce four domains of adjustment policies: rent-seeking policies, austerity measures, policies of taxation, and structural reform measures.
This concluding chapter focuses on two aspects of the Middle Eastern political economy. It initially examines the major consequences of the post-2014 oil price decline and also deals with the oil price crash as triggered by the COVID-19 pandemic. First, migrant workers in the Arab Gulf are the main social losers of policy adjustments. Second, citizens who are predominantly employed in the well-paid public sector were capable of repelling burdensome adjustments. Third, adjustment policies show some of the institutional weaknesses characteristic of rentier states. Fourth, for the three semi-rentier states of Egypt, Jordan, and Lebanon, the expectation that they could profit from the oil price decline in 2014 has not been fulfilled. Beyond major empirical developments, this conclusion also highlights three conceptual dimensions for the theoretical advancement of rentierism. First, it is important to bring state–class relations back into the discussion. Second, the authors stress the importance of institutions during periods of policy adjustment within countries shaped by the inflow of hydrocarbon resources. Third, the authors call for a more nuanced understanding of rentier state autonomy. Based on these discussions, they argue that rentierism still prevails with regard to both empirical dynamics in the Middle East and academic discussions on its political economy.