How can we understand the economic responses of rentier states to the oil price downturn in 2014? Through the case of the Sultanate of Oman, this chapter answers this question on the present with a view of the past. With a longer view of economic adjustment since the 1980s, the authors unsurprisingly find that economic adjustments mirror oil market fluctuations. However, fiscal restraint does not adjust as steeply during contractions in the oil market. This illustrates the difficulty in cutting expenditure in spaces where both state and economic life are deeply tied to each other and to oil-supported government spending. The authors examine a selection of economic policies and initiatives Oman is using in response to its contracted fiscal position, including government borrowing, labour market regulation, subsidy reduction, the tanfīdh programme, and changes in taxation regimes. The authors argue that the government is caught between socio-economic demands and financial realities, understanding that a disruption in one can lead to undesirable financial or social instability. These findings have implications for the literature on rentierism and demonstrate conditions under which rentier states are more sensitive to social pressures and therefore less autonomous from society than often purported.
Post-2014 adjustment policies in the Arab Gulf and beyond
Martin Beck and Thomas Richter
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.
Leadership transition, regional crisis, and the imperatives for reform
Qatar is a small yet dynamic Gulf state, among the richest countries in the world per capita due to its oil and gas wealth, which plays an outsized role on the world stage. This chapter outlines and assesses how state policies, and various actors and forces, have shaped Qatar’s political economy, especially since the decline in oil prices that began in 2014. There is an explanatory emphasis on the structural characteristics of Qatar’s economy, the policy decisions of its relatively new emir, Tamim (r. 2013–), and the impacts of the post-2017 Gulf crisis, with the arguments grounded in a theoretical foundation that combines late-stage rentierism, an entrepreneurial form of state capitalism, and an economic statecraft that has been ambitious, even aggressive. The overarching argument is that Qatar was uniquely positioned for the challenges that have arisen after the oil price fall in 2014, in some ways by simple good fortune, but more as a result of the Qatari state having prepared the economy well for the risk of economic or diplomatic problems, and then having responded quickly and emphatically when the oil price fall began.
While Kuwait has recorded budget deficits since the decline in crude oil prices in mid-2014, this has not resulted in a significant decline in fiscal expenditure. Although budgetary pressures have encouraged the government to take steps towards fiscal and economic reform, a reconfiguration of the relationship between the state and the citizens has proved to be one bridge too far, with different social groups holding on to their share of the oil wealth. This has been compounded by historical contingencies with the codification of social protections and the establishment of a relatively powerful parliament through the 1962 Kuwaiti constitution. The burden of the fiscal adjustment policies has mainly fallen upon the shoulders of expatriate workers, who have been further restricted from access to the country’s oil wealth. Meanwhile, the significant reserves accumulated by Kuwait’s sovereign wealth funds have reduced short-term pressures to initiate fiscal reform, encouraging the government to embark on a path of piecemeal reform to avoid conflict with the influential opposition eager to protect the interests of the salaried middle classes.
This chapter discusses adjustment policies in Bahrain since the steep decline in oil prices in 2014. Placing these policies within the context of rentier state theory (RST), the chapter discusses the extent to which recent policy changes remained within the realm of the rentier state as the prime mover of the economy and the sole fiscal manager. The argument presented points out that the ‘rentier state’ remains prevalent. Adjustment policies adopted and implemented since 2014 are merely specific policies which have reallocated rents from high subsidies to higher debt financing, from high investment expenditure to higher wage expenditure. The key driver behind these policies is maintaining the long-term sustainability of the existing rentier structure in order to maintain sociopolitical stability. While the prevalent rhetoric refers to these adjustment policies as unprecedented reforms, this chapter shows that recent adjustments lack effective institutional change away from rentier governance, which is based on patronage, public gestures of benevolence, and benefit distribution rather than meritocracy. Providing evidence by giving concrete examples and presenting actual data, this chapter emphasises that the adjustment policies implemented are best described as fiscal policy corrections, rendered necessary amid changing internal fiscal and external economic factors exacerbated by a low-price environment.
The Basque militant organisation Euskadi Ta Askatasuna (Basque Country and Freedom, ETA) emerged in Franco’s Spain in the late 1950s. Since embracing armed struggle in 1968, ETA has been a thorn in the side of the Spanish state. The Basque group entered the Spanish national consciousness on 20 December 1973 with the spectacular assassination of Admiral Carrero Blanco, the designated political heir of Francisco Franco. Since then and despite the democratic political transition following the death of Franco in 1975, ETA has carried on its violent campaigns across Spain. Furthermore, the organisation’s seemingly endless ability to regenerate itself in the face of ongoing police repression has contributed to the production of a performative representation of ETA as one of Western Europe’s most virulent clandestine movements. This chapter reflects upon how such representations of ETA as the arch-enemy, whose simple existence endangers the nature of Spain and its democratic future, could have unleashed the desire for agencies of a democratic State to imitate ETA’s unlawful violence and enact an extra-judicial campaign of assassination against ETA.
Despite US nuclear weapons being deployed on its territory for most of the Cold War, and notwithstanding a close military relationship with the US, South Korea has frequently been anxious about the risk of alliance abandonment. Only with the advent of deeper institutional alliance networks at the political level over the past twenty years has Seoul become more reassured of US extended nuclear deterrence. Confronting a nuclear-armed North Korea with which it is still technically at war, South Korea places strong value on the US nuclear umbrella and has successfully negotiated a more structured dialogue on extended nuclear deterrence at the operational level.
The chapter presents a comprehensive historical overview of the practice of referendums and direct democracy in Europe from Napoleon to the present day. Is shows trends and patterns and analyses the policy effects of more Democracy on demand
The chapter surveys different countries’ experiences with democracy on demand. Focusing on the initiative in the United States, it looks at the quality of legislation in a direct democracy, the policy implications of initiatives and the effect of these on the economy. The chapter also analyses the experiences with initiatives in Germany, the Netherlands and New Zealand. In addition, the chapter looks at the effects of agenda initiatives using the example of Denmark.