THE POLITICS OF REFORM149Outside Saudi Arabia’s across- the- board price hikes, however, the
reforms in the other five monarchies were less aggressive— unless you
were an expatriate or owned a business. Foreign residents of the UAE,
Bahrain, and Qatar were accustomed to their status as second- class tem-
porary hirelings. Now, official discrimination in subsidy policy would
widen the divisions between them and citizens. Gulf nationals would
lose a small share of their social benefits, but in comparison to their non-
citizen neighbors, they looked more privileged than ever. It was a clever
trade of benefits for privilege.
Business owners were another prime focus for reforms. Like expatri-
ates, private businesses enjoy little political clout. Firms are generally
seen by the state as free riders. They pay little or no tax— since even busi-
ness taxes are considered risky— and they hire few citizens because dis-
criminatory labor laws mean citizens receive higher wages than expa-
triates. Businesses thus were easy targets.
Of course, discrimination in governance is a monarch’s prerogative.
The ruling sheikh enjoys policy flexibility unmatched by counterparts
in republican systems, where all groups expect to be treated as equals.
Playing favorites among subsidy recipients enabled rulers to begin reform
without triggering a political backlash. As Homer and, later, Mel Brooks,
put it: It’s good to be the king.
But the significance of the 2015– 2017 subsidy reforms extends beyond
modest increases in price. The subsidy retractions represent a change in
the understanding of the state- society relationship in the Gulf monar-
chies.^33 During the previous austerity period— the great oil bust that
lasted from the mid- 1980s until 2003— regime behavior was markedly
different. Rulers in that era also slashed spending, but the focus was
on projects and infrastructure. Saudi Arabia almost completely halted
capital spending, allowing roads and infrastructure to rot until oil prices
finally recovered in 2003. Social spending— especially government sal-
aries and welfare benefits— was then understood as the glue that bound
citizens to the regime. Governments did their best to preserve subsidies
as long as they could.^34
Things have changed. The pairing of fiscal and security crises has pro-
vided cover for Gulf regimes to launch permanent, structural drives to