THE POLITICS OF REFORM157The farthest- reaching reforms have taken place in Saudi Arabia, the
quintessential rentier state. The Saudi retractions provide the strongest
evidence that subsides can be rolled back and therefore that they should
no longer be described as rights. The theoretical prohibitions enshrined
in the literature have been disproven by events on the ground. The Saudi
social contract is undergoing deep experimentation through the Citizen’s
Account compensation, the imposition of VAT, and the steady drum-
beat of increasing fuel and utility prices— with more hikes looming. The
developments suggest that a new “Social Contract 2.0”— with increased
regime flexibility in social policy— is being imposed from the top down.
According to rentier theory, this was supposed to be possible “only if
the state enjoys solid democratic legitimation” that could justify the
$0$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Bahrain Kuwait Oman Qatar KSA UAE United
States2014/2015
2018FIGURE 9.4 Change in regular gasoline price ($US/gallon) after subsidy cut.
Prices for regular- grade gasoline rose in all six GCC states as well as in other
Middle Eastern oil exporters after 2015, but even by 2018 GCC prices still fell short of
international prices, represented here by the United States, which imposes only a small
amount of tax on gasoline sales.
Source: 2018 prices for the GCC were retrieved from media and government sources in
March 2018, using prices for regular— 90 or 91 octane— gasoline. US data are for
February 2018, retail price for midgrade gasoline (88– 90 octane).