WE HAVE A SERIOUS PROBLEM87energy subsidies are also inviolable components of the social contract
between state and society. Rulers provide them in exchange for political
support. One can no more retract subsidies in a rentier state than one
can retract the right to vote in a democracy.
Beblawi and Luciani wrote in 1987 that the specter of rentier govern-
ments clinging to “detrimental” spending policies that “very clearly can-
not be sustained in the long run” was a symptom of the weakness of their
states.^2 Samih Farsoun in 1988 warned of the attractions of subsidies: over
time they metamorphose from ruler’s gift into “a political right of the citi-
zen.” Jill Crystal cautioned during the oil bust in 1990 that the combi-
nation of low oil rents and cutbacks in welfare benefits would create a
“source of future instability” and bring “demands for representation.”^3
Dismantling subsidies, echoed Farsoun, “will likely trigger movements of
opposition against the regime.”^4
There is undoubtedly some truth to these arguments. A sudden
eighteen- fold increase in electricity prices would probably push Kuwaitis
to riot. If things went badly, the emir could find himself out of a job. But
is any reform off the table? Can there be no compromise to the energy
subsidy quandary in which the Gulf finds itself?
Academics have long argued that these types of regimes have little to
no flexibility on subsidies. Rentier theory considers benefits such as sub-
sidies on energy, food, housing, health care, and land as vital compo-
nents of citizenship, which, collectively, comprise the citizen’s biggest
incentive for consent to his government’s rule. The predominant mes-
sage is that benefits cannot be retracted without offsetting their loss with
a corresponding increase in democratic participation. To do otherwise
would challenge the basis of the state.
Whether these scholarly prohibitions are accurate is another matter.
CAN YOU REMOVE SUBSIDIES?As mentioned in chapter 4, a key issue in the rentier social contract is
the rejection of taxation and other forms of extraction from society. Not
only are autocrats unable to tax citizens, theory holds, but they also