96WE HAVE A SERIOUS PROBLEMfailed; Saudi Arabia imposed electricity tariff increases in 1985 and 1999
that were quickly reversed, and a 2010 attempt also failed.
It’s not hard to see why monarchies might be hesitant to pull back sub-
sidies (or why scholars have viewed subsidies as necessary for regime
survival). Under any political setting, subsidies are described as asym-
metric: easy to enact, difficult to retract. Governments usually intend for
subsidies to provide a helping hand to a struggling (or politically con-
nected) community or business sector. What policy makers don’t real-
ize is that their benevolent policy winds up creating a new bloc that can
turn against them. Subsidies create solidarity among beneficiaries who
organize to protect their interests. When their benefits are put at risk,
this bloc can rise up and threaten the political leadership. Welfare soci-
eties like those in the Gulf therefore maintain a constant potential for
mobilization that raises the stakes of reform.^32
It’s also worth noting that citizens in the 1970s were not clamoring
for cheap energy. Governments decided to provide it. Electricity and
fuels are cheap today because autocratic governments require a source
of legitimacy for their rule that does not involve a mandate from the
ballot box. In other words, subsidies exist not because citizens remain
unable or unwilling to pay but because the state has been unwilling to
charge them.^33
The highly centralized nature of Gulf regimes poses an additional
barrier to reform. When authority is concentrated, so is accountability.
Monarchs that dare reform are exposed to the full force of public reac-
tion. Everyone knows that there is no one to blame but the ruler. This
makes subsidy reform an especially agonizing prospect for a ruling
sheikh. Since regime survival is the ultimate priority, rulers try to push
through unpopular measures when they can be shielded from blame.^34
Low oil prices, for instance, can give political cover for belt tightening.
Monarchs may also be dissuaded from taking action by watching
backlash from other countries. Angry hordes flooded the streets and
overthrew regimes after reforms that included fuel price increases in
Venezuela in 1993 and Indonesia in 1998. More recently and closer to
home, rioters greeted fuel price hikes in Jordan in 2012 and Yemen
in 2006. Yet while rulers may fixate on the times reform caused an