Jim_Krane]_Energy_Kingdoms__Oil_and_Political_Sur

THE POLITICS OF REFORM139

it comes to reforming subsidies or other benefits. Everyone knows who is
behind any painful policy decision. Therefore, centralized regimes try to
restrict unpopular reforms to periods when they can deflect blame.^4 A
crisis presents a useful excuse. The old governing adage “never let a crisis
go to waste” is apt.
The Kuwait mosque bombers probably had no idea that their attack
would make it easier for governments around the Gulf to raise prices on
fuel, electricity, and water, but that is essentially what happened. Citizens
rallied around their ruling sheikhs as bulwarks against the depredations
of ISIS. Fear of unrest put citizens in a more understanding mindset.
A few years earlier, Dubai’s ability to retract citizen electricity and
water subsidies was seen as a “special case,” given the peculiarities of
that post- oil city- state. Now, the prerequisites for retraction began to
materialize across the GCC. Keeping citizens awash in cheap fuel was
not as important as keeping them safe from ISIS. Since crumbling oil
prices had shattered government budgets, social spending could at
last be tackled.

$108

$84

$49

$96

$52

$95

$69

$0

$20

$40

$60

$80

$100

$120

Bahrain Iran Kuwait Oman Qatar Saudi

Arabia

UAE

$US per Barrel

2015 Average Brent Price

FIGURE 9.1 2015 breakeven oil prices in GCC.

Oil prices needed to fund 2015 government budgets fully were above the prevailing Brent

price in all but Kuwait and Qatar.

Source: International Monetary Fund, “World Economic Outlook”

(Washington: IMF, October 2016).