140THE POLITICS OF REFORMBut while a fiscal crisis and a security crisis might have been enough
political cover for ordinary centralized states, the Gulf monarchies
aren’t ordinary. They are absolute monarchies, an extreme form of
centralization. For these regimes, subsidies are crucial tools that are
exploited to preserve social peace and rulers’ political legitimacy. Tin-
kering with subsidies is so risky that multiple political enablers need to
be in hand. Fortunately for reform- minded regimes, a third source of
political cover presented itself, arriving in the form of outside pressure—
international campaigns to end fossil fuel subsidies and address climate
change and pollution. Multilateral agencies such as the G20, the IMF,
the World Bank, and the Paris climate agreement of 2015 intensified
pressure on countries to end price supports for carbon- rich fuels. Saudi
Arabia, a G20 member, explicitly tied its Paris pledge to its ability to
reduce domestic energy demand by raising prices.^5
Thus, we can say that reforms in the Gulf appear to have been cata-
lyzed by the combination of extreme instability and deepening fiscal
crisis, with an added dose of external pressure. These factors should be
considered convenient political cover that helped launch reforms; they
were not the driving rationales for changes in energy prices. The real
reason reforms went ahead, of course, was that policy makers simply
needed to rein in the growing diversion of exportable oil and gas into
domestic markets.
In the previous chapter, we looked at some of Saudi Arabia’s reforms—
but they weren’t the only ones. The other five sheikhdoms also took
action.
KUWAITOf all the Gulf monarchies, subsidy reform faced its stiffest challenge in
Kuwait. By the mid- 2000s, per capita energy demand in Kuwait had
reached staggering levels, particularly for power consumption in the
homes of Kuwaiti citizens. This led to a defining moment in 2008, when