156THE POLITICS OF REFORMIn January 2018, Saudi Arabia and the UAE imposed the GCC’s first-
ever value- added tax, imposing an extra 5 percent price hike on nearly
all goods and services. The remaining monarchies announced plans
to impose VATs of their own in 2019.
New forms of supposedly illegitimate “extraction” from society were
becoming business as usual in the Gulf. Depending on the level of chaos
that persists in the Gulf and neighboring states, it’s possible that citizens
may even accept the long- avoided third rail of autocratic politics—
personal income tax— if it protects their sheltered lifestyles. No demo-
cratic opening necessary.
FUTURE IMPLICATIONSTaken together with Saudi Arabia’s dramatic price increases, the modest
subsidy reforms around the GCC— and the evidence that such subsidies
indeed affect demand— suggest that the energy demand conundrum may
be resolvable. The once- rigid social contract that confronted Gulf export-
ers’ economic well- being has grown more flexible. Ruling families are
finding that the advice of their technocrats is accurate: giving away ever-
increasing amounts of energy products really is unsustainable. Further-
more, the public can grasp this notion. People may grumble, ruling fam-
ily legitimacy may even be damaged in the eyes of some, but citizens
appear to be moving on with their lives without trying to overthrow the
regime.
My 2011 survey research, detailed in chapter 7, suggests that a hard-
core group of about a third of the citizen population remains opposed
to any sort of change in energy subsidies, even when told that increased
prices are in the national interest.^44 For now, this large and potentially
dangerous cadre of dogged opponents appears to have accepted its loss
in benefits, probably grudgingly. Thus far, reforms have not impinged
on ruling families’ overriding concern: regime security. This, of course,
could change. More survey work is needed to measure changes in atti-
tudes as reforms are rolled out.