While Kuwait has recorded budget deficits since the decline in crude oil prices in mid-2014, this has not resulted in a significant decline in fiscal expenditure. Although budgetary pressures have encouraged the government to take steps towards fiscal and economic reform, a reconfiguration of the relationship between the state and the citizens has proved to be one bridge too far, with different social groups holding on to their share of the oil wealth. This has been compounded by historical contingencies with the codification of social protections and the establishment of a relatively powerful parliament through the 1962 Kuwaiti constitution. The burden of the fiscal adjustment policies has mainly fallen upon the shoulders of expatriate workers, who have been further restricted from access to the country’s oil wealth. Meanwhile, the significant reserves accumulated by Kuwait’s sovereign wealth funds have reduced short-term pressures to initiate fiscal reform, encouraging the government to embark on a path of piecemeal reform to avoid conflict with the influential opposition eager to protect the interests of the salaried middle classes.

Qatar is a small yet dynamic Gulf state, among the richest countries in the world per capita due to its oil and gas wealth, which plays an outsized role on the world stage. This chapter outlines and assesses how state policies, and various actors and forces, have shaped Qatar’s political economy, especially since the decline in oil prices that began in 2014. There is an explanatory emphasis on the structural characteristics of Qatar’s economy, the policy decisions of its relatively new emir, Tamim (r. 2013–), and the impacts of the post-2017 Gulf crisis, with the arguments grounded in a theoretical foundation that combines late-stage rentierism, an entrepreneurial form of state capitalism, and an economic statecraft that has been ambitious, even aggressive. The overarching argument is that Qatar was uniquely positioned for the challenges that have arisen after the oil price fall in 2014, in some ways by simple good fortune, but more as a result of the Qatari state having prepared the economy well for the risk of economic or diplomatic problems, and then having responded quickly and emphatically when the oil price fall began.

Since 2006, Egypt has shown the puzzling trend of being a country that imports energy yet does not benefit economically from lower international oil prices. Despite being a net energy importer, Egypt remains heavily dependent on crude energy for its foreign currency earnings, directly through exports and indirectly through foreign direct investment, external aid, and workers’ remittances from oil-rich countries. Egypt’s twisted dependency is explained by two predominant and largely interrelated factors: institutions and geo-economics. Sustained rent dependency weakens the state institutions necessary for regulating and extracting resources from the economy, as well as those required for state–business coordination of diversification or upgrading. These state institutions instead reproduce capacities that are allocative in essence and that involve rent. Institutions are sticky. They do not readily change in response to economic shocks or downturns, nor do they adjust automatically and functionally to changing economic conditions. Regionally, oil-rent recycling from the GCC to Egypt mitigated the overall impact of becoming a net energy importer. It kept the Egyptian economy and state dependent on higher oil prices through aid packages, cheap credit and investment, and the flow of workers’ remittances, even when the country itself was becoming a net importer.

This concluding chapter focuses on two aspects of the Middle Eastern political economy. It initially examines the major consequences of the post-2014 oil price decline and also deals with the oil price crash as triggered by the COVID-19 pandemic. First, migrant workers in the Arab Gulf are the main social losers of policy adjustments. Second, citizens who are predominantly employed in the well-paid public sector were capable of repelling burdensome adjustments. Third, adjustment policies show some of the institutional weaknesses characteristic of rentier states. Fourth, for the three semi-rentier states of Egypt, Jordan, and Lebanon, the expectation that they could profit from the oil price decline in 2014 has not been fulfilled. Beyond major empirical developments, this conclusion also highlights three conceptual dimensions for the theoretical advancement of rentierism. First, it is important to bring state–class relations back into the discussion. Second, the authors stress the importance of institutions during periods of policy adjustment within countries shaped by the inflow of hydrocarbon resources. Third, the authors call for a more nuanced understanding of rentier state autonomy. Based on these discussions, they argue that rentierism still prevails with regard to both empirical dynamics in the Middle East and academic discussions on its political economy.

This chapter investigates impacts of low oil prices, from 2014 onwards, on Jordan’s fiscal and foreign policy. High prices of oil have long been blamed for amplifying Jordan’s fiscal deficits, also counterbalanced via aid and remittances from Gulf Cooperative Council (GCC) states. These economic linkages in turn deepened GCC states’ influence over Jordanian foreign policy. By contrast, has cheap oil lightened Jordan’s fiscal deficits and political dependency on GCC states? This chapter argues that it has not. Jordan’s fiscal deficits expanded with cheap oil. While low oil prices and cuts in GCC aid initially buffeted Jordanian foreign policy under the GCC’s pressure, the depth of Jordan’s debt crisis and the public’s mounting discontent over fiscal reform ultimately pushed Jordan to solicit even more aid. This compromised fiscal reform and Jordan’s foreign policy autonomy, despite the low oil prices from 2014 to 2018.

How can we understand the economic responses of rentier states to the oil price downturn in 2014? Through the case of the Sultanate of Oman, this chapter answers this question on the present with a view of the past. With a longer view of economic adjustment since the 1980s, the authors unsurprisingly find that economic adjustments mirror oil market fluctuations. However, fiscal restraint does not adjust as steeply during contractions in the oil market. This illustrates the difficulty in cutting expenditure in spaces where both state and economic life are deeply tied to each other and to oil-supported government spending. The authors examine a selection of economic policies and initiatives Oman is using in response to its contracted fiscal position, including government borrowing, labour market regulation, subsidy reduction, the tanfīdh programme, and changes in taxation regimes. The authors argue that the government is caught between socio-economic demands and financial realities, understanding that a disruption in one can lead to undesirable financial or social instability. These findings have implications for the literature on rentierism and demonstrate conditions under which rentier states are more sensitive to social pressures and therefore less autonomous from society than often purported.

This chapter discusses adjustment policies in Bahrain since the steep decline in oil prices in 2014. Placing these policies within the context of rentier state theory (RST), the chapter discusses the extent to which recent policy changes remained within the realm of the rentier state as the prime mover of the economy and the sole fiscal manager. The argument presented points out that the ‘rentier state’ remains prevalent. Adjustment policies adopted and implemented since 2014 are merely specific policies which have reallocated rents from high subsidies to higher debt financing, from high investment expenditure to higher wage expenditure. The key driver behind these policies is maintaining the long-term sustainability of the existing rentier structure in order to maintain sociopolitical stability. While the prevalent rhetoric refers to these adjustment policies as unprecedented reforms, this chapter shows that recent adjustments lack effective institutional change away from rentier governance, which is based on patronage, public gestures of benevolence, and benefit distribution rather than meritocracy. Providing evidence by giving concrete examples and presenting actual data, this chapter emphasises that the adjustment policies implemented are best described as fiscal policy corrections, rendered necessary amid changing internal fiscal and external economic factors exacerbated by a low-price environment.

This chapter analyses the relationship between lower oil prices and the Lebanese economy since 2014. First, it discusses the different transmission channels through which oil price fluctuations affect economic activity. In his discussion, the author reviews how key macroeconomic variables have evolved during the recent oil price decline period, and he evaluates the relevance of each transmission channel. Overall, the author finds that the 2014–16 oil price decline was beneficial for the Lebanese economy. Second, he studies the 2015 deflation and investigates the different sources behind it. Despite the different negative aggregate demand shocks that hit the Lebanese economy during that year, GDP increased. This empirical evidence suggests that the 2015 deflation was primarily caused by the reduction in oil prices. Finally, the author explores the effect of lower oil prices on the oil and gas sector. He explains why lower oil prices have negatively affected the oil and gas sector at its current embryonic stage. He also presents the pre-resource curse concerns and provides arguments on why Lebanon is unlikely to fall into this trap. Moreover, the author discusses the Dutch disease and emphasises the importance of why Lebanon should adopt a long-term development strategy to avoid this economic anomaly.

Saudi Vision 2030 was touted as a plan to move the Kingdom away from dependence on oil, aided by the 2016–2020 National Transformation Plan. However, as this chapter argues, the rapid and concurrent changes taking place in Saudi society and political economy are profound on multiple levels. Some incidents and trends have led to reputational damage, which is affecting the Kingdom's economic policy and revenues through its immediate ability to retain capital, complete large-scale public–private projects, and attract foreign direct investment. Others, such as the Yemen conflict, mean that the national economy cannot be disconnected from equally profound changes taking place in Saudi Arabia’s regional and international politics. The chapter builds on a wide range of literature on rentierism, Saudi economic studies, political economy, and international relations. The chapter’s main contribution lies in explaining the interplay between the pace and nature of structural reform and the consolidation of governance that utilises unprecedented measures aimed at supporting the bottom line, elite, and national security interests in the near term.