The Political Risks of Subsidy Reform in the Middle East and North Africa

• In Event: Governance and Authority in MENA

Abstract

The governments of the Middle East and North Africa (MENA) have long been facing a conundrum. On the one hand, the fiscal strain caused by broad food and energy subsidies, as well as the demands of international financial institutions, create pressures to cut or eliminate subsidies. These pressures only increased further in the wake of the Covid-19 pandemic that triggered a collapse of oil prices, economic activity, and tax revenues. On the other hand, these subsidies have over time become part and parcel of social contracts across the region, and more so in the MENA region than in anywhere else in the world. The region’s largely authoritarian rulers have therefore notoriously dreaded touching these subsidy schemes, fearing that reforms could lead to regime-threatening popular mobilisation like, for example, in Iran in 2019, or even to their ouster. However, the assumption that subsidy reform in the Middle East is politically highly destabilising has not yet been systematically examined and tested. Do subsidy reforms or reform announcements really trigger protests, extraordinary state acts (e.g. imposition of martial law), or political power reconfigurations (e.g. resignation of governments)? And if so, do the type, timing, and justification of reforms matter? We plan to answer these questions using a mixed methods approach that will combine a quantitative cross-country study with both quantitative and qualitative within-country analysis. The findings will have important implications for our understanding of the linkages between subsidy reform and political stability in the MENA region but also of the relationship between austerity, popular mobilisation, and political stability more generally.

Authors

• Moritz Schmoll, Mohammed VI Polytechnic University

• Amir Abdul Reda, Mohammed VI Polytechnic University, African Institute for Research in Economics & Social Sciences

• Thomas Richter, GIGA German Institute of Global and Area Studies