Mideast energy subsidy reforms succeed against the odds

As government reforms of energy subsidies trigger chaos in OPEC-member Ecuador, similar reforms are quietly succeeding in other oil-exporting countries. Across the Middle East and North Africa, a series of energy subsidy reforms have raised prices on fuel and electricity in at least nine countries. Large increases in prices that have been fixed, in some cases, for more than 50 years challenge academic theories that model governance in the region, according to a new research paper by an expert in the Center for Energy Studies at Rice's Baker Institute for Public Policy. "Too Much of a Good Thing: Subsidy Reform and Tax Increases Defy Academic Theory on the Rentier Middle East,” authored by Jim Krane , the Wallace S. Wilson Fellow for Energy Studies, highlights four critical developments. Academics have long held that the oil kingdoms of the Middle East are subject to a strict set of governance conditions, Krane said. Autocratic rulers cultivate support from their citizens by providing them with welfare benefits and subsidies, funded through oil export revenues, or rents. These rents were sufficient to eliminate taxes and provide generous subsidies, which allowed regimes to avoid accountability links with taxpayers, Krane said.