Oil states, with many citizens below the poverty line, may try to slash the social safety net. That would be a very dangerous Rubicon to cross.
If Subsidies Fall with Oil Revenues, Arab Unrest May Rise [NYTimes]
December 17, 2014
The prospect of cheaper oil is welcomed in Western nations, but the effect of the price drop will be remarkably different in the Middle East.Affordable energy may become a thing of the past within the Arab world, where vast numbers of citizens live below the poverty line, as Arab states cut price subsides to redress budget imbalances resulting from lower oil revenue.Carrying such changes without providing a suitable social safety net could be a very dangerous Rubicon for those states to cross.
In Egypt, for example, where the government has begun to remove subsidies on gasoline, one can only imagine what is likely to happen if further subsidies on both gasoline and other commodities are removed too. For decades, subsidies have underpinned an unhealthy Egyptian economy. If other social spending does not replace the subsidies, there is a real risk of civil unrest, as Egyptian history has previously shown.Pressure on the authorities wouldn’t stop there. Egypt is at the core of geopolitical reality in the modern Arab world.In a turbulent Arab world, the stability of many governments may depend, at least in part, on their ability to address the social needs of their populations.It may seem to some that the Arab Spring is over – but the conditions that let it flower in 2011 may have just become more intense.Join Room for Debate on Facebook and follow updates ontwitter.com/roomfordebate.
Source: NYTimesPhoto Credit: By Olav Gjerstad (Flickr: Olav Gjerstad) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons