Refinancing the Rentier State: Welfare, Inequality, and Citizen Preferences toward Fiscal Reform in the Gulf Oil Monarchies

Abstract

Middle East oil producers are today pursuing profound transformations of their rentier economies, including through new taxes and reductions in state spending and welfare subsidies that have supported citizens for generations. Reforms aimed at deficit reduction are expected to pose serious challenges for authoritarian states whose citizens are accustomed to generous financial patronage in return for political allegiance. However, the dominant rentier state theory does not offer clear expectations about citizen preferences or priorities surrounding welfare retrenchment, beyond the basic assumption that citizens should oppose reductions in state largesse. This paper proposes a general framework for understanding how citizens relate to welfare benefits in the rentier state, and then tests some observable implications using original survey data from the quintessential rentier state of Qatar. We distinguish between nonexcludable benefits that are available to all rentier citizens and personalistic benefits that disproportionately flow to elite citizens and the ruling class, the latter giving rise to inherent inequality. Using two novel choice experiments, we ask Qataris to choose between competing forms of economic subsidies and state spending, producing a clear and reliable ordering of welfare priorities. Finally, expectations derived from the experiments about the individual-level determinants of rentier reform preferences are tested using data from a follow-up survey. Findings demonstrate the importance of nonexcludable public goods, rather than private patronage, for upholding the rentier bargain. Our study has important implications for understanding how citizen preferences may serve to constrain the domestic and foreign policy options available to rentier governments as they seek to reshape their societies away from reliance upon oil. It also invites a larger conceptual reorientation of key aspects of the prevailing rentier state paradigm.