International Monetary Fund Managing Director Christine Lagarde, center, meets with Gulf Cooperation Council finance ministers in Doha, Qatar on November 8, 2015. (AP Photo/Osama Faisal)
Executive Summary
This paper puts the attempts by Gulf Arab states and Iran to launch large-scale development programs into historical and comparative context. Strategic “visions” have been a hallmark of regional policymaking for more than two decades but persistent difficulties in implementation have meant that the plans have fallen far short of intended outcomes. By focusing on the practical and political challenges of technocratic and economic reforms, using specific examples to illustrate broader thematic points, this paper analyzes what the current generation of officials need to do differently to secure more favorable and sustainable results. Although the prolonged fall in oil prices has provided officials with a window of opportunity to introduce politically and economically sensitive reforms, the urgency of the fiscal pressures on budgets on both sides of the Gulf means there is little margin for error, and it is vital that decision makers absorb the lessons from the flawed earlier attempts at reform.
As Gulf Arab governments adjust to fiscal deficits driven by lower oil prices, the state, traditionally the leader in economic development, is under pressure to utilize available finance from the private sector. In labor markets, the state will need to reassess its role in providing the bulk of job creation for Gulf citizens, as well as question its reliance on low-wage foreign labor. These recalibrations of the Gulf economic development model have been under discussion in the “visions” of national development plans for some time. But the necessity of expeditious structural reforms is now far more pressing. Diversification away from resource-dependent state spending will require changes across the economies, and the societies, of the Gulf Arab countries.
This paper is a part of AGSIW’s Visions of Change series, examining how the Gulf Arab countries are addressing reduced hydrocarbon revenue and responding to pressures to liberalize their economies. This series engages how these efforts are unfolding across the region, by sector and country, to underline the challenges, opportunities, and risks of innovation and economic change.
The views represented herein are the author's or speaker's own and do not necessarily reflect the views of AGSI, its staff, or its board of directors.
Trump’s visit to the UAE, centered on artificial intelligence, investment, and defense, will not only highlight the scale of Emirati aspirations but also reveal the complex interplay of state, business, and family networks now shaping the U.S.-UAE relationship.
Saudi Arabia has continued to make progress in diversifying its economy, although lower oil revenue, higher imports, and stronger remittance outflows pushed the current account into a small deficit in 2024.
Given how Syria after 2011 became a cockpit for external intervention in domestic affairs, the early signs this time for engagement of Gulf states appear more promising, particularly due to their ability to convene and lead in regional affairs.
Any escalation in the tit-for-tat exchanges of fire between Iran and Israel could heighten the Gulf states’ vulnerability to being caught in the crossfire.
Saudi Arabia’s King Salman bin Abdulaziz is conducting a six-country tour of Asia that will take him to Malaysia, Indonesia, Brunei, Japan, China, and the Maldives. Aside from its monthlong duration, the trip is significant for the commercial and strategic messages it conveys in the context of Saudi Arabia’s ambitious program of economic reform and...
The surprise Cabinet reshuffle undertaken on January 27 by Emir Tamim bin Hamad al-Thani reflected and reinforced the convergence of three trends that together are reshaping the policymaking and decision making landscape in Qatar. An influx of new ministers signals the continued clearing out of the “old guard” as Tamim consolidates his position after assuming...
