Welfare Retrenchment Under Authoritarianism: The Political Economy of Subsidy Reform in the Middle East

Abstract

How do authoritarian regimes implement unpopular economic policies that threaten to undermine their political stability? In many countries in the Middle East and North Africa, spending on subsidies on basic commodities has historically served as a key foundation of the welfare regime. Over the past few decades, subsidies have become increasingly burdensome on state budgets, prompting governments to cut back on spending. However, this shift tends to generate dissatisfaction amongst citizens. This problem is especially salient in authoritarian regimes, where public spending can bolster stability in the absence of electoral legitimacy. How do governments balance citizen dissatisfaction with the economic need to make these reforms, and ultimately arrive at completed reforms? My project examines the strategies authoritarian regimes deploy when they implement these challenging reforms, and the strategies they use to counter citizen mobilization when it arises in response to unpopular policies. I focus on Jordan and Egypt, which have undergone parallel processes of reform, yet vary in their use of repression. Subsidy reform is used to illustrate a quintessential case of unpopular economic reform in the region. I argue that authoritarian regimes adopt preemptive and responsive strategies to implement subsidy reforms despite broad popular opposition. These include rhetorical strategies in anticipation dissatisfaction, and when protests do occur, responding to them with temporary concessions, before ultimately quietly restating the offending policies. Despite differences in repressive capacity, both Egypt and Jordan deploy common strategies, combining preemptive messaging with temporary concessions, to implement subsidy reform without destabilization. The willingness and ability to use repression conditions reliance on these strategies.