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Gulf states struggle to adjust to new reality
Oct 10: The website carries here an interesting analysis on how the basic economic principles on which oil rich Gulf nations have operated so far are being turned upside down subsequent to the dramatic fall in oil prices.
8These countries have lived so far on the classic theory of rents, as rentier states, where citizens are spared taxes, and rents earned by the states are distributed to the citizens in various ways.
8The rentier state also allows a despotic regime to buy their citizens servitude.
8With oil prices remaining low, there will have to be a shift from the ‘cradle to grave’ welfare system to a different system where citizen and the private sector expected to bear the burden of adjustment.
8And these countries, lead by Saudi Arabia, are adjusting badly so far
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