Gulf states face hard economic truth about subsidies (BBC, 18/12/2012)

The security and stability of the six-member states of the Gulf Co-operation Council (GCC) rests on a basic assumption.

Their governments, run by royal families, have a social contract with the people that in its simplest terms effectively says: « In return for your acquiescence we will provide health, education, water, energy and other services virtually free. »

But what happens if the governments are no longer able to fulfil their side of the contract?

What happens if the cost of subsidising all those services becomes too high to be sustainable?

That question has caught the attention of Jim Krane, a Gulf analyst at the Judge Business School of the University of Cambridge.

He was drawn to an astonishing figure about the price of electricity in Kuwait.

« In 1966, Kuwait dropped its electricity tariff from 27 fils per kWh to 2 fils and it has remained the same ever since. That is about 1 US cent, » he told the BBC.

In the UK, electricity costs about 12p ($0.19) per kWh.

Cet article, publié dans Golfe, Koweït, est tagué , . Ajoutez ce permalien à vos favoris.

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