The 2020 coronavirus pandemic has crystalized a picture that has been developing for some time in the Gulf: with oil prices plummeting, Gulf Cooperation Council (GCC) states are now facing even greater pressure to make difficult changes in economic and social policies as well as spending habits. While these changes will have important domestic repercussions that differ from one Gulf country to another, it is also worth considering what they will mean for regional dynamics and for other Arab countries that have long relied on the Gulf for largesse, investment, and employment.
Having lost the cushion of Gulf support, many Arab states are looking for external financing from international financial institutions and other donors such as China (particularly in North Africa) and the United States. These states’ unemployment problems are likely to grow significantly as their workers return from Gulf countries. Although hastened by the pandemic’s effects, the changes also will flow from the seismic shifts underway in the Middle East and North Africa (MENA) region, where the rentier model of natural resource extraction is crumbling without new economic or governance models yet in place.
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