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COVID-19 and the global energy market: implications for international and domestic policies in the Arab Gulf states

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For the Gulf states, the COVID-19 pandemic has acted as an accelerant to systemic fiscal challenges the states were projected to face. These longer-term fiscal challenges were a result of fundamental shifts in the global energy market towards lacklustre demand, oversupply of oil and gas, and depressed prices. Moreover, the shift towards carbon -neutrality and investment in renewables by key regions such as the European Union and China, have added to the long-term outlook on fossil fuel demand. This article examines such trends and concludes that the Gulf region is facing a looming fiscal cliff, whereby public policy within the Gulf states will necessarily reflect the three main areas of taxation, austerity and increased activity in the bond market to raise liquidity. Such trends have been made more pronounced by the pandemic. It is argued that in the context of rising debt, the immediate challenge identified for these states will be their peg to the United States Dollar. Such fiscal conditions will necessitate a drive by these states to attract foreign direct investment, and greater engagement with China through the Belt and Road Initiative is identified as a likely outcome. Therefore, this article concludes that the impact of the pandemic will hasten a shift in both public policy, state-society-relations, and in the international relations of the region.
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Keywords: BRI; COVID-19; China; Gulf states; currency peg; debt; energy geopolitics; fiscal debt

Document Type: Research Article

Affiliations: Hamad bin Khalifa University, Qatar

Publication date: November 2020

This article was made available online on October 28, 2020 as a Fast Track article with title: "COVID-19 and the global energy market: implications for international and domestic policies in the Arab Gulf states".

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  • Global Discourse is an interdisciplinary, problem-oriented journal of applied contemporary thought operating at the intersection of politics, international relations, sociology and social policy. The Journal's scope is broad, encouraging interrogation of current affairs with regard to core questions of distributive justice, wellbeing, cultural diversity, autonomy, sovereignty, security and recognition. All issues are themed and aimed at addressing pressing issues as they emerge. Rejecting the notion that publication is the final stage in the research process, Global Discourse seeks to foster discussion and debate between often artificially isolated disciplines and paradigms, with responses to articles encouraged and conversations continued across issues.

    The Journal features a mix of full-length articles, each accompanied by one or more replies, policy papers commissioned by organizations and institutions and book review symposia, typically consisting of three reviews and a reply by the author(s). With an international advisory editorial board consisting of experienced, highly-cited academics, Global Discourse publishes themed issues on topics as they emerge. Authors are encouraged to explore the international dimensions and implications of their work.

    All research articles in this journal have undergone rigorous peer review, based on initial editor screening and double-blind peer review. All submissions must be in response to a specific call for papers.

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