Arab petrostates must prepare their citizens for a post-oil future

Fancy going to a rave in Saudi Arabia? The countries of the Gulf face a daunting transition away from fossil fuels in the coming decades. But another transition is happening in parallel that is just as striking: a shift from state-led economies and towards somewhat more . That prospect is thrilling. Millions of people will enjoy new freedoms and opportunities. But it is also disconcerting, because it brings the risk of social instability if autocratic governments fail to adapt. Whether the Gulf countries succeed in redrawing their social contracts matters not only to their people, but also to the world, because of their clout in oil and gas and their role in exporting cultural values across the Muslim world.Ever since Gulf governments took control of oil and gas production from Western firms in the 1970s, the social contract has been clear. Rulers used petrodollars to pamper their subjects with everything from cushy public-sector jobs to water subsidies and bonuses for newlyweds. Foreigners were encouraged to move to the Gulf to do the jobs citizens either could not or would not do. There was no path for these migrants to become citizens, whether they were labourers sweating on construction sites or bankers in air-conditioned offices. And everyone—locals and expats—had to accept restrictive royal rule.