While the rest of the world battled soaring inflation, looming recession, gas shortages and socio economic upheavals, energy producers in the so-called MENA region saw the wind blow in their economic sails carrying them swiftly to new shores. The figure, $1.3 trillion is mind blowing. Already, most GCC countries manage a few of the world’s wealthiest sovereign funds… writes Osama Al Sharif
Energy-rich Middle Eastern states stand to make more than $1.3 trillion in additional oil revenue in the next four years, according to the IMF’s director of the Middle East and North Africa region, or MENA, as reported recently by the Financial Times. The figure is staggering having been disclosed in August, almost six-month since the outbreak of the war in Ukraine.
While that war has wreaked havoc on the economies of the developed world, especially Europe and the United States, it has brought windfall profits to oil and gas exporting countries; primarily the GCC group as well as Russia itself. OPEC Plus has become the most potent economic club in the world; controlling oil production while keeping energy prices at historic highs.
While the rest of the world battled soaring inflation, looming recession, gas shortages and socio-economic upheavals, energy producers in the so-called MENA region saw the wind blow in their economic sails carrying them swiftly to new shores. The figure, $1.3 trillion is mind-blowing. Already, most GCC countries manage a few of the world’s wealthiest sovereign funds.
With Saudi Arabia and the UAE launching ambitious plans to diversify their economies even before oil prices soared due to the war in Ukraine, one can confidently predict that most projects in both countries’ plans will become a reality. These include multi-billion-dollar investments in tourism, especially in the case of Saudi Arabia, and in embracing smart technological solutions in green energy, transportation, health, agronomy, Artificial Intelligence (AI), water harvesting and others.
The GCC is well on its way to becoming an economical and creative hub, at least in the coming two decades. But that is only part of the story.
The acronym MENA first appeared in the mid-1990s and while it is used in various UN reports, there is no MENA region among the official United Nations Regional Groups. Alternatively, other acronyms have been used like WANA; where the Middle East is referred to as West Asia or MENAP; to include Afghanistan and Pakistan or even MENAT; to include Turkey. Whatever the geopolitical necessity, these acronyms may soon become archaic.
Even before the mid-1990s, the GCC political and economic grouping was detached from the rest of the MENA region in terms of its unique socio-economic indicators. One can compare Jordan to Iraq and Syria to Lebanon or Egypt to Algeria but one can hardly make logical comparisons between Saudi Arabia and Tunisia or the UAE and Yemen.
On the other hand, GCC countries share similarities in terms of economic structure, demography, ecology, history, foreign labour and political system. These common characteristics have been deepening as most members seek to diversify sources of revenue, invest in infrastructure, and adopt policies to replace foreign labour, especially in corporate and governmental positions. They are investing in health, education, logistics, green energy, tourism and others. Their economies are being transformed at roughly the same rate and all are witnessing healthy GDP growth.
While this is happening, other members of the MENA region, with the exception of Israel, are not so lucky. Egypt is battling a huge foreign debt burden putting pressure on its currency. Almost all members have been affected by soaring inflation, which has exacerbated endemic unemployment and poverty rates. Libya, Yemen, Syria, Iraq, Lebanon and Tunisia are immersed in various political conflicts with a few on the verge of total collapse.
With the decades-old political grouping of the Arab League now irrelevant, countries outside the oil-rich club of the GCC, are seeking to find alternatives. Egypt, Jordan and Iraq are in the embryonic stage of building an economic coalition. That has a long way to go. The fact of the matter is that barring a major geopolitical upheaval, the GCC club looks impervious to fluctuating economic indicators and factors. It is on its way to emerging stronger and more resilient than ever.
But despite the widening chasm separating the GCC from the rest of the MENA members, there are few shared challenges and even threats that cannot be ignored or repulsed individually. Extreme weather conditions as a result of climate change are cross-border phenomena and the Arabian Gulf region will be affected severely by rising temperatures in the coming two decades. That is a danger that must be confronted collectively.
Another shared challenge is the possibility of turmoil sweeping countries in the Levant as a result of a combination of ecological and socioeconomic factors. The chaos in the general neighbourhood, including West Asia and the Indian Subcontinent, will affect the domestic security of the GCC countries, which host millions of foreign workers.
This is why the GCC must look beyond its immediate borders as it enjoys relative stability and security. Part of its revenues must go to help the struggling economies of its neighbours, not as handouts, but as smart investments in a wider regional project for food security by reclaiming arable land and securing water resources in the Levant, Egypt and Sudan.
Oil and gas-producing Gulf countries have always enjoyed wealth and economic growth along with internal stability. Now they are on the verge of a new renaissance that will set them apart, as a group, as they invest heavily in the economies of the 21st century and beyond. But for the bliss to last, they must also look across their borders to their neighbours and formulate plans to invest in the region’s stability as well.
(Osama Al Sharif is a journalist and political commentator based in Amman.)