A “transformational moment”?
Afshin Molavi, like so many others, is drawing a straight line to the sky, in Newsweek:
It’s no exaggeration to say that the oil-rich states of the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates—are enjoying a transformational moment, one that could deeply affect the region if not the world. Buoyed by unprecedented oil prices, these states are awash with cash. In the past five years, they have earned a staggering $1.5 trillion for their petroleum, according to the Institute of International Finance (IIF). And there’s no end in sight: by the close of 2007, the IIF says, the GCC will have picked up an additional $540 billion, more than the combined exports of Brazil, India, Poland and Turkey
All that green has turned the once backward region into the world’s 16th largest economy, according to IIF. And if present trends continue, the GCC zone could become the world’s sixth largest by 2030….”A new gulf is dawning,” says Edmund O’Sullivan, the Dubai-based editorial director of the Middle East Economic Digest (MEED). “And it’s moving much faster and smarter than it did in the 1970s…
the IIF estimates that $1 trillion of the $1.5 trillion windfall has stayed in GCC states, being spent on imports or development. That’s a big improvement on the past, when much money was stashed in Swiss banks or squandered on weapons…This is especially so in Saudi Arabia, which, according to Georgetown’s Jean-François Seznec, is on target to become the world’s top petrochemicals producer by 2015…
On the government level, a lot of money is still being invested in safe havens like the United States (about $300 billion this time) and Europe (about $100 billion). But in the past five years, Gulf states have also invested $60 billion in the needy regions of the Middle East and North Africa and have put another $60 billion in Asia…King Abdullah has launched a $600 billion infrastructure development plan, aiming to create several new multi-billion-dollar industrial, financial and manufacturing “cluster” cities. These include the $27 billion King Abdullah Economic City that could, on its completion, house 2 million people and create 1 million jobs in an area the size of Paris…
The piece notes that while some countries are going hog-wild with their spending and investments, “Kuwait seems content to follow its old model, growing fat off oil profits and investing in blue-chip companies.” Let’s look in on the situation five years from now and see whose model worked best.