DUBAI — The Arab world might be expected to be feeling cheerful given current high prices for oil. But, instead, a cloud of unease hangs over Arabia today. There are fears of slow economic development, fears of weakening oil prices as oil production expands elsewhere — or as the world learns to conserve energy — and, of course, fears of religious extremism and inter-Islamic strife upsetting the political balance in the main Arab states.
Yet there are good reasons why this gloom may be overdone and why, with good management, the Arabian future could be very bright indeed. Here are some of them:
The demand for oil and gas is going to continue to rapidly increase. World oil consumption, now officially at 76 million barrels a day (MBD), but probably already over 80 MBD, is expected by the International Energy Agency to rise to 122 MBD by 2030.
Expansion of Asian demand has only just begun, with China becoming a major oil importer. India will follow, while the major “offender,” the United States — now importing more than 12 MBD, 60 percent of its needs — shows no sign of adopting the radical policies needed to curb its thirst.
At the same time, oil production from “safer” areas is falling. The IEA estimates that, by 2030, more than half the world’s supplies will originate from shaky and troubled regions.
Alternative non-Middle East energy sources will remain both expensive and politically unreliable. The same, of course, can be said of large parts of the Middle East today, but this merely underscores the central point: If the Arab world and the Persian Gulf States can deliver political stability and good governance, hopefully flanked by a peaceful Iraq and a stable Iran, then the future is truly theirs.
Meanwhile, attempts by the main consumer countries to leap into a low-energy future, or to a low carbon-emissions future, will continue to have marginal impact for decades. The strategy to cut carbon-dioxide emissions and slow down global warming is not working.
For example, wind farms are unrealistic in practical terms. The one major alternative, nuclear power, remains under a political cloud. In Britain it is being deliberately wound down. The nuclear option in Britain is still said by government ministers to be “open,” but in practice, to keep it truly open and to be ready to build new state-of-the-art stations along with safer waste-handling techniques will require training and research on a scale that is not taking place.
One development running counter to this is that China is clearly limbering up for a major expansion of nuclear power and is planning, at least on paper, to build up to 40 new nuclear stations. But in the Western world, civil nuclear programs remain mired in controversy.
All these factors indicate that the dream of an oil-free future, and a future for the Western economies less dependent on the Middle East, remains just that, a dream with little prospect of realization in the first half of the 21st century.
This puts the ball firmly in the court of major oil producers. Their opportunities are enormous. But there are two ways in which they could be fumbled:
First, poor production management and unbalanced marketing could push the price of oil so high that the governments of consumer countries could be panicked into measures that, in normal times, they would have no prospect of adopting.
Second, bad governance, regional strife and political turbulence in the producer societies could interrupt production, as well as fatally weakening future investment in the development and production of their gigantic reserves. And this would then have a negative effect on prices and consumer attitudes.
So the issue, which comes down to political stability and wise government, is in the Arab world’s hands. If these two items can be delivered, and if peace can be made with Israel, then the prospects are limitless. A vista opens in which the Arab world could not only become rich again, both intellectual and physically, but it could also leave struggling Europe far behind. An Arab renaissance could at last take off, reducing resentments that foster terrorism and transforming the lives of millions of Arabs for the better.
Throughout the Arab world it should be perfectly possible for Islamic faith to be combined with rapid-wealth creation and growth. The idea that the two cannot go together is defeatist nonsense. Indeed, the example of Dubai, which in a few years has transformed itself from a small desert sheikdom into one of the world’s most glittering trading and high-tech centers, shows what can be done.
The opportunity now opens up to prove that not only are Islam, prosperity and free enterprise compatible but that they can reinforce one other.
The Arab leaders should banish their unease and defensiveness and prepare their followers for the time when the Europeans will once again come to Arabia to learn new ideas and sit at the feet of wisdom, just as they did centuries ago.
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