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Page added on February 19, 2020

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Arabs should welcome a future with less oil wealth

Consumption

A new report from the International Monetary Fund warns that, by 2034, declining oil demand could gnaw away the $2 trillion in financial wealth amassed by the members of the Gulf Cooperation Council. Unless they act quickly to reform their hydrocarbon-dependent economies, these countries, which collectively account for a fifth of the world’s crude production, will become net debtors.

Inevitably, the report has led to predictions that the evaporation of Arab oil wealth will bode ill for economic development and political stability in an already troubled region. Beyond the GCC, low oil prices would hamper the progress of populous, but still under-developed, oil-rich Arab countries—Iraq and Algeria—that must reorganize their economies and societies toward productive sectors without the cushion of wealth salted away during the boom years.

But declining oil prices and the dwindling of cash reserves are not necessarily bad news for the political economy of the Arab region as a whole.

To start with, the overwhelming majority of the Arab people do not live in oil-rich countries. The most populous Arab countries are for the most part oil-poor. Many are net energy importers, with relatively diversified economic structures and external sectors. These include Egypt, Morocco, Tunisia, Jordan, Lebanon and war-torn Syria. For these countries, lower oil prices would lower the costs of their production and improve their balance-of-payments positions.

The decline in oil wealth would reinforce the incentives to diversify away from GCC-dependency by countries like Egypt, Jordan and Lebanon, which have long relied on recycled oil rents—through workers’ remittances, aid and credit from the oil-rich member states. Lower oil prices may actually improve the longer-term prospects of redefining the position of the most populous Arab countries in the global division of labor.

Countries like Egypt, Morocco, Tunisia and Jordan already possess diversified export structures, with non-oil goods constituting the bulk of what they export. They have also developed strong trade, investment and tourism connections with powerful partners in the European Union and the U.S. For Morocco and Tunisia, lower oil prices would boost their position as energy importers and as exporters of manufactured goods.

Conversely, the outlook for Egypt is significantly tougher given its dense ties with the GCC. But, the overall share of oil-related rents in the country’s GDP, including remittances and foreign aid (predominantly from the GCC), has been constantly declining since the 1990s.

There is near consensus in the literature on the Arab world that oil wealth has been associated with less democracy and more conflict and repression. This does not mean that all conflict can be traced back to oil wealth, but it has played a central role in deepening and prolonging hostilities. Hydrocarbon wealth since the oil shock of 1973 has been associated with higher intensity of conflict around the Persian Gulf, with ramifications for the wider Arab world. Three Gulf wars and the ongoing tensions between Iran and an alliance of the U.S. and several Arab countries attest to this fact. Beyond the Gulf region, oil rents have often been often used to fuel arms races and civil conflict through the sponsorship of local militias along ethno-sectarian lines. Hence, lower oil prices in the long term may weaken the financial resource-base for fueling conflict in MENA, whether directly or by proxy.

Since 2011, oil riches have been used instrumentally to shape the outcomes of post-Arab Spring political processes across the region. Oil-rich governments have supported non-democratic forces, be they Islamist or non-Islamist, Sunni or Shia, creating prolonged and internationalized civil conflicts. In Syria, for instance, Iran threw its weight behind the regime of Bashar al-Assad. Elsewhere, the GCC monarchies used their money power against people-power movements by backing autocrats. It may not be a coincidence that the only success story of a post-Arab Spring transition to democracy is Tunisia, which is not only oil-poor but also too small to draw much attention from oil-rich states.

Less access to easy money could curb ongoing conflicts, or at least make them less intense. It’s worth remembering that the end of the Iraq-Iran war in the 1980s was hastened by the oil glut of 1986 and the subsequent decline in revenues for the two belligerents and their regional sponsors.

Civil conflicts are more complicated than international ones, and will likely linger even with declining oil rents, as they have done since 2014 in Syria, Libya and Yemen. Still, the availability of fewer resources may hasten the conclusion of these conflicts—or at least limit their scope and intensity.

For much of the Arab world, and especially in the counties where hydrocarbon revenues have long represented a curse, the decline in oil wealth described in the IMF report might yet be a blessing in disguise. –Bloomberg



104 Comments on "Arabs should welcome a future with less oil wealth"

  1. joe on Thu, 20th Feb 2020 1:15 am 

    without oil, the US and British wont give a crap what happens in the middle east. all those shia majority Emirates propped up with sunni minority shieks will be finished. the PERSIAN gulf will reemerge as its always been HISTORICALLY sunni sheiks culturally misappropriated shia oil, just like native american genocide, as usual backed up by the greedy west and soon chinese ‘communists’.

  2. Cloggie on Thu, 20th Feb 2020 1:57 am 

    “Arabs should welcome a future with less oil wealth”

    Arabs should use their remaining oil wealth to invest in the future and that is hydrogen:

    https://deepresource.wordpress.com/2020/02/16/142-eurocent-kwh-new-record-low-solar-electricity/

    “1.42 Eurocent/kWh – New Record Low Solar Electricity”

    Their formerly useless deserts and ideal solar conditions can be perfectly used to install endless arrays of solar panels and corresponding electrolyzers to produce hydrogen and perhaps some derivative like methanol, ammonia, formic acid, methane-from-CO2-in-air, whatever. As of 2020 there is no cheaper way to generate a “raw kWh” (unbuffered kWh) than with solar-in-the-desert.

    Both Arabia and Africa can become the new producers of energy for Eurasia, where hydrogen will replace hydro-carbons.

    And for the eternal US detractors of renewable energy and nihilist collapseniks the question is:

    What part of 1.42 Eurocent/kWh don’t you understand?

  3. makati1 on Thu, 20th Feb 2020 2:25 am 

    Hydrogen, Cloggie? LMAO! You really are stupid!

  4. Abraham van Helsing on Thu, 20th Feb 2020 2:28 am 

    “without oil, the US and British wont give a crap what happens in the middle east.”

    A mouse and an elephant cross a wooden bridge. Says mouse to elephant: “boy, we sure make a lot of noise together!”

  5. makati1 on Thu, 20th Feb 2020 2:49 am 

    It’s all that US oil under those ME sands. LOL

  6. Cloggie on Thu, 20th Feb 2020 3:02 am 

    “Hydrogen, Cloggie? LMAO! You really are stupid!”

    Predictable, uninformed laymen’s OPINION.

    Now please elaborate WHY it is stupid?

    Tik-tok-tik-tok

    Here the Dutch minister of economic affairs Eric Wiebes, who in contrast to layman makati, is an engineer of the TU Delft and KNOWS what he is talking about, announcing that the Netherlands are going to be a hydrogen economy:

    https://www.youtube.com/watch?v=OEePUwO0ZK0

    https://deepresource.wordpress.com/2020/02/06/hydrogen-delta/

    https://deepresource.wordpress.com/2018/07/14/the-netherlands-is-placing-its-bets-on-the-hydrogen-economy/

    But in hyper-egalitarian America there is no respect for accomplishment, know-how, experience, only for “financialization” and making others to work for you and make billions.

  7. Richard Guenette on Thu, 20th Feb 2020 7:13 am 

    The UAE has a nuclear power plant: Barakah Nuclear Power Planet. So I read. Correct me if I’m wrong.

  8. joe on Fri, 21st Feb 2020 10:10 am 

    “Abraham van Helsing on Thu, 20th Feb 2020 2:28 am ”

    An elephant is afraid of a mouse.
    Anyway, doesn’t really matter how small you look when you have 520+ nukes…..

  9. Duncan Idaho on Fri, 21st Feb 2020 10:58 am 

    1965 — US: Malcolm X assassinated Audubon Ballroom, New York City.

    You don’t have to be a man to fight for freedom. All you have to do is to be an intelligent human being.

    — Malcolm X, New York City, December 20, 1964

  10. Abraham van Helsing on Fri, 21st Feb 2020 11:50 am 

    Anyway, doesn’t really matter how small you look when you have 520+ nukes…..”

    And who might that be?

    https://en.wikipedia.org/wiki/United_Kingdom_and_weapons_of_mass_destruction

    “The UK has been estimated to have a stockpile of 120 active nuclear warheads and 215 nuclear warheads in total.”

    The trouble is, joe esquire, that if everybody has nukes, nobody can use them.

    #MAD

    https://www.businessinsider.com/these-are-the-worlds-20-strongest-militaries-ranked-2015-9?international=true&r=US&IR=T#20-canada-1

    1. USA
    2. Russia
    3. China
    4. Japan
    5. India
    6. France
    7. South-Korea
    8. Italy
    9. UK
    10. Turkey
    …
    17. Poland
    18. Germany

    Don’t overestimate yourself, joe esquire.

    And please stop talking about the UK being economy #5:

    https://www.moneycontrol.com/news/business/india-overtakes-uk-france-to-become-5th-largest-world-economy-says-report-4954051.html

    If you do lose Scotland (15%) and Northern Ireland in a couple of years, not an unreasonable assumption AND you maneuver yourself in a no-deal Brexit (also very well possible), France and perhaps Italy will definitely overtake you.

  11. Duncan Idaho on Fri, 21st Feb 2020 11:59 am 

    Actually, California will overtake you:

    California now world’s fifth-largest economy, bigger than Britain

    https://www.sacbee.com/news/business/article210466514.html

    The US would be even more third world without CA.
    Eventually, it won’t support our red state friends—

  12. Bruno Araujo on Fri, 21st Feb 2020 12:31 pm 

    But apparently they not. I wouldn’t be so sure if I was a sheikh according to https://anenglishessay.com.

  13. Abraham van Helsing on Fri, 21st Feb 2020 12:34 pm 

    “California now world’s fifth-largest economy, bigger than Britain”

    California independent now!!

    GDP PPP

    https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

    1. China…..27T
    2. EU……..23T
    3. US……..21T
    4. India…..11T
    5. Japan……6T
    6. Germany….4T
    7. Russia…..4T
    8. Indonesia..4T
    9. Brasil…..3T
    10. UK……..3T
    11. France….3T

    California is 3.1T, between UK and France at #11.

    Expect China to stall this year.

    EU + Russia would be 27T as well, equal to China. OK, minus England. If we add the Red Staters to our European culture circle, add another 7T and expect our English friends to return to the EU, with the tail between the legs, after the US balkanizes, whitey would still have a comfortable planetary upper hand.

    Let’s go for it. Colonization of solar system is next.

  14. Hello on Fri, 21st Feb 2020 1:02 pm 

    >>> California is 3.1T, between UK and France at #11.

    That’s impossible Clog.
    California population is 40M, UK/france is 66M. And europeans are a minority in california.
    Are you telling me that a brown one is 1.65 times more productive than a Frenchman?

  15. Abraham van Helsing on Fri, 21st Feb 2020 1:20 pm 

    Das habe ich mir auch gefragt.

    https://en.wikipedia.org/wiki/Economy_of_California

    Vielleicht Drogen mitgezaehlt.

  16. Hello on Fri, 21st Feb 2020 1:21 pm 

    Haha 🙂

  17. Davy on Fri, 21st Feb 2020 1:36 pm 

    Laut lachen!

  18. Davy on Fri, 21st Feb 2020 1:48 pm 

    “CDC Warns Coronavirus Coming To US, Will Be “Tremendous Public Health Threat””
    https://tinyurl.com/srh76g9 zero hedge

    “Update (1240ET): As we mentioned below, the CDC had some pretty chilling words for the American public during a press conference on Friday. During the 12:15pm ET update, the organization warned that it had centralized ‘surge’ virus response due to a lack of testing kits and the fact that every state but three is unprepared for the epidemic. During the press conference, the CDC described the virus as a “tremendous public healht threat” and warned that human to human transmission in the US is “very possible, even likely.”

    “The CDC has warned that only three states, California, Nevada and Illinois, have the testing capacity needed to confront a coronavirus outbreak. They added that future human to human transmission in the US is possible, even ‘likely’ (which is why the US probably should have left those ‘DP’ passengers in Japan).”

  19. JuanP on Fri, 21st Feb 2020 1:49 pm 

    “CDC Warns Coronavirus Coming To US, Will Be “Tremendous Public Health Threat””
    https://tinyurl.com/srh76g9 zero hedge

    “Update (1240ET): As we mentioned below, the CDC had some pretty chilling words for the American public during a press conference on Friday. During the 12:15pm ET update, the organization warned that it had centralized ‘surge’ virus response due to a lack of testing kits and the fact that every state but three is unprepared for the epidemic. During the press conference, the CDC described the virus as a “tremendous public healht threat” and warned that human to human transmission in the US is “very possible, even likely.”

    “The CDC has warned that only three states, California, Nevada and Illinois, have the testing capacity needed to confront a coronavirus outbreak. They added that future human to human transmission in the US is possible, even ‘likely’ (which is why the US probably should have left those ‘DP’ passengers in Japan).”

  20. Davy on Fri, 21st Feb 2020 2:06 pm 

    “”Keenly Aware”- FDA Braces For Drug And Medical Supply Shortages From China ”
    https://tinyurl.com/rmaky2s zero hedge

    “The FDA warns, “we are keenly aware that the outbreak will likely impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products in the U.S.”

    “A shortage of medical products from China would be disastrous for America’s aging population and fragile economy.”

  21. Davy on Fri, 21st Feb 2020 2:16 pm 

    ‘It’s Coming’: CDC Director Warns Coronavirus To Become Widespread Throughout United States, ‘Probably Beyond 2020’“
    https://tinyurl.com/wa7kgm3 zero hedge

    “The extremely virulent coronavirus which is sweeping through China’s Hubei province like wildfire will eventually gain a foothold in the United States – becoming a ‘community virus’ this year or next, according to CDC Director Dr. Robert Redfield.”

    “As of Thursday, 15 cases have been confirmed in seven states; eight in California, two in Illinois and one in Arizona, Washington, Massachusetts, Wisconsin and Texas, according to CNN.”

  22. joe on Fri, 21st Feb 2020 2:32 pm 

    EU budget crisis: Finnish PM attacks fellow leaders’

    “www.express.co.uk/news/world/1245381/EU-news-budget-2020-brussels-summit-Sanna-Marin-Charles-Michel-MFF-France-Germany-latest/amp”

    Soon to be 27 independent countries…….?

  23. joe on Fri, 21st Feb 2020 2:37 pm 

    “Abraham van Helsing on Fri, 21st Feb 2020 12:34 pm ”

    I checked ur link, you edited it to make it appear that the ‘eu’ is second at 23t, actually it its 18t, fool. Hopless EUSSR propagandist.

  24. JuanP on Fri, 21st Feb 2020 2:43 pm 

    avy on Fri, 21st Feb 2020 2:16 pm

    ‘It’s Coming’: CDC Director Warns Coronavirus To Become Widespread Throughout United States, ‘Probably Beyond 2020’“
    https://tinyurl.com/wa7kgm3 zero hedge

    “The extremely virulent coronavirus which is sweeping through China’s Hubei province like wildfire will eventually gain a foothold in the United States – becoming a ‘community virus’ this year or next, according to CDC Director Dr. Robert Redfield.”

    “As of Thursday, 15 cases have been confirmed in seven states; eight in California, two in Illinois and one in Arizona, Washington, Massachusetts, Wisconsin and Texas, according to CNN.”

  25. JuanP on Fri, 21st Feb 2020 2:44 pm 

    Davy on Fri, 21st Feb 2020 2:06 pm

    “”Keenly Aware”- FDA Braces For Drug And Medical Supply Shortages From China ”
    https://tinyurl.com/rmaky2s zero hedge

    “The FDA warns, “we are keenly aware that the outbreak will likely impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products in the U.S.”

    “A shortage of medical products from China would be disastrous for America’s aging population and fragile economy.”

  26. Anonymouse on Fri, 21st Feb 2020 2:45 pm 

    JuanP, dumbass, are you too stupid to see that Davy already posted those references? Man, he is right about you being low IQ and mindless!

  27. JuanP on Fri, 21st Feb 2020 2:48 pm 

    Hey, anon, I thought you were my friend?

  28. Abraham van Helsing on Fri, 21st Feb 2020 3:02 pm 

    “I checked ur link, you edited it to make it appear that the ‘eu’ is second at 23t, actually it its 18t, sir. Hopless EUSSR propagandist.”

    You need glasses. Those the figures are of 2019, when the UK unfortunately still sabotaged the EU.

    Thank God we got rid if you, so we can swap you in a couple of years for Russia:

    https://www.ecfr.eu/article/commentary_emmanuel_macrons_very_big_idea_on_russia

  29. makati1 on Fri, 21st Feb 2020 4:10 pm 

    I say again: “Hydrogen, Cloggie? LMAO! You really are stupid!” I will add, gullible and in denial.

  30. Abraham van Helsing on Fri, 21st Feb 2020 4:34 pm 

    BBC Newsnight, now presented by a Faisal Islam.

  31. Abraham van Helsing on Fri, 21st Feb 2020 4:36 pm 

    “I say again: “Hydrogen, Cloggie? LMAO! You really are stupid!” I will add, gullible and in denial.”

    You’re an American one trick oil pony.

    Leave inventing new things to the Europeans, shall we?

    https://documents1940.wordpress.com/2017/09/26/origin-scientific-accomplishments/

  32. I AM THE MOB on Fri, 21st Feb 2020 4:49 pm 

    CNN: Bernie attacks Putin for interfering.

    Hit em hard

  33. JuanP on Fri, 21st Feb 2020 5:00 pm 

    Mob, Bernie is a communist so I wonder why he does not like Putin??

  34. I AM THE MOB on Fri, 21st Feb 2020 5:10 pm 

    Bloomberg campaign blames Bernie Sanders supporters for Knoxville vandalism

    https://www.msn.com/en-us/news/politics/bloomberg-campaign-blames-bernie-sanders-supporters-for-knoxville-vandalism/ar-BB10f7W5#image=BB10f7W5_1|1

    Owned!

  35. JuanP on Fri, 21st Feb 2020 5:11 pm 

    Mob, I take it you like Burnie? I do too. In my South American country we love communist. Nobody works under communism so it is a great system.

  36. Abraham van Helsing on Fri, 21st Feb 2020 5:12 pm 

    CNN: Bernie attacks Putin for interfering.
    Hit em hard

    Indeed. On behalf of Europe, China and Islam: hit em real hard!

    #BeerPopcorn

  37. I AM THE MOB on Fri, 21st Feb 2020 5:45 pm 

    Germany shooting: chants of ‘Nazis out’ at vigils after gunman kills nine

    https://www.theguardian.com/world/2020/feb/21/germany-shooting-chants-of-nazis-out-at-vigils-after-gunman-kills-nine

    Humpty dumpty is going to have a great fall

  38. makati1 on Fri, 21st Feb 2020 5:52 pm 

    Abe(Cloggie), ““I say again: “Hydrogen, Cloggie? LMAO! You really are stupid!” I will add, gullible and in denial.””

    You are the “one trick pony”, stuck in a techie dream land. Sometimes, you seem like a high school dropout living in mom’s basement, not the “educated engineer” you claim to be. But then, on the internet you can be anybody. Davy proves that point. A nobody with an antique ‘smart’ phone. LOL

  39. JuanP on Fri, 21st Feb 2020 6:01 pm 

    Mak, you better leave the P’s soon the infections there are ready to explode and you are in the 15% death group. Of all the people on this forum you are most in danger!

  40. Davy on Fri, 21st Feb 2020 6:05 pm 

    Makato’d be better off in the Ps juanpee.

    “CDC Warns Coronavirus Coming To US, Will Be “Tremendous Public Health Threat””
    https://tinyurl.com/srh76g9 zero hedge

    “Update (1240ET): As we mentioned below, the CDC had some pretty chilling words for the American public during a press conference on Friday. During the 12:15pm ET update, the organization warned that it had centralized ‘surge’ virus response due to a lack of testing kits and the fact that every state but three is unprepared for the epidemic. During the press conference, the CDC described the virus as a “tremendous public healht threat” and warned that human to human transmission in the US is “very possible, even likely.”

    “The CDC has warned that only three states, California, Nevada and Illinois, have the testing capacity needed to confront a coronavirus outbreak. They added that future human to human transmission in the US is possible, even ‘likely’ (which is why the US probably should have left those ‘DP’ passengers in Japan).”

  41. Davy on Fri, 21st Feb 2020 6:32 pm 

    The worse part? Coronavirus looks just like the flu. And its flu season here in the US. You’d be smart to get your family out mak. REAL Soon.

  42. Cloggie on Fri, 21st Feb 2020 6:35 pm 

    JuanP, you are a fine example of a South American. Sarc, cough, fart. lol

  43. JuanP on Fri, 21st Feb 2020 6:37 pm 

    Why do you think my family shipped me off to Miami. They wanted me gone. This is why I don’t go back because they won’t have me back

  44. JuanP on Fri, 21st Feb 2020 6:38 pm 

    I am feeling depressed with suicidal thoughts so I may quit posting soon

  45. Davy on Fri, 21st Feb 2020 6:46 pm 

    ‘It’s Coming’: CDC Director Warns Coronavirus To Become Widespread Throughout United States, ‘Probably Beyond 2020’“
    https://tinyurl.com/wa7kgm3 zero hedge

    “The extremely virulent coronavirus which is sweeping through China’s Hubei province like wildfire will eventually gain a foothold in the United States – becoming a ‘community virus’ this year or next, according to CDC Director Dr. Robert Redfield.”

    “As of Thursday, 15 cases have been confirmed in seven states; eight in California, two in Illinois and one in Arizona, Washington, Massachusetts, Wisconsin and Texas, according to CNN.”

    Add in medical supply shortages from China?

    We got a REAL BIG problem. specially when our economy is already REAL fragile…

    “”Keenly Aware”- FDA Braces For Drug And Medical Supply Shortages From China ”
    https://tinyurl.com/rmaky2s zero hedge

    “The FDA warns, “we are keenly aware that the outbreak will likely impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products in the U.S.”

    “A shortage of medical products from China would be disastrous for America’s aging population and fragile economy.”

  46. JuanP on Fri, 21st Feb 2020 6:48 pm 

    ‘It’s Coming’: CDC Director Warns Coronavirus To Become Widespread Throughout United States, ‘Probably Beyond 2020’“
    https://tinyurl.com/wa7kgm3 zero hedge

    “The extremely virulent coronavirus which is sweeping through China’s Hubei province like wildfire will eventually gain a foothold in the United States – becoming a ‘community virus’ this year or next, according to CDC Director Dr. Robert Redfield.”

    “As of Thursday, 15 cases have been confirmed in seven states; eight in California, two in Illinois and one in Arizona, Washington, Massachusetts, Wisconsin and Texas, according to CNN.”

    Add in medical supply shortages from China?

    We got a REAL BIG problem. specially when our economy is already REAL fragile…

    “”Keenly Aware”- FDA Braces For Drug And Medical Supply Shortages From China ”
    https://tinyurl.com/rmaky2s zero hedge

    “The FDA warns, “we are keenly aware that the outbreak will likely impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products in the U.S.”

    “A shortage of medical products from China would be disastrous for America’s aging population and fragile economy.”

  47. Richard Guunette on Fri, 21st Feb 2020 6:49 pm 

    Hey, stupid, Davy just posted that. Where did you get your brain from

  48. JuanP on Fri, 21st Feb 2020 6:50 pm 

    I got a GED is that a brain?

  49. makati1 on Fri, 21st Feb 2020 8:16 pm 

    My last post before this one: Fri, 21st Feb 2020 5:52 pm.

    I’m going to stop posting much until the flakes go to bed and the immature are off the site.

  50. JuanP on Fri, 21st Feb 2020 8:51 pm 

    The wife and I are going out for dinner with Tulsi, Davy.

    Have a good night!

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