A trillion-dollar catalyst for change in the Arab World

The Middle East's oil wealth has the potential to become the key driver for change and innovation in

At the end of the 19th Century, Lord Curzon, the then British Viceroy of India, described Iran and its Arab neighbours as "pieces on a chessboard upon which is being played out a game for the domination of the world".

Throughout history, the geostrategic importance of the Middle East, with its immense oil wealth, has shaped the policies of colonial empires, secured the longevity of autocratic regimes and given rise to religious elites. The 'game of chess', as described by Lord Curzon, promises great riches and influence for the players involved, but has often come at a huge cost for the majority of the Arab people.

Indeed, oil wealth, so narrowly shared between the region's ruling minorities, has historically presented a barrier to democracy and left a vacuum of inequality and lost opportunities in many Arab societies. It is no coincidence that the citizens of Arab countries with limited fossil fuel reserves have enjoyed greater freedom over the years than their oil-rich neighbours.

Now, however, the uprisings of the Arab Spring present a unique opportunity to use the wealth of the region to reinvest in the future prosperity and wellbeing of the Arab people. It is an opportunity which must be grasped before history repeats itself and, as with recent events in Cairo, the transition to democracy is derailed.

Fuelling progress

While the Arab world is no stranger to revolution - Egypt, 1952, Iran, 1979 - this time around the stakes are higher than ever. With oil prices climbing to above $100/barrel, the Arab Peninsula is currently generating export oil revenues of $1 trillion dollars a year. But the conventional reserves and production capacities of oil-rich Arab countries are finite and slowly depleting. This means there is a narrowing window of opportunity to leverage the region's resources for the benefit of the people.

What's more, the ease of wealth creation from oil readily attracts those whose sole interests lie in personal profit, religious agenda or geopolitical power. If such forces emerge triumphant from the Arab Spring, oil wealth will continue to line the pockets of the few, rather than meet the needs of the many.

With these scenarios in mind, the new emerging Arab leadership needs to create genuine democratic expectations as a bulwark against corruption and oligarchy. In many countries across the region, the euphoria of revolution will soon give way to the on-the-ground realities of reconstruction. Amid the many challenges and complexities of state-building, it is critical that these countries recalibrate their socio-economic systems in a way that provides enhanced economic and human prosperity.

Diversification and development

The new Arab leadership also need to focus on transforming oil-based economies into information-based economies supported by firm democratic foundations and social equity. And this can only be achieved through the reinvestment of petrodollars into manufacturing, technology and intellectual capital. The development of mass-transit systems, solar energy conversion, water desalination or passive cooling technologies, for example, will be of long-term value to Arab societies, providing new employment and export opportunities in a warming world.

By harnessing the region's potential for alternative energy from sunlight, and by enhancing their non-oil based productive capacity, countries will be able to project themselves onto a path of sustainable and inclusive economic development. The decentralisation of oil wealth will also break up governments' ownership of petrodollar wealth and lead to improved transparency, good governance and trust among the Arab people.

Levelling the playing field

The Middle East's oil wealth, then, has the potential to become the key driver for change and innovation in Arab countries. To ensure a more sustainable model for the future, states' natural resource wealth should be saved for export, and foreign oil companies should only be awarded oil contracts once they partake in third-party monitored bidding rounds.

But other issues also need to be addressed to enable long-term wealth creation in the region - not least the record number of 75 million illiterate adults, the fatal mismatch within the labour market and, most importantly, the gender inequality in both education and employment. At present, 50 per cent of the talent base is excluded from society and the workplace, and the Middle East's long-term growth strategy must address all parts of an inclusive wealth-creation framework. Such a strategy should be based on a home-grown path for change, and provide inclusive and broadly shared development gains. One trillion dollars a year could serve as sufficient investment to achieve these goals.

In Egypt, we've already seen how easily interim leaders can renege on their promises. Without doubt, new governments with old mindsets will undermine all progress made so far in the Arab Spring. For this reason, the calls for democracy, transparency and accountability currently sweeping the region need to be answered with genuine commitment. If they are not, the sacrifices and achievements of the younger Arab generation will be squandered. Leaders must also take a long-term approach to the management of oil wealth to ensure the region can meet the challenges of food and water shortages, rising population levels and global warming.

The Arab Spring presents an opportunity not only to reset the pieces on the chessboard, but to level the playing field entirely. The new Arab leadership needs to show strength and vision to take this opportunity in the months ahead.

Tara Shirvani and Sir David King
Smith School of Enterprise and the Environment, University of Oxford

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Leader: Europe and the long shadow of war

Amid the rancour, it is easy to forget what drove European integration in the first place: the two great wars in the first half of the 20th century.

Amid all the claims and counterclaims about David Cameron’s so-called renegotiation of Britain’s membership of the European Union, it is often forgotten, or conveniently ignored, just how successful the European project has been in helping to create and maintain the post-Second World War peace order.

We support continued British membership of the EU but are sceptical of the imperial ambitions of the European elites. We opposed British membership of the single currency, a decision that the eurozone crisis has vindicated. It is obvious that the Schengen Agreement is unravelling and in all likelihood is unsustainable, as embattled nation states reimpose emergency border controls and the continent grapples with its worst refugee crisis since the end of the Second World War. Like the British government, we are opposed to further political and economic integration and to the creation of a federal or quasi-federal superstate.

However, at a time of profound instability in the world, we accept that it would be foolish for the United Kingdom to retreat from our various multilateral peace alliances – whether that be membership of the EU or, indeed, Nato (as some on the left would wish) – all of which involve some kind of surrender of sovereignty.

Amid the rancour, it is easy to forget what drove European integration in the first place. The two great wars in the first half of the 20th century racked the continent, with neighbouring armies slaughtering each other on a scale that still defies comprehension. As Alistair Horne writes on page 22, “the most atrocious battle in history” began a century ago next week in Verdun, France, on the Western Front. The German army hoped to lure the enemy into a trap and then “bleed the French army white” using its superior firepower. Yet the rivers of blood flowed both ways: in ten months, over 25 square miles, pounded by heavy artillery and poisoned with gas, 300,000 French and German soldiers died.

The lessons of the battle were not quickly learned – the carnage of the Second World War was still to come – yet ultimately they were. In 1963, France’s Charles de Gaulle, who was wounded at Verdun, signed a treaty with the then German chancellor, Konrad Adenauer, binding two countries that had engaged for centuries in tit-for-tat wars in an enduring nexus of co-operation. The aim, as David Reynolds notes in his article on page 28, was “to free the next generation from the vice of nationalism”.

Two decades later, President François Mitterrand, who fought near Verdun in 1940, and Chancellor Helmut Kohl, whose father served there in 1916, attended a commemoration ceremony at one of the battle sites. In what became an iconic image of reconciliation at the heart of Europe, Mitterrand impulsively gripped Kohl’s hand during their national anthems. The two men were later the architects of the Maastricht Treaty, which created the European Union under its current name.

These are troubling times for Europe. Confidence and optimism are low. The wars in the Middle East and the rise of Islamic State, Russian revanchism and financial and economic turbulence have dented the morale of even the most committed liberal Europhiles. In addition, the EU seems unable or unwilling to control or police its borders, just as it has been unable to bring an end to the crisis in the eurozone. Nor is it any closer to forging a common foreign policy, let alone forming a common European army that might be necessary in future years to patrol the outer edges of the continent.

“Unless the EU can find solutions to the problems Europe is facing that are acceptable to its members . . . the Union will be on a glide path to collapse,” wrote the historians Brendan Simms and Timothy Less in a recent issue of the New Statesman. And yet, for all its flaws and present difficulties, the EU remains a force for stability in the world. It embodies the liberal, rules-based order without which barbarism and war are never far away, as the centenary of the Battle of Verdun so poignantly reminds us. 

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle