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

Getty
Show Hide image

How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.