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: Trump and an age of disorder

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions.

The US presidency has not always been held by men of distinction and honour, but Donald Trump is by some distance its least qualified occupant. The leader of the world’s sole superpower has no record of political or military service and is ignorant of foreign affairs. Throughout his campaign, he repeatedly showed himself to be a racist, a misogynist, a braggart and a narcissist.

The naive hope that Mr Trump’s victory would herald a great moderation was dispelled by his conduct during the transition. He compared his country’s intelligence services to those of Nazi Germany and repeatedly denied Russian interference in the election. He derided Nato as “obsolete” and predicted the demise of the European Union. He reaffirmed his commitment to dismantling Obamacare and to overturning Roe v Wade. He doled out jobs to white nationalists, protectionists and family members. He denounced US citizens for demonstrating against him. Asked whether he regretted any part of his vulgar campaign, he replied: “No, I won.”

Of all his predilections, Mr Trump’s affection for Vladimir Putin is perhaps the most troubling. When the 2012 Republican presidential nominee, Mitt Romney, warned that Russia was the “number one geopolitical foe” of the US, he was mocked by Barack Obama. Yet his remark proved prescient. Rather than regarding Mr Putin as a foe, however, Mr Trump fetes him as a friend. The Russian president aims to use the US president’s goodwill to secure the removal of American sanctions, recognition of Russia’s annexation of Crimea and respect for the murderous reign of the Syrian president, Bashar al-Assad. He has a worryingly high chance of success.

Whether or not Mr Trump has personal motives for his fealty (as a lurid security dossier alleges), he and Mr Putin share a political outlook. Both men desire a world in which “strongmen” are free to abuse their citizens’ human rights without fear of external rebuke. Mr Trump’s refusal to commit to Nato’s principle of collective defence provides Mr Putin with every incentive to pursue his expansionist desires. The historic achievement of peace and stability in eastern Europe is in danger.

As he seeks reconciliation with Russia, Mr Trump is simultaneously pursuing conflict with China. He broke with precedent by speaking on the telephone with the Taiwanese president, Tsai Ing-wen, and used Twitter to berate the Chinese government. Rex Tillerson, Mr Trump’s secretary of state nominee, has threatened an American blockade of the South China Sea islands.

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions. The US constitution, with its separation of powers, was designed to restrain autocrats such as the new president. Yet, in addition to the White House, the Republicans also control Congress and two-thirds of governorships and state houses. Mr Trump’s first Supreme Court appointment will ensure a conservative judicial majority. The decline of established print titles and the growth of “fake news” weaken another source of accountability.

In these circumstances, there is a heightened responsibility on the US’s allies to challenge, rather than to indulge, Mr Trump. Angela Merkel’s warning that co-operation was conditional on his respect for liberal and democratic values was a model of the former. Michael Gove’s obsequious interview with Mr Trump was a dismal example of the latter.

Theresa May has rightly rebuked the president for his treatment of women and has toughened Britain’s stance against Russian revanchism. Yet, although the UK must maintain working relations with the US, she should not allow the prospect of a future trade deal to skew her attitude towards Mr Trump. Any agreement is years away and the president’s protectionist proclivities could yet thwart British hopes of a beneficial outcome.

The diplomatic and political conventions embodied by the “special relationship” have endured for more than seven decades. However, Mr Trump’s election may necessitate their demise. It was the belief that the UK must stand “shoulder to shoulder” with the US that led Tony Blair into the ruinous Iraq War. In this new age of disorder, Western leaders must avoid being willing accomplices to Mr Trump’s agenda. Intense scepticism, rather than sycophancy, should define their response.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era