Is Oil Wealth curse or blessing for Gulf States? Essay

Custom Student Mr. Teacher ENG 1001-04 20 March 2017

Is Oil Wealth curse or blessing for Gulf States?

It was 14 January 2008, Times reported as the world read President of the United Arab Emirates, Sheikh Khalifa bin Zayed Al Nahyan, at Al Mushref Palace in Abu Dhabi presented a gift of solid gold sash studded with diamonds and other gems to President George W Bush. In an atmosphere of sprawling artifacts of latest artists with expensive antiques- a unique touch of loyalty with paintings of Harem and the ruling Sabah clan that hung near Louis XVI, with enameled clocks and candlesticks in the long hallways, George W. Bush had a dinner with Kuwaiti Emir. This lavish style embodies wealth and richness of Gulf Nations- a boon of Black Gold.

In 1901, British recognized the importance of oil as a major source of economic development in the region. It was done against the backdrop of the Sykes-Pikot Agreement of 1916 with France. This agreement led to the division of the Ottoman Empire into different states, which would be ruled by the British and French respectively. Later in 1928, with the signing of the Red Line Agreement, the oil wealth of former Ottoman territories were distributed between the British and French colonial governments, and some percentage of the oil production was decided to be allocated to British, French and American oil companies.

(Burleigh Online Edition) Again in the year 1945, when British was still the major colonial power, they also decided to come in coordination with United States and this agreement was mentioned in the following memo: “Our petroleum policy towards the United Kingdom is predicated on a mutual recognition of a very extensive joint interest and upon control, at least for the moment, of the great bulk of the free petroleum resources of the world….

” (Burleigh Online Edition) After 2 years, British Government realized that Middle East was “a vital prize for any power interested in world influence or domination, since control of the world’s oil reserves also meant control of the world economy” (Burleigh Online Edition) but after the Second World War, United States became a new dominant force and they expressed in 1953 in their internal U. S document: “United States policy is to keep the sources of oil in the Middle East in American hands. ” (Burleigh, Online Edition)

Discovery of Oil in Arab Peninsula since 1930 became one of the key aspects of the United States foreign policy in the region as the interests of United States solely relied on the defense of Saudi Arabia. (Burleigh, Online Edition) The main mandate of the United States Government was to support feudal regime of the house of Al Sa’ud and all efforts were gone to protect royal family without any concern for establishing democracy and civil rights of its citizens and million of migrant workers who were generating maximum of the nation’s wealth.

Since 1943, this royal clan was surviving because of the military support they were enjoying from United States and it was estimated that US government had been spending more than $33 billion in weapons. Mamoun Fandy of Georgetown University’s Center of Contemporary Arab Studies found that, “Securing the flow of affordable oil is a cornerstone of U. S. Middle East policy. ” (Burleigh, Online Edition) This reflected hypocrisy on the part of the democracy and human rights and “creates the perception among Gulf subjects that their countries are being ruled in the interests of an outside power.

” (Burleigh, Online Edition) Therefore it was quite clear that all the United State maneuvers in the region were aimed at controlling the oil supplies in the region. 2/3 of the worlds oil reserves and 1/3 of its natural gas reserves are only concentrated in the Middle East and more than half of the world’s export of Oil is from Middle East. (Elamine, Online Edition) Gulf War of 1991 gave opportunities for United States to have more controlling powers on the oil deposits and establish strong military base around Saudi Arabia.

Bahrain already had on its grounds United States Fifth Fleet and Qatar had on its soils a new air strip for Pentagon and huge army base and thousands of many more troops in Kuwait, Oman, Jordan, and the United Arab Emirates. In 2005, Saudi Arabia had 400 military personal, Kuwait had 90,000 forces, in UAE there were 1800 Air Force personnel giving support to OIF and OEF, almost 6000 Air force personnel were stationed in Qatar, Oman had mostly 25 Air Force equipment and Bahrain had 4700 navy personnel.

(Katzman, Online Edition) According to Arab World Competitiveness Report 2007, United Arab Emirates boast itself to be the most competitive and one of the most advanced economy in the Arab world followed by Qatar and Kuwait and in the second stage of economic development are the Tunisia and Oman as the best performing Arab economies. The main reason for their growth is obviously Oil.

Qatar’s position is 32nd among the 40 advanced economies of the world and it is leading ahead in all the economic, political and social spheres, diversifying its resources towards public investments involving good transport infrastructure, which is though still lagging behind than the other areas of the region. Today its per capita income is highest in the world and since 1998 with a $160 bn projects blitz, it has become the leading nation. In 2006, with an annual output of 25. 1m tonnes, it became the world’s largest exporter of liquefied natural gas. (APS Review, Online)

With the economic environment getting a boost, Kuwait got 37th position among 40 developed nations. With good financial infrastructure, increased innovation capacity and emphasis on education and notwithstanding red-tapism still being hallmark of the business community, Kuwait is speeding ahead on the path of economic progress. The increase in international Oil prices along with Bahrain’s policies toward economy has led to its Gross Domestic Product (GDP) as on 2000-2006 to be 6. 2%. After political and economical turmoil in the year 1991, Bahrain is heading towards reforms in politics and growth and development sphere.

But as said by Kenneth Katzman, Foreign Affairs, Defense and Trade Division, the tension between ruling Sunni Muslims and Shiite majority is still looming large on the soils of Bahrain. (Katzman, Online Edition) Since World War II, this small Persian Gulf State had remained headquarters for United States Naval forces. Again in September 2004, United States and Bahrain signed a free trade agreement to initiate reforms in the state and to attain strategic support from Bahrain. It’s oil reserves though are much less than any other Gulf Nation yet whole it’s economy and politics is revolving around this Black Gold.

Ranked number second among 40 advanced nations, Oman is an emblem of the growth and development owing to its Oil reserves. Since last two decades, Oman has seen the highest growth rate in the Middle Eastern Region and has entered into the path of economic development in all its spheres. Careful utilization of revenues earned from the Oil exports enabled Oman to increase their social and physical infrastructure with substantial amount of investments going in health, transportation, electric power, water supply, and communications making it the most promising economy in the Arab world. (Mansur & Treichel, Online edition)

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