3- Has oil wealth been a blessing or a curse for the Gulf States?

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 its 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

Where on one hand -Kuwait , Saudi Arabia , the United Arab Emirates Bahrain , Qatar and Iran has captured the world 's attention toward its Black Gold and lavish life style of its Emirs and personages of royal clan yet on the other hand there is a raging stir among economists and analysts on their relatively slow progress and the poor development activities . In Saudi Arabia only , the per capita income of the population is around ?4 ,300 and very limited investment has been made in the overall welfare development activities . Increase in Oil prices is making it difficult for the local manufacturers to export it . The economy is also witnessing the growth of foreign debt on account of the Government using Oil as security and the revenue is getting diverted towards purchasing weapons

Another important aspect to the Oil production has been the immigration in large number of the cheap labor and majority from the South Asian Region . They had been playing the most important role in the economic development of the areas of Saudi Arabia , Arab Emirates , Oman , Qatar Kuwait and Bahrain and in most of these areas , the temporary immigrant workers are more than citizens are . The revenue earned from the exports of oil go in the hands of the ruling elite and among the royal clan majority of the people have to sustain with living below poverty line and especially in Saudi Arabia , women are least benefited . As a result education is getting a tremendous set back and along with that unemployment is increasing at an alarming rate . Above all the danger of Oil Wars ranging since last few decades in these areas , the interference of United States in its internal political affairs and religious ambiguity between Sunni and Shiite population is always hovering large on the States . The deteriorating social position and the political turmoil are eating the roots of the economic prosperity for which these Arab Nations so boast of . Many Gulf Kingdoms have never seen any trade unions or any other democratic organizations perpetuating on its soil As Cohen reported Professor Michael Ross , Associate Professor , UCLA Political Science Department , in his news statesman .com , Oil makes matters worse in countries where governments are already weak (Cohen Online Edition ) Further he said , It provides the income for a government to ignore its people and get on with the business of spending without questions being asked . Oil provides the reason and the means - it is a terrible opportunity forgone (Cohen , Online Edition ) It is an old saying , the more natural wealth the nation has the more democratic it will be , but looking at the scenario of Gulf Nations , it may not seem so . Except Norway and Mexico , no Oil exporter nation is democratic Martina Ottaway too rightly proclaimed in her New York Times , oil and democracy do not mix (Schubert Online Edition ) Dependence on Oil leads to the concentration of economic power in the hands of few making the way for corrupt forces to penetrate in the trade , foreign policies and economy . They are suffering from as The Economist said poverty of policy (Schubert , Online Edition ) and Jeffrey Sachs have shown the world ten years ago that the nations who boast of having rich in natural resources have slower growth in development activities than those without it (Schubert , Online Edition ) Kuwait is the best example to show how the tendency towards Oil led to the dampening of democracy Before Oil was discovered in 1938 , the economy of Kuwait 's was based on pearls . The merchants dealing with the exports were paying all taxes to fill the ruling Al Sabagh exchequer . Not long following the discovery of oil in 1938 , the merchants realized they were losing influence and demanded distributive rights on the revenues the Sheikh would have nothing of it . Using his newfound wealth from oil , he disbanded the merchant 's assembly , and the pearl merchant class disappeared . To consolidate his power , the Sheikh then eliminated taxes , arranged jobs for all the merchants and provided free health care and education essentially buying the opposition (Schubert , Online Edition

Oil wealth has been mixed of blessings as well as Curse for the Gulf States . The lure of the Wealth of Oil saw the withdrawal of merchant class and whole new political set up with the development of new ties between Sheikhs and the ruling families (Crystal , Pp .1 ) Oil brought in its vague new tie-ups , new relationships but also international interdependencies for cheap labor , goods , and capital (Crystal , Pp . 7 On the other hand , Oil became a means of weapon for Arabs to use against Israel , supporting terrorists and gathering weapons of mass destruction At the onslaught of the United States to overthrow Saddam Hussain put an end to the Iraq regime to show its military power in Persian Gulf but brought forth other kind of danger for the region , the danger of Shiite Sunni enmity . It has brought economic development and prosperity in the Gulf States . On the other hand the western nations gave the support to all forms of dictatorship for only one reason to bring The Black Gold of Gulf stand under their domination

Oil is a lifeline for Gulf Nations and is the most important source for development and welfare of states . In its economic , social , political and foreign affairs , it has always been Oil that has considered to the main reason for all the turmoil 's and prosperity since its discovery Some say Oil has been a curse for the Gulf States-where it is available in abundance whereas on the other hand some analysts says it has been a curse , but Oil wealth has been mixed of blessings as well as Curse for the Gulf States

WORKS CITED

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HYPERLINK http /www .entrepreneur .com /tradejournals /article /9 .html http /www .entrepreneur .com /tradejournals /article /9 .html January 21 , 2008

Azzam , Henry . Another year of prosperity and growth awaits Gulf states (January 04 , 2008

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Crystal Jill . Oil and Politics in the Gulf : Rulers and Merchants in Kuwait and Qatar ' Cambridge University Press , 1995

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Mansur , Ahsan Treichel Volker (Editors ) Oman Beyond the Oil Horizon : Policies Toward Sustainable Growth ' International Monetary Fund Internet . Available : HYPERLINK http /www .imf .org /external /pubs /nft /op /185 overview http /www .imf .org /external /pubs /nft /op /185 overview , January 21 , 2008

Schubert , Samuel . Revisiting the Oil Curse ' Development 49 64-70 ,2006 . Available

HYPERLINK http /www .palgrave-journals .com /development /journal /v49 /n3 /full /1100291 a .html http /www .palgrave-journals .com /development /journal /v49 /n3 /full /1100291 a .html , January 21 , 2008

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