The New Nation - Internet Edition

Dr N. Janardhan

A SENSE of tentative hope hangs in the air in the Gulf region following the recent shift in Washington's policy towards Iran, as well as the relative gains being achieved in Iraq. Though the region's dilemmas are far from fixed, these set the stage to explore a theme that resonated at the University of Exeter's Gulf Conference few weeks ago, which marked 30 years since the Gulf Studies programme began there.

In an academic coincidence, highlighted by Prof. Tim Niblock, while 1978 (when the first conference was held) marked five years into the first oil boom (1973-82), 2008 is five years into the second oil boom, given that prices began to rise in 2003.

For academics, the Gulf region was gripped by a "spirit of optimism" 30 years ago - buoyed by high oil prices, governments brimmed with plans that had the potential to transform the economies and societies not only in the region, but also in the developing world, which was an opening for them to become a force to reckon with internationally.

However, by 1981, the spirit of optimism was replaced by the "spirit of Armageddon", which was characterised by the region "entering the period of wars, conflicts presaging descent into wars, and aftermath of wars, which has dominated so much of the history of the Gulf region since thent(Further,) all three major wars in the world in the last three decades have been fought in the Gulf (along with the Arab-Israeli wars, the Middle East has had the highest per capita war in the world in six decades), and there have been conflictual reverberations coming from the 'arc of crisis' allegations (the presumed encirclement of the Gulf) in the early 1980s, the Afghanistan conflict, the 'war on terror', and the side effects of ongoing conflicts in Palestine and Lebanont"

The fall and instability in oil prices, as well as the consequent low revenues during the next two decades added to the woes.

These two eras transpired to usher in the reigning "spirit of possibility" where "it is possible to develop and implement visions of transformative and far-reaching change" - which cannot be compared yet to the spirit of optimism, but has certainly and positively moved away from the spirit of Armageddon.

This new spirit is characterised, first, by high oil prices. Unlike political reasons, which fuelled the first oil boom, it is largely economic factors - driven by the need to fuel economic growth in the developing countries - that have resulted in unforeseen oil price rise, resulting in overflowing treasuries for the Gulf countries. This phenomenon is unlikely to see a quick reversal of fortunes like in the past.

After earning $364 billion in 2007, the Gulf Cooperation Council (GCC) countries are projected to earn about $1.3 trillion in oil revenue in 2008 and 2009. The International Monetary Fund's Institute of International Finance estimated that the GCC public and private overseas wealth reached $1.8 trillion at the end of 2007.

A Goldman Sachs report titled "The GCC Dream" projected the 2050 per capita GDP for the region at $63,250, which compares with leading industrial countries. If problems such as inadequate human resources can be addressed, the per capita income level could touch $78,800.

The report also estimates that the projected cumulative oil and natural gas revenues for the GCC countries during 2005-2030 would amount to $5.5 trillion. This would help the region's GDP hit $5.5 trillion by 2050, overtaking Britain and Germany.

It is obvious that the GCC countries have learnt a lesson after squandering oil wealth during the 1970s. Thus, for the first time, high oil price is accompanied by economic diversification. Economic reform is also encouraging private sector growth, which in turn is capable of providing competitive and underprivileged nationals with opportunities to take up challenging jobs, rather than rely just on the public sector.

Socially, in order to sustain the diversification process in the long run and tackle the unemployment problem, the region is attempting to tread the "knowledge economy" route - "one in which the generation and exploitation of knowledge play the predominant part in the creation of wealth," where human capital is the chief source of economic value, and education and training the main tools.

Even politically, contrary to the opinion that political reforms are usually on the region's agenda only during low oil prices, the GCC countries have made noticeable progress since 2003, gradually expanding the participation of both the political actors and electorate - Oman allowed all citizens above the age of 21 years to vote in the consultative council elections in 2003; Saudi Arabia held its first municipal elections in 2005; Kuwait weathered a gender-sensitive society to grant women the right to vote and stand for public office in 2006; Bahrain elections the same year saw the opposition groups, which boycotted the 2002 polls, successfully participate; the UAE elected half its Federal National Council members in its first elections in 2006; and Qatar is bound to conduct elections sooner or later after announcing recently that two thirds of its parliament members will be elected.

Further, all the GCC countries, except Saudi Arabia, now have women ministers.

The second factor driving the spirit of possibility is the "failure of others", especially on issues related to Iraq and Iran.

This exposed "the limitations of externally-initiated solutions" to regional problems and reinforced the wisdom in exploring local solutions to local problems - as seen in Qatari and Saudi diplomatic initiatives that have contributed positively to Lebanese, Yemeni, Iraqi and Iranian crises, among others.

The third factor is what some describe as the "real strategic shift" in the region's foreign policy. Owing to the failure of the United States in the region and the shift in the economic power centre from the West to the East, the GCC countries are building ties with a host of alternatives, particularly in Asia. For the doubters of the Gulf's 'look East' policy, "the extent to which there are real options is not the issue. It is the perception which is important, as it is this which creates an openness to envisaging new possibilities."

It would not be imprudent to suggest that the ongoing changes are bound to further alter the region's socio-politico-economic foundations, giving momentum to the spirit of possibility, which could translate into a Fertile Gulf.

(Dr. N. Janardhan is a UAE-based political analyst specialising on Gulf-Asia affairs, and can be contacted at njanardhan71@gmail.com )