Has Oil Hindered or Helped Develop the Middle East?

The Middle East elicits mixed thoughts because of various issues such as the exploitation of their vast oil reserves and their political system of governance that emanate from this area. Iraq, Saudi Arabia, Kuwait, and Yemen are some of the countries that form the Middle East. Natural resources are unevenly distributed, and luckily for the Middle East countries, they have oil in surplus. Before the discovery of oil reserves in these nations, the Middle East was a third world economic zone. However, in the mid-20th Century, things were about to take a significant economic turning point with the discovery of oil (Malachova 1). The Middle East made ambitious moves in the 20th Century to integrate the respective countries in the international market as a result of their new-found wealth. It can be argued that although oil has been a blessing of the arid Middle East, it has adversely affected the democracy and resulted in an authoritarian leadership in these countries.

Oil and more so, its products such as diesel and petrol were and remained to be essential resources for the transport and manufacturing sectors in any economy. Holding approximately 66% of the global oil reserves, the Middle East was primed for an era of unprecedented success (Yousef 92). Oil brought about profound changes from a social, economic, or political viewpoint. However, different spheres of people have expressed divided opinions on the consequences of oil in the Middle East based on the economic and political aspects. The discovery and production of oil in the Middle East has resulted in an exponential rise in the economic situation of these countries, but this has come at the expense of political progression where politically, the region is suppressed. 

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Despite the exploitation of oil taking full gear in the ‘50s, oil had already been discovered in Iran, formerly referred to as Persia, in 1908. Masjed Soleyan was the precise place where the first oil discovery was made (Owen 1). Back then, mechanization in the production was low and the reason for the small-scale operations. In his analysis, Malachova cites the absence or minimal production of motor vehicles in the period preceding World War (1). The motor vehicle was a new idea and was gradually taking shape. Therefore, much of the petroleum products were in less demand justifying low production of oil barrels. This situation is different from today where the demand is at an all-time high coercing the Middle East countries to produce more. 

Another challenge came with another energy source, coal, which was used to run ships, trains, and power plants. Coal was also responsible for surmounting oil production challenges. The Middle East region after World War II was reminiscent of a zone with little infrastructure and underdeveloped sewage systems. Ports were yet to hit the designated stage where they could seamlessly load and unload products to and from large cargo ships. These were signs of the under-developed economies although they are fading away as governments aim at improved living standards for its people in this region. Therefore, the infrastructure and level of civilization were significant hindrances to the exponential rise of the Middle East countries despite the possession of a valuable present-day commodity. 

The living standards of the citizens are a guaranteed sign to conveying the level of life. Living standards is a parameter which can be applied to determine progress and Kuwait serves as the best example of this. Shatt Al-Arab River was the primary source of fresh water for domestic use, and it is still an important even in the present society (Moyel and Hussain 459). The river supplied water to almost the entire nation. Not directly though, as donkeys were used the distribution of this and the imported water across the country. In Abu Dhabi, people lived in makeshift houses made of leaves and earth. Even more laughable given today’s standards is the Oman which had 10 kilometers of road in the entire country metaled while the rest of the roads were impassable and ultimately, unusable for economic productivity (Yousef 93). The idea was to economically utilize the benefits of oil as a trading commodity and using the revenues for the erection of modern infrastructure. After the WW II, governments and their people embarked on robust economic development programs such as the construction of infrastructure and better drainage systems which were bound to improve people’s lives. 

In the contemporary marketplace and, in particular, the oil industry, the Middle East contributes a unique role to the countries’ gross domestic products (GDP). Countries gain proceeds from international trade with oil as their chief export. Iran, Iraq, Kuwait, and Saudi Arabia were the first countries to obtain these profits of this large-scale production of oil. At the time, homes and firms were in dire need of water, and most of this income was directed at solving water scarcity. This part of the world is arid, and besides the low amount of rainfall, most of the water is saline. At the time, the authorities were concerned with construction of dams, desalination plants, and irrigation systems (Jreisat 412). War and political upheavals rarely deterred the government from achieving these set objectives. 

Presently, a considerable difference exists in between the past and present of the Middle East countries. The massive skyscrapers and an improvement in infrastructure is a revelation of the economic progress of these countries. This development strengthens the reputation of these countries abroad. Their influence in the market is undisputed and more so, considering that in 2002 the primary oil producing countries – Saudi Arabia, Iran, and Iraq – produced approximately 13 million oil barrels daily.  Their production accounted for 17% of global oil supply (Maloney 129). These figures are proof that oil has been a central segment for the importing economies, and even of greater importance to the domestic economies. With the returns, these countries have improved the literacy levels of their populations, offered them employment opportunities, and homes. The adverse consequence of the oil in this region is that some of the funds are used to promote violence, war, and radical reforms such as terrorism (Levitt). However, the bottom-line remains that there is a considerable discrepancy between the eras before and after the discovery of oil. 

Having forged a clear path of development with the initial funds from oil sales in the 1950s, the government administators turned attention to the health infrastructure and industrialization in the 1960s. During the ‘60s phase, the Middle East achieved a commendable 6% growth performance per worker. This feat was the highest attained in the world (Mozafarri 2). The Middle Eastern were gaining extraordinary attention because of the astronomical rise in national economies. In the 1970s, the situation got better as the revenues from this commodity were crucial in the boom. Social indicators of economic development were evident because the mortality rate had decreased tremendously and opportunities to work abroad, particularly in first world countries were abundant (Mozafarri 3). In the following decade, the life expectancy of the population and the school enrollment rose. Adults also sought education and surprisingly, adult literacy levels increased from 40% to 60% (Malachova 3).  The trends continued in the succeeding decade and they vividly transmitted the economic direction of the countries in the late 20th Century.

Despite the continued advocacy for cleaner sources of energy, the oil industry was subject to a boom over the turn of the 21st Century. According to Jreisat, the Middle East countries have been smart to invest in other countries, for instance, Morocco and Egypt. A case example is where the United Arab Emirates (UAE) injected approximately $3 billion into the Egyptian economy (414). Such type of investments broadens the country’s portfolio implying that the country’s leaders are making concerted efforts to advance the financial position of the country and its citizens. These type of investments strengthen the capital markets in this region considering that it is a sector that is lagging. The commonly held belief that the Middle East is a dangerous place is out of order. At the moment, the region has multiple investment opportunities and better still; it has a great investment climate (Maloney 136). Cities like Dubai and Abu Dhabi have become tourist destinations. Foreign investments from the Middle East continues to trickle down to other countries. More private investments of this nature are bound to mitigate some of the factors that lead to violence in the area, for example, poverty.

The benefits mentioned above highlight the advantages oil discovery has had in the Middle East over the years. Unfortunately, political interference in various ways has placed the industry at the brink of collapse if no remedies are upheld. If this is not the case, the Middle East region might deepen into the worst economic crisis. Oil revenues are equivalent to economic growth which cannot be achieved in the long-term if political instability reigns (Vohra 7). A more compelling reason for the state administrators to adopt another primary source of the country’s GDP is that oil is a non-renewable resource. Besides, oil being a non-renewable resource compels the state administrators to search for other ways of service the economy. An excellent method of executing this bold move would be to venture in the production industry. The Chinese government has become a model for the world that an economy can grow immensely within a decade or two. The Middle East countries happen to have the financial capability of investing in these sectors and should see to it that they achieve this before the exhaustion of the oil reserves. 

Ironically, these countries are making vast amounts of money, but still, they have had adverse political developments as a result of oil discovered. Almost all countries in this region suffer from this adversity as the sitting governments rarely do mind about accountability. These governments exhume blurred dimensions of dictatorship which guarantees silence even in the face of severe injustices. Although it is human nature to be greedy, the ruling elite in this region has extremely exploited this opportunity. Their greediness was evident when they called for the taxation of their subjects. Most of the Middle East countries rely on oil funds to service the nation’s expenditure, and the citizens have refused to oblige to any type of taxation (Ross 325). Calls for democracy and accountability came into the scene when governments were trying to deviate from this norm. 

When the public is living in a tax-free nation, it is bound to feel less responsible for the country’s resources. The situation allows for the people in power to have dominance over these resources. Besides, they distribute the resources at their will only because the public do not finance the government (Luciani 82). The government takes care of essential services like quality infrastructure, health, employment, security, and education (Ross 328). As mentioned earlier, there exists a significant inequality in the distribution of these resources as the quality of the services may also vary with the neighborhoods. The Middle East countries are “rentier” countries with oil accounting for the largest segment of the funds. This income is shared with the public, but the type of conditions of this social contract is the overwhelming factor. The Saudi Arabia government controls the entire economy, employs almost the entire population, and provides lavish lifestyles to their people (Wharton University of Pennsylvania). On the other hand, people will sacrifice these things for an authoritarian political system. 

Oil dependency does not owe the entire blame on the political stagnation experienced in the Middle East. Personal ties and relations damage the system critically, and eventually, the political culture created hinders development. Cases of patronage and cronyism are primary stumbling blocks to better decision-making and political processes (Ross 342). This type of government is so discriminative because it clearly shows that personal contact rather than personal capacity or labor is the influencing factor in the allocation of resources. More so, most of these countries are ruled by royal families. 

The Middle East is endowed with oil reserves that even though they will not last forever, they will be closely watched. As in the past, these countries are likely to continue experiencing these challenges unless they adopt better policies and improve democracy and accountability processes. The discussion above highlights that if the Middle East use their resources wisely, they can transform the entire zone as evidenced by the great infrastructure and real estate progress. Oil is still a worthwhile commodity, but it is also a non-renewable resource. Saudi Arabia and other Middle East countries ought to be alert to warnings as the global economy advocates for cleaner sources of energy. It is wise they continue in the stock market of other countries and gradually expanding their portfolio.

Works Cited

Jreisat, Jamil E. “The Arab World: Reform or Stalemate.” Journal of Asian and African studies vol. 41, no.5-6, 2006, pp. 411-437.

Levitt, Matthew. “Terrorist Financing and the Islamic State.” The Washington Institute for Near East Policy, Washington, 2014.

Luciani, Giacomo. “Oil and Political Economy in the International Relations of the Middle East.” International relations of the Middle East, 2005, pp. 79-104.

Malachova, Anastasija. “The Middle East and Oil: Economic Modernisation and Political Stagnation.” 2012.

Maloney, Suzanne. “The Gulf’s Renewed Oil Wealth: Getting It Right This Time?.” Survival vol.50, no.6, 2008, pp. 129-150.

Moyel, Mohammad Salim, and Najah Aboud Hussain. “Water Quality Assessment of the Shatt al-Arab Eiver, Southern Iraq.” Journal of coastal life medicine vol. 3, no.6, 2015, pp. 459-465.

Mozaffari, Mehdi. Reshaping the Middle East: Why and How? Institut for Statskundskab, Aarhus Universitet, 2004.

Owen, E. Roger. “One Hundred Years of Middle Eastern Oil.” Middle East Brief 24 (2008): 1-8.

Ross, Michael L. “Does Oil Hinder Democracy?” World politics, vol. 53, no.3, 2001, pp. 325-361.

Vohra, Rubina. “The Impact of Oil Prices on GCC Economies.” International Journal of Business and Social Science vol. 8, no.2, 2017, pp. 7-14.

Wharton University of Pennsylvania. “The Political Economy of Oil In The Middle East”. Wharton Public Policy Initative, 2017, https://publicpolicy.wharton.upenn.edu/live/news/1778-the-political-economy-of-oil-in-the-middle-east/for-students/blog/news.php. Accessed 1 Mar 2019.Yousef, Tarik M. “Development, Growth and Policy Reform in the Middle East and North Africa since 1950.” Journal of Economic Perspectives vol. 18, no.3, 2004, pp. 91-115.

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