[Graeme]

When Oil Wealth Fuels Arab Conflicts

In what way is the oil wealth of the Arab countries being spent? Is that wealth being used to promote sustainable social, cultural, political and economic development in Arab countries and, thus, plays a positive role in the life and livelihood of the Arab masses? Or is it being used in the opposite direction and is actually destroying the entire infrastructure in the Arab world, and instead of being a silver bullet for the maladies of the Arab countries, is only a scourge?

It is not easy to pass a simple judgment on this issue and many positive or negative arguments can be offered here. However, if the current conditions in the Arab world are examined more closely, especially after the political developments that have come to be known as the Arab Spring, one can, at least, claim that more than being a cure to their intractable ailments, the Arab oil wealth has been a scourge in disguise.

A cursory glance at the Arab world from Morocco, in the entrance of the Gibraltar, all the way east to Somalia and Sudan in the Horn of Africa, and from the strategic Strait of Hormuz in the Persian Gulf up to the Mediterranean and Turkey, will clearly prove that Arab nations are going through one of the most critical junctures of their historical life. They are currently grappling with a crisis, which more than anything else, emanates from unequal distribution of the oil wealth and emergence of growing divides in all aspects of the social and political life of Arabs. Therefore, the oil wealth in the Arabs hands has been playing a very destructive role on two fronts:

1. By worsening the existing gaps between oil-rich countries and countries devoid of abundant oil resources; and

2. By exacerbating the existing gaps within the Arab societies which have made many people in those societies change course in the direction of traditional tribal tendencies.

It does not need a lot of research to understand to what extent the oil wealth in Arab countries has been at work to undermine the infrastructure in those societies. It would suffice to note that how the power struggle both at domestic level in many Arab countries, and at regional level in various parts of the Arab world has been raging on just because some Arab states enjoy hefty revenues through oil sales, and other countries are deprived of such a huge source of power and wealth.

ionglobaltrends

[Plantagenet]

the oil wealth in the Arabs hands has been playing a very destructive role on two fronts:

1. By worsening the existing gaps between oil-rich countries and countries devoid of abundant oil resources; and

2. By exacerbating the existing gaps within the Arab societies which have made many people in those societies change course in the direction of traditional tribal tendencies.

Your point #1 is just that oil producing countries are WEALTHIER then non-oil producing countries. And thats not a bad thing at all---its GOOD for a country to be wealthy.

Your point #2 is that oil wealth is promoting traditional "tribal" tendencies. But when you go to wealthy arab oil producing countries like KSA and Qatar, the people are very well educated, often at top western Universities and they are commonly well-traveled----probably more so than the typical American.

Education and travel don't "promote" tribal tendencies----they are the ANTIDOTE to tribalism. People learn in Universities and through travel that the world is a much larger and more diverse place then just the narrow world encompassed by their tribe. None of the education and travel that is so common now for Arabs in wealthy ME countries would be possible without the oil wealth.

[Graeme]

Except that the oil wealth has been abused. There are interesting parallels with the US. How many US dollars have been spent on wars? Wouldn't this have been better spent at home?

Otherwise, the oil wealth, per se, is not a negative phenomenon. If used properly, instead of being spent on buying lethal weapons that Arabs are currently using to kill each other, it could have been used to build factories, farms, roads, schools and universities.

The petrodollars could have been spent on constructing infrastructure in Arab countries and making Arab nations more attuned to the modern world. It is a pity that this is not really the case. The fact that everybody is now blaming everybody else for the status quo will solve no problem. Both the rulers and those ruled in Arab countries are similarly responsible for the existing dire situation of the Arab world.

[yellowcanoe]

In oil producing countries a disproportionate amount of the wealth goes to the people at the top of society but the rest of society may benefit from food and fuel subsidies. The most volatile situation for a society occurs when oil/gas exports drop to the point that those subsidies are no longer sustainable. The clearest example of that in the middle east would be Egypt -- a country that was heavily dependent on imported food subsidised with petrodollars and subsidised fuel. It was a workable system as long as Egypt generated revenue from oil and gas exports but when oil production dropped below what was being consumed domestically the system was no longer sustainable. Egypt now needs to import petroleum products that are sold well below their cost. The western media haven't figured this out -- they really believe the turmoil is because people want democracy. If the system was still providing jobs, food and fuel to everyone there would not be large numbers of people protesting.

I believe the trouble in Syria is rooted in falling oil production and drought that reduced agricultural harvests. The combination of rising domestic oil consumption and falling oil production (the classic ELM model) would have been having an impact on oil revenue.

The next country to watch will be Saudi Arabia. Production has likely peaked but domestic consumption continues to rise so revenue will be dropping unless oil prices keep rising. Saudi Arabia also has a fairly high birth rate.

[Plantagenet]

Except that the oil wealth has been abused. There are interesting parallels with the US. How many US dollars have been spent on wars? Wouldn't this have been better spent at home?

In theory, yes.

However, much defense spending is done with the idea of deterence. An oil-rich country with no military is pretty much a sitting duck if one of its neighbors decides to invade it. Look what happened to Kuwait---Iraq invaded it.


Saddam Hussein burned the Kuwait oilfields.

[ROCKMAN]

Graeme makes some valid points for a change (just teasing, bro). But it isn't a distinction between OIL wealthy countries and OIL poor countries IMHO. Consider the two extremes: Norway and Equatorial Guinea. The Norwegian wealth has been transformational in a variety of positive ways for it's citizens. In EG OTOH oil hasn't changed those charming tribal ways for 99% of the population...they are still living an incredibly impoverished life. Their oil wealth is controlled by their homicidal dictator for life. They only started producing oil about 15 years but have recovered 1.3 billion bbls. And women still carry water home in buckets from a fountain in the town square of the capital. El Presidente didn't end their malaria prevention program when he had his uncle assassinated and took over because they had oil wealth. He did it because a sick population is easier to control.

Oil neither destroys societies nor makes them bloom. Neither do blood diamonds or copper. That path is in the hands of TPTB.

[Keith_McClary]

Oil neither destroys societies nor makes them bloom. Neither do blood diamonds or copper. That path is in the hands of TPTB.

Not sure who you mean by TPTB. The oil consuming powers can change the regimes in places like EG simply by changing the "pay to the order of" line on the cheque (while discreetly slipping a few loads of weaponry to "rebels" who are decreed to be the legitimate representatives of the people).

[ralfy]

I suppose TPTB refers to any regime in place.

[Keith_McClary]

I suppose TPTB refers to any regime in place.

I thought it might mean the major powers in the world.

[ROCKMAN]

Thanks ralfy...I should have been more clear. Yes: those who are in control of the govt policies. In the case of EG it's a mad man. In the case of Norway it's their politicians. In the case of the US it's the president and congress. My view of the world is simple: it's controlled by ass holes and folks who aren't ass holes. I'll let every one decide how they want to classify TPTB in the world.

[lasseter]

The oil consuming powers can change the regimes in places like EG simply by changing the "pay to the order of" line on the cheque (while discreetly slipping a few loads of weaponry to "rebels" who are decreed to be the legitimate representatives of the people).

They can Keith, but in this corrupt word the oil consumer rarely cares who benifits from the dollars paid, all they care about is the oil. History has shown that as long as the oil flows and the dictator behaves themself in the global sphere, the dictator stays in power.

[ROCKMAN]

Lasseter – “…as long as the oil flows and the dictator behaves himself in the global sphere” So true. Half the Equatorial Guinea oil goes to the US and half to the EU. Most of their LNG goes to the EU. While few in the US know of the brutal dictator of that country the “good and moral” folks in the EU are very familiar with the situation. For instance how many here know about the attempt by Margaret Thatcher’s son to mount an armed coup against the dictator some years ago? Well known on the other side of the Big Pond.

But as long as he only starves, tortures and kills his own people the kind hearted folks in the EU are satisfied to keep him in power. And they do keep him in power. As implied above all the EU need do is to force an embargo of EG oil. Won’t bother with details but all it would take is one small destroyer escort. EG isn’t Iraq: they have no military to speak of…just a police force armed mostly with machetes. Mr. Thacker’s “invasion force” consisted of just 80 mercs. It only failed because they got busted at the airport in another African country for weapons violations. Mr. Thacker actually pleaded guilty in order to avoid extradiction to EG.

A side bar: find the movie “Dogs of War”. So similar to EG it’s spooky. And the film was made long BEFORE Thacker’s bungled attempt.

[Keith_McClary]

The oil consuming powers can change the regimes in places like EG simply by changing the "pay to the order of" line on the cheque (while discreetly slipping a few loads of weaponry to "rebels" who are decreed to be the legitimate representatives of the people).

They can Keith, but in this corrupt word the oil consumer rarely cares who benifits from the dollars paid, all they care about is the oil. History has shown that as long as the oil flows and the dictator behaves themself in the global sphere, the dictator stays in power.

Preferably the dictator should recycle the petrodollars back to the banksters and arms merchants without taking too big a cut.
If the dictator actually tries to build a modern competitive economy, that is seen as a threat. Even if it's an elected dictator.

[Plantagenet]

My view of the world is simple: it's controlled by ass holes and folks who aren't ass holes. I'll let every one decide how they want to classify TPTB in the world.

Yup---thats true enough.

But the world is also controlled by culture and institutions. In the US we've been lucky enough to have a country where the rule of law mostly dominates, where there is a mostly functioning democracy, and where the government was designed to have three independent branches, so if an asshole takes over one part of government, the other two branches can act as checks and balances on the asshole's power, and elections can even allow the people to periodically change assholes and occasionally even get someone good.

Lucky for us.

Countries like EG just have an asshole in charge. Forever.

Unlucky for them.

[ROCKMAN]

P - "But the world is also controlled by culture and institutions." So true. And it's the ineffective cultures and corrupt institutions that allow those asses to gain control. But don't worry about the noble institutions in EG like their legal system. El Presidente isn't breaking the law when he has someone killed. The constitution was changed to allow him to execute anyone without a trial. All nice and legal...by EG law.

[ralfy]

I thought it might mean the major powers in the world.

I think they have similar views, i.e., the use of military force to prop up capitalism in various forms.