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Title: Unveiling the Gulf: Past, Present, and Future Challenges
Description: Delve into the evolution of the Gulf States from pre-oil poverty to rapid economic growth fueled by the oil industry boom post-1970s. Explore the complexities of governmental procedures, lack of transparency in decision-making, and the establishment of Sovereign Wealth Funds (SWFs) to secure a post-oil future amidst challenges faced by both companies and non-Gulf Arab states.
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THE ARAB
SPRING & THE
GULF STATES
TIME TO EMBRACE CHANGE
Mohamed A. J. Althani
PROFILE BOOKS First published in Great Britain in 2012 by
PROFILE BOOKS LTD
3A Exmouth House
Pine Street
London ECIR O...
ISBN 978 1 78125 073 0
eISBN 978 1 84765 9149
Maps by ML Design
Typeset in Bembo by MacGuru Ltd
info@macguru.org.uk
Printed and bound in Britain by Clays, Bungay, Suffolk
A The paper this book is ...
The
transformation has been swift, and the Gulf Co-operation
Council (GCC) states have experienced some of the most
rapid spurts of development and economic growth in
recent global history. In this re...
Arabian society was largely untouched by modernisation
before the 1970s, relying on traditional forms of social organisa-
tion. Tribal structures were important. Since the crash of the
pearl market in...
With the rise in oil revenues, government spending increased
rapidly. There was investment in infrastructure projects such
as roads, hospitals and schools, which encouraged many of the
region’s inhabi...
GDP per head rose further and in
some cases became among the highest in the world. Massive
Arab Spring.indd 2 28/06/2012 17:57 1970-2011: four decades of transformation in the Gulf
government spendi...
These developments were accompanied by keenly optimistic
predictions about the region’s future. These were often built on
the premise that the Gulf’s strategic position at the crossroads
between Asia,...
Real
estate prices fell rapidly and the economy started to contract. The emirate still looks fragile, with its flagship company, Dubai
World, seeking to restructure billions of dollars of debt. The re...
Many of these
firms are able to operate in Middle Eastern markets where cul-
tural and political restrictions make things difficult for Western
companies. As the private sector has grown, there has al...
Companies complain that it is hard to do business because of
governmental failure to streamline procedures for obtaining work
visas and import licences and the lack of action taken to ease
the movemen...
Other
forms of rent gathering include taking commissions from foreign
companies seeking contracts with the government. The GCC
region also has a large number of financiers who invest in projects
but d...
It has
been difficult for these nationals to be sacked, and therefore many
have had little incentive to perform to the best of their ability. For decades there have been anecdotal stories about nation...
context:
The text discusses challenges faced by companies in the Gulf states related to governmental procedures, lack of transparency in decision-making, and issues with workforce performance and development.
As a result,
governments in the region have established sovereign wealth
funds (SWFs) designed to protect them against fluctuations in oil
and gas prices and safeguard the future of their economies wh...
Before the recession, their presence was thought to
be threatening: many Western governments were concerned that
Arab Spring.indd 7 28/06/2012 17:57 THE ARAB SPRING AND THE GULF STATES
they might us...
For example, the Government Pension Fund in
Norway is one of the largest equity owners in Europe, with a
total value of $455bn as at the end of 2008. Governed by an
ethics committee, which ensures its...
Most of them are relatively young,
and there has been little opportunity to develop the checks and
balances seen in more mature societies. Breakneck development
in recent years has catapulted the Gulf...
fact:
Oil is a finite resource in the Gulf and has led governments to establish sovereign wealth funds (SWFs) to protect against price fluctuations and plan for a post-oil future. These SWFs have grown significantly and operate in various ways, characterized by a lack of transparency which has raised concerns. The lack of transparency in Gulf SWFs is a serious problem for the GCC countries, as these funds are meant to safeguard each state’s future. The primary function of SWFs is to ensure stability and economic security beyond oil dependence. The absence of transparency could lead to misuse of funds, undermining the intended purpose of these sovereign wealth funds. Ideally, SWFs should be managed transparently and apolitically to ensure trust and credibility. Most of the Gulf states have experienced rapid spurts of development and economic growth in recent global history, making progress in public health, standards of living, education, and state building. Before the 1970s, standards of living in the Gulf states were poor, with indicators like low literacy rates and high infant mortality.
Arab nationalism
was defined by the principles of Arab unity, cultural pride and
resistance to Israel. In the 1950s and 1960s these principles were popular and
defined Arab politics. Nasser’s power ex...
Although
many of them claimed to be creating more progressive societies,
they nonetheless became some of the worst regimes in the region. Baathist states such as Syria and Iraq have abused human right...
Many governments have not had the vision or the
accountability to address unemployment and foster sustainable
economic growth. A lack of democracy has resulted in public
administrations that are not w...
context:
The text discusses the Arab Spring and the Gulf States, emphasizing the need for change. The Gulf Co-operation Council (GCC) states have experienced rapid spurts of development and economic growth in recent global history, making progress in public health, standards of living, education, and state building. Before the 1970s, standards of living in the Gulf states were poor, with indicators like low literacy rates and high infant mortality. Politically, the Gulf states were fragile, with varying degrees of progress in state building among older and younger countries in the region. Institutional development was lacking, leading to centralized decision-making and reliance on traditional social structures. Arabian society was largely untouched by modernisation before the 1970s, relying on traditional forms of social organisation. Tribal structures were important. Since the crash of the pearl market in the 1930s, the economies of the region had been sluggish. Many inhabitants had a semi-subsistence lifestyle, with income from farms and livestock and any work they could find. The Gulf oil industry started in the 1940s, but it was not until the 1970s that it began to generate revenues that could be distributed among the states’ inhabitants. In 1972 the Arab oil embargo meant that the price of oil quadrupled to almost $12 a barrel. As a result, oil revenues in Saudi Arabia rose from $4.3bn in 1973 to $1o1.8bn in 1980. Similar increases occurred in the other Gulf states.
context:
The text explores challenges faced by companies in the Gulf states related to governmental procedures and lack of transparency in decision-making, contributing to difficulties in doing business.
The region’s inhabitants
have had to deal with unemployment, corruption, nepotism and
the absence of vision and competitive spirit. Upward mobility
10
Arab Spring.indd 10 28/06/2012 17:57
context:
The text introduces challenges faced by non-Gulf Arab states, such as human rights abuses, widespread corruption, poor governance, conflicts, economic crisis, high unemployment rates, brain drain, corruption, nepotism, absence of vision, and lack of competitive spirit.
fact:
More than one in four Arabs are out of work, and it is estimated that more than $5 million new jobs will have to be created by 2020 to keep this number from growing. The brain drain from talented and educated middle-class individuals leaving to find jobs in the US and Europe is estimated to cost Arab economies $1.6 billion a year. Upward mobility is a challenge faced by the region's inhabitants.