May 14, 2013

"Energetical" Monarchies of the Middle East. Oil and Gas as a Basis for "Desert" Economy

In its articles "Borysfen" has already touched upon the features and development prospects of both, leading European countries and developing countries following the example of the BRICS group. For comparison, it is interesting to consider another type of countries - namely, the Arab monarchies of the Middle East and Persian Gulf, which build their economy on export of oil and gas, in particular, Qatar, the United Arab Emirates, Saudi Arabia and Kuwait. The importance of this issue for Ukraine is growing due to its desire to find alternative to Russian suppliers of energy carriers. The mentioned above countries can become such alternative suppliers.

Oil and gas basin of the Persian Gulf
Oil and gas basin of the Persian Gulf
http://ru.wikipedia.org/

Despite some differences, Arab monarchies of the Middle East and Persian Gulf have fundamental features in common, in particular, - the presence of large energy reserves, giving high revenues from oil and gas exports, and ensuring strength of national monarchical systems trusted by most of their population.

Resources of oil and gas in the Middle East
Resources of oil and gas in the Middle East
http://voprosik.net/

Thus, the resource potential of Qatar is 26 trillion cubic meters of gas (up to 15% of the world total), of the United Arab Emirates - more than 30 billion tons of oil (20% of world reserves), of Saudi Arabia - about 40 billion tons of oil (25% of the world's resources) and 78 trillion cubic meters of gas (the fourth place in the world), of Kuwait - 14 billion tons of oil (9% of world reserves). Export of energy resources enables these countries to avoid the negative impact of the global financial and economic crisis and to maintain high rates of economic development.

In particular, in 2012, Qatar's GDP in 2012 grew by 19% (the highest index in the world), the UAE’s - by 4%, Saudi Arabia’s - by 4% and Kuwait’s - by 3%, which is higher than corresponding European figures.

Economic achievements allow Arab monarchies to take active foreign policy positions and to protect their national interests, as well as to satisfy social needs of the population, preventing social unrest which is taking place in other countries of the region.

Developed oil resources of the countries of the Middle East Developed gas resources of the countries of the Middle east
Developed oil resources of the countries of the Middle East
Developed gas resources of the countries of the Middle east
(As of January 1, 2007)
http://www.orientir.ae/

Recently, however, there are certain problems in most countries - energy producers from the Middle East and the Persian Gulf region, complicating their economic development and requiring search for alternative solutions. These problems first of all include an excess of gas at the world market. This is a consequence of the wide use by the United States, Canada, Australia and other countries of the new technologies for extracting shale hydrocarbons. Growth in global food prices (in the situation of shortage in the desert regions of their own food resources), and the dissemination of ideas of the "Arab Spring" that threaten the region with crisis.

Serious problems can arise due to aggravation of the situation around Iran. This increases a possibility of an armed conflict in the region, during which tanker traffic through the Persian Gulf and the Strait of Hormuz can be interrupted, and the relations between Iran and the countries of the region, especially the UAE and Saudi Arabia, can get worsened.

Oil and gas resources of Saudi Arabia
Oil and gas resources of Saudi Arabia
http://voprosik.net/

In this case, the Governments of Qatar, the UAE, Saudi Arabia and Kuwait will adapt their activities in the political, economic and security spheres to the new global and regional realities. This will include measures for increasing effectiveness of national energy systems, which will contribute to increasing their competitiveness at world markets. In particular, by 2015, the leadership of Saudi Arabia plans to invest about 95 billion US dollars into new projects in the sphere of oil production, including 70 billion US dollars – into the expansion of production and 25 billion US dollars - into creation of processing capacities.

Arab monarchies of the Middle East and the Persian Gulf will actively look for new oil and gas markets, trying to find a replacement for the US energy market. In particular, they will try to widen the opportunity to enter markets of Europe, Asia-Pacific region and South America.

Most active in this matter is Qatar. In recent years, the Qatari energy companies have signed several long-term contracts for the supply of gas to China, India, Japan, South Korea and Argentina. They also hope to increase volumes of export of liquefied natural gas to the European Union.

It should be noted that one of the priorities of the efforts of Qatar, the UAE, Saudi Arabia and Kuwait is to diversify their economies in order to avoid critical dependence on the export of energy resources. Thus, the adopted in 2011 Qatar's Economic Strategy was designed for five years. It determines new directions of the activity of the Qatari Government, including development of transport infrastructure and telecommunications systems.

Oil and gas fields of the UAE
Oil and gas fields of the UAE
http://voprosik.net/

Leadership of the UAE in 2012 has developed a special economic program that includes development of iron and steel industry, as well as creation of new high-technology industries, including planes, cars and electronic equipment for various purposes. More attention is being paid to cybernetics, systems of communications, science, education, and financial issues.

Taking into consideration the increasing problems with food and fresh water, governments of these countries are trying to adopt modern agricultural technologies and desalination technology, create food reserves, as well as to develop trade relations with those states that can export food.

Cooperation Council for the Arab States of the Gulf
Cooperation Council for the Arab States of the Gulf
http://ru.wikipedia.org/

Taking care of national and regional security, Arab monarchies of the Middle East and the Persian Gulf strengthen their defensive components. For this they are developing military-technical cooperation with leading Western countries, first of all with the United States, Great Britain and France. In recent years, Qatar, the UAE, Saudi Arabia and Kuwait have been buying combat aircrafts F-15 and F-16, AD and MD systems, artillery, armored vehicles, warships, highly-accurate bombs and missiles, as well as other types of offensive and defensive weapons.

Флаг ССАГПЗ
CCASG's Flag

Besides, at the regional level, measures are being taken to strengthen the interaction of these countries within the Cooperation Council for the Arab States of the Gulf (CCASG). In particular, are being implemented plans to strengthen joint military forces of the CCASG "Peninsula Shield" with their further transformation into the "Arab NATO."

The circle of foreign partners of the countries of the Middle East and Persian Gulf has been growing. Thus, to traditional partners from energy-consuming countries and suppliers of high-tech equipment (including weapons and military equipment), first of all, the USA, EU, China, Japan and South Korea, soon may be added other countries. In particular, recently is being studied a possibility of partnership with countries of Central and Eastern Europe and former Soviet Union, which are now also looking for alternative relations in energy, military-technical and agricultural spheres.

In general, thanks to such measures, Qatar, UAE, Saudi Arabia and Kuwait maintain positive momentum of economic development, while gaining additional opportunities for the welfare of the population, including higher wages and social spending, increased funds for health and education, loans and credits, etc.

From these circumstances, it can be concluded that Ukraine is getting opportunities for cooperation with countries of the Middle East and Persian Gulf. The main spheres of such cooperation can be energy, high-tech industry, aviation, space, engineering and agriculture.