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When Will Arab Oil Translate into Political Power?

The Arab countries need to translate their wealth -- with vision, intelligence and determination -- into political power to resolve the many conflicts which sap their energies, afflict their people, and prevent them from taking their proper place in the world, argues Patrick Seale.

Arab oil producers are awash in wealth. They have never been so rich. But the paradox is that, in spite of their great and growing wealth, their political weight in the world remains small, even derisory. They have not -- or at least not yet -- converted their wealth into political influence on a global scale.

This is particularly striking in the Arabs’ own Middle East region. Why, one wonders, have the Arabs not been able to resolve the grave crises in Iraq and Lebanon, which are tearing their region apart? Why have they allowed the United States to neglect Arab interests in the festering Arab-Israeli conflict, and tilt so decisively in Israel’s favour? Why have the Arabs not intervened to defuse the dangerous confrontation between the West and Iran, which if it were to escalate into a military clash would be utterly disastrous for the Gulf?

Why do the Arabs seem to focus all their attention and all their energies on business -- on getting rich and richer still -- while leaving their political and strategic destinies very largely in the hands of foreigners?

Some would argue that the problem lies in ancient inter-Arab rivalries, in the sectarian divide between Sunnis and Shi‘a, in the absence of an Arab-wide consensus, in autocratic leadership, in the crippling influence of intelligence and security agencies, in the lack of vigorous democratic debate.

Whatever the reasons -- and they are undoubtedly many and deep-seated -- the Arab world projects an image of impotence, even where its own vital interests are concerned.

Yet, the wealth is there -- and, in most other societies, wealth means power. But not in the Arab world -- or at least not yet. It is worth recalling the figures. On 12 December 1998, the price of oil collapsed and was quoted at $10.76 a barrel. In January 2007, it had recovered to a comfortable $58 a barrel. Then, to universal astonishment and alarm, the price soared on 2 January 2008 to a then all-time record of $100.

But that was not the end of it. This past week, oil surged to $126 a barrel -- an 11 per cent rise on the month – and some experts even predict it could rise to $200!

We are living through what looks like the first great crisis of the twenty-first century. Quite apart from oil, foreign exchange and commodity markets have also displayed huge volatility. Food prices, for example, have risen by 40 per cent this past year -- their sharpest rise since 1978. The price of wheat alone nearly doubled between March 2007 and March 2008, causing tremendous problems for countries like Egypt, which imports 50 per cent of the wheat it consumes.

The UN’s Food and Agriculture Organization (FAO) estimates that 36 countries -- including 21 in Africa -- will need external food aid in 2008 to feed their people.

The sub-prime mortgage crisis in the United States has infected the entire world financial system, leading to vast losses of close to one trillion (1,000 billion) dollars for major banks, insurance companies, pension funds, hedge funds and other institutional investors. This amounts to nothing less than a financial earthquake.

At the same time, the US dollar -- to which several Gulf currencies remain pegged (but not the Kuwaiti dinar which broke loose a year ago in May 2007) -- has collapsed. The causes lie in the vast US budgetary, commercial and foreign trade deficits -- themselves linked to the disastrous Iraq war -- to alarming signs of recession in the US economy, and to a sharp fall in US interest rates.

Meanwhile, wealth and power are moving away from the once-dominant Western world to China, India, Brazil and other emergent economies. China outstrips them all with its phenomenal double-digit growth rates, its soaring foreign exchange reserves, its all-conquering exports, and its deep inroads into Africa, Latin America, and the Middle East. Its hunger for raw materials seems insatiable. It is today the second largest consumer of oil after the United States.

Such is the world in which the Arabs live. Their oil is a non-renewable resource. They need to be careful not to waste a single dollar of their oil bonanza and invest instead in building a post-oil economy.

Above all, they need to translate their wealth -- with vision, intelligence and determination -- into political power, so as to resolve the many conflicts which sap their energies, afflict their people and prevent them from taking their proper place in the world.


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Added: May-12-2008 
By: theblue8
Iraq, Iran, News
Tags: Oil
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