Geopolitics and the Gulf

Mehran Kamrava26 October 2009

Lecture:

Historical Context

The Gulf and Global Politics

Oil and the Political Economy of the Gulf

The Political Economy of Growth

Gulf Oil Production

• 21.7 million bbl/d in 2000• 30.7 million bbl/d by 2010• 42.9 million bbl/d by 2020

• 28% of world production in 2000 to 35% in 2020

International Energy Agency

GNP & GDP average annual growth rate in developing countries

1970-1995 (GNP) 1990-2000 (GDP) 2000-2007 (GDP)

South Korea 10.0 5.8 4.7

Botswana 7.3 6.0 5.3

China 6.9 10.6 10.3

Thailand 5.2 4.2 5.3

Indonesia 4.7 4.2 5.1

Malaysia 4.0 7.0 5.4

Egypt 3.7 4.4 4.3

Oman 3.3 4.5 4.7

Tunisia 2.3 4.7 4.8

Israel 2.0 5.4 3.2

Morocco 1.8 2.4 5.0

Syria 1.4 5.1 4.5

Iran -2.4 3.1 5.9

Saudi Arabia -2.9 2.1 4.1

Kuwait -3.5 4.9 9.2

UAE -4.0 4.8 7.7

Libya -4.8 … 3.7

Qatar -5.9 … 6.1 (2005)

Population & Wealth in the Gulf

Population GDP Per Capita (000$)

Bahrain 0.75 37,200

Iran 71.0 12,800

Kuwait 2.7 57,400

Oman 2.6 20,200

Qatar 0.84 103,500

KSA 24.2 20,700

UAE 4.4 40,000

GCC Exposure to the Global Financial Crisis

• Direct banking sector exposure to toxic assets;

• Sudden stop/reversal in foreign capital inflows;

• Weaker non-commodity export growth;

• Plunge in commodity prices, most notably crude oil;

• Faltering demand for energy-intensive industrial and building materials.

Global Downturn and the GCC

60% fall in GCC hydrocarbons revenue in 2009, to around $200 billion

Five Consequences:

– Sharp decline in liquidity and assets that fueled the 2002-2009 business growth spurt;

– Steady growth deceleration in all economic sectors;

– Steady decline in inflation, especially in real estate and other consumer indices;

– A steady wave of consolidation across several sectors;

– Built-in Structural resilience and growth momentum will make Qatar less susceptible to downturn, followed by Abu Dhabi and Saudi Arabia.