The Middle East Post-Petroleum: Averting the Storm

Envisioning a post-oil era leaves an ominous uncertainty hanging over the ruling elites in the Middle East and North Africa (MENA), particularly in the oil-exporting countries. What is the proper strategy for a transition to a more reliable and sustainable economy? While the resource curse is widely regarded as having contributed to the underdevelopment of the region, recent studies demonstrate that oil wealth in and of itself provides a less compelling explanation for economic decline. Oil wealth does not necessarily weaken state institutions; rather, a rentier economy requires governments to perform remarkably well in order to effectively manage financial gains.¹ What will happen to “the viability of these countries if they can no longer rely on oil and gas exports, or if they run out?” ² The global trend toward alternatives to fossil fuels is likely to undermine oil-dependent MENA economies, and many countries have come to realize that the move to low-carbon-emission energy sources is inevitable.

Few within MENA are naive enough to think that making the transition to the post-oil era will be easy. The gradual depletion of petroleum reserves is an aspect of concern for the region’s oil-rich countries, especially if their governments are intent on building a sustainable economy.³

Today, many regional states continue to devote significant resources to the military. The rise of transnational loyalties and sectarian-identity politics has intensified perceived and actual threats, while at the same time deepening the region’s security dilemma. Regional rivalries have added a new element of uncertainty to the security context. “Despite an intense arms race and the procurement of increasingly more sophisticated weaponry,” Mehran Kamrava writes, “the states of the Persian Gulf are today less secure and indeed are much more vulnerable than ever before.”⁴ The transition toward a post-oil era, according to one expert, will be fundamentally different from the period of transformation into the oil era in the 1960s and 1970s. The key variable in the shift to a post-petroleum future is that the “socioeconomic and demographic constraints will limit regimes’ capacity to co-opt political support.” ⁵ In the post-oil era, seeking non-oil sources of revenue, along with diversifying economies and bolstering productive capacities, has to be credible in both strategic and economic terms.

NON-MILITARY THREATS

A range of nonconventional and nonmilitary threats is likely to further compound the transition toward any post-oil era. The three major threats — demographic and generational change, the political economy of resource distribution and scarcity, and environmental degradation and climate change — are likely to effect a paradigmatic shift away from national security toward human security. Air pollution has reached critical levels in Tehran, Istanbul and Cairo, and the rate of CO2 emissions has been steadily on the rise in virtually all countries of the region. Environmental pollution is no longer seen as simply a challenge of the future but as an immediate crisis.⁶

The ruling elites in the southern and eastern Mediterranean — Egypt, Jordan, Lebanon, Morocco and Tunisia — appear to be primarily concerned with demographic trends and priorities for economic growth rather than environmental constraints. “The shift in gravity in Mediterranean water cooperation,” Michael Mason writes, “from UN-led hard-law to EU-driven soft-law processes has at the same time imported the slow, hesitant pace of European Neighborhood Policy in the region, favoring a lowest common denominator of (technical) collaboration and not challenging regional wielders of geopolitical power (e.g., Israel and Turkey), who are generating transboundary inequities in freshwater allocation.”⁷ The major constraint to environmental effectiveness, however, stems from rapidly growing pollution sources — fueled in part by urbanization, industrialization and population growth in southern Mediterranean countries. Additionally, the political elites in these countries lack economic or political incentives, or even capacity, to restrain growth.⁸

Despite the fact that Euro-Mediterranean energy cooperation under the Barcelona Convention process and the Mediterranean Action Plan has successfully addressed the environmental protection of marine areas and coastal zones across the Mediterranean basin, it is generally believed that, outside the Barcelona Convention process, Euro-Mediterranean climate relations are distorted by European geopolitical interests. ⁹ Similarly, steady cooperation regarding common ecological risks facing the region is at times disrupted by unforeseen events, such as the recent migration crisis of hundreds of thousands of asylum seekers crossing the Mediterranean Sea to reach Europe. The migration crisis, to be sure, is itself symptomatic of a politically divided region where mutual security interdependencies have yet to induce an effective response to regional conflicts and political instability.¹⁰

DEMOGRAPHICS

Demographic transitions correlate with greater levels of urbanization. Transitions from high fertility and mortality to falling rates of both — propelled by access to education, health care and contraception — have led to dramatic incidences of a youth bulge in the region. The link between urbanization and demographic transitions has in turn contributed to the rise of unemployment rates. Simply put, increasing levels of urbanization as well as high population density in the megacities, such as Cairo, Istanbul and Tehran, and in the second tier of cities, such as Alexandria, Isfahan, Mashad, Riyadh, Ankara and Adana, have exacerbated the unemployment problem. The economies in these cities cannot absorb their large populations, resulting in further unemployment, underemployment and poverty.¹¹

In Iraq, the West Bank and Gaza, and Yemen, high fertility is largely a function of poverty, poor schooling, internal and external conflicts, and patriarchal traditions and values. ¹² Syrian refugee populations have reportedly illustrated similarly high fertility rates due largely to the lack of viable contraceptives.¹³ Moreover, the MENA population is estimated to increase to 576 million by 2025 from 373 million in 2016, placing increasingly high demand on water and agricultural land, prolonging civil conflict in Syria and extant tensions in Iraq, and causing massive outflows of citizens toward refugee camps in Jordan, Lebanon and Turkey. Lost in such estimates is the issue of how depopulation has impacted the urban centers of Syria and Iraq.¹⁴

The prospect of increasing unemployment looms large in the post-oil era, as many of the existing governments appear unable to generate the necessary number of jobs for new graduates. According to one study, 29 percent of MENA’s total populace is 14 or under. Those aged 15 to 24 are highly literate, the majority having at least a primary education.¹⁵ With the exception of Egypt, Morocco and Yemen, regional youth literacy rates are above 90 percent. Only Israel, Qatar and the UAE have unemployment figures below 10 percent. The region’s average of 30 percent youth unemployment is the highest in the world, with most other regions ranging between 10 to 16 percent.¹⁶

The World Bank has cited the need for the creation of 100 million jobs in MENA by 2020 if the next generation is to be successfully absorbed into the market. Achieving this goal is highly unlikely; state bureaucracies are rife with corruption and cronyism, and their infrastructures are not capable of providing the platform for economic diversification and employment opportunities for their populations.¹⁷

Unemployment is made even more complex by the gender gap. Female literacy rates in the region average 36.6 percent, a quadrupling of the 1990s rate. ¹⁸ There is no denying that the personal and social returns of education to women have been considerable. While women’s equal or even higher educational achievement falls far short of gender equality, it does signal an increasing population of educated women who are likely to challenge their inferior citizenship status in the family and in society at large.¹⁹ With few exceptions, however, the region has suffered from very low female economic and political engagement. On average, nearly 21.6 percent of women 15 and older have entered the workforce, a figure much below not only the West but also sub-Saharan Africa and Latin America. ²⁰

The advent of social media, the Internet and cyber-activism is likely to bolster women’s rights in the region. The ability of women to deploy their assets in the labor force, professional and educational circles, and epistemic communities has given them newfound power. Although far from being able to dictate the terms of investment in more skill-intensive sectors, women have become a central part of a long-term vision for growth throughout the region.

Women have also been emboldened by the 2011 Arab uprisings and are unlikely to be as severely repressed as in the past. Since these protests, women — both Muslims and Christians — have emerged as a political force challenging repressive regimes throughout the region. This trend captured attention when Yemeni activist Tawakkol Karman won the 2011 Nobel Peace Prize. At the same time, Muslim women bent on injecting feminist-influenced perspectives into Islam’s teaching and practices, as well as distancing themselves from state policies, have embraced the notion that Islam can liberate rather than restrict them. This new generation of Islamic feminists is determined to win equality through Islam, not despite it. ²¹

WATER SCARCITY

Concerns regarding water scarcity in MENA, the most water-stressed region in the world, have triggered a new debate over whether water should be treated as a security issue. Experts warn that MENA suffers from both physical water scarcity and large-scale water-management problems: overuse of aquifers, deteriorating water quality, rationed supplies, and negligible irrigation services.²² Due to water and land scarcity and suitability, MENA has rarely had a comparative cost advantage in agricultural production. This explains the region’s dependency on food imports. Yet these imports have not only mitigated the water (and food) deficit; they have also allowed the postponement of politically risky water decisions, such as the adoption of water-market or re-allocation policies.²³

The data on this subject seem to support the concerns voiced by experts closely tracking the water crisis. For example, the Middle East, which encompasses 4.9 percent of the total area of the world and is home to 4.4 percent of the world’s population, possesses water resources amounting to just 1.1 percent of the world’s total renewable water supply.²⁴It is estimated that by 2050, per capita annual water availability throughout MENA will drop from today’s 1,000 cubic meters to 500.²⁵ Except for Lebanon, Turkey and Iran, the countries in the Middle East are dependent on exogenous sources of water.²⁶

Disputes over water have increasingly become security issues, but few long-term or serious efforts have been made to deal with the impending crisis. The most contentious water-related issues in the region revolve around riparian rights, specifically, Egypt’s Nile, the Jordan River basin, and the Tigris-Euphrates system. Poorly managed and archaic policies pose longstanding threats to water security and conflict resolution. ²⁷ At the same time, many analysts agree, the growing networks of water cooperation and dialogue at both governmental and nongovernmental levels have kept open the channels of communication.²⁸ The post-oil era is likely to give Turkey, which has the advantage of being upper riparian, a great advantage over the interests and water rights of Syria and Iraq, which are downstream, in part because Turkey’s dependency on its neighbors’ oil will increasingly diminish over time.

The impact of water scarcity on social welfare is likely to be profound. The two major environmental threats in the region, according to one study, are lackluster water governance and desertification and land degradation. Owing to outdated technologies, agriculture continues to consume vast water resources in most of the region’s countries. Water governance remains spread out among various institutions, generating problems for rationing. The problem is further complicated by high population growth, the location and the climate conditions of the Great Desert belt, and the lack of national programs to rationalize water consumption.²⁹

FOOD SECURITY

Closely related to the water crisis is food insecurity, which was directly linked to the 2011 Arab Spring protests. Experts argue that macroeconomic indicators, such as unemployment, growth rate, gross domestic product (GDP) and inflation, were not the only contributing factors to the poor Arab economies. The 2008 global financial crisis was accompanied by ensuing rounds of commodity-price spikes, which energized the purportedly resigned Arab street into a formidable source of opposition against autocracies and their trade-liberalization programs.³⁰

The non-oil agricultural Arab states, such as Egypt and Morocco, have suffered from increasing integration into global markets and the privatization of state enterprises, which has led to heavy dependency on food imports. For arid and semi-arid Arab countries, several factors, including “a rapidly growing population, elimination of tariffs on agricultural imports, and lack of available water and fertile land,” converted the region into the world’s biggest food importer.³¹ By 2011, Arab countries imported 58 percent of their cereal and 75 percent of their sugar consumption — nearly 61 percent of per capita calories — a fact that illustrated the extent of their vulnerability to the vagaries of world commodity markets.³²

While multiple factors contributed to the uprisings in 2011, as well as earlier riots in 2008, some observers suggest that the timing of such protests, which were preceded by drought in countries such as Syria, coincided with spikes in global food prices during 2006-11. These protests thus reflected not only government incompetence but also the sudden dire conditions in which many vulnerable populations found themselves.³³ Given its heavy reliance on external supplies, the Middle East is extremely vulnerable to variations in both the price and availability of food stocks.³⁴

In Egypt, food insecurity was inextricably intertwined with poverty, limited access to land, poor sanitation and health services, unstable employment, and shrinking regional per capita spending on agriculture, in part fueled by neoliberal models of agro-food provision. According to one study, gross investment in agriculture between 1980 and 1990 declined in Egypt from 31 percent to 23 percent of GDP. The boom years of economic liberalization (infitah) and oil-led development were also years of neglect of agricultural and rural development.³⁵ The 2011 uprisings have, in fact, increased expectations for governments to meet food-security needs.³⁶

The issue of food insecurity, which cannot be divorced from the larger water crisis, should arguably assume the highest salience in public policy. These challenges will require regimes to reconfigure the bases of their legitimacy, their so-called “ruling bargain,” often including the use of subsidized agricultural and natural-resource-based goods. For decades, the security of these countries has been interlocked with their control of substantial reserves of hydrocarbons.³⁷ In the post-oil era, heavy dependency on imported food becomes highly problematic.

POST-PETROLEUM SCENARIOS

Two scenarios await MENA as global dependency on the region’s oil declines, one likely and the other unpredictable. Many in the U.S. national-security establishment continue to embrace the argument that Saudi Arabia’s importance is based on its role in global oil economics, as well as its counterweight to Iran’s expanding role. As such, the ongoing U.S.-Saudi alliance dependably overrides other political considerations. Yet, the fundamental change in the global economics of oil — including the rise of the U.S. shale-oil industry — has upended the Saudis’ prior role in regulating and maintaining the stability of the global oil market. World demand for oil has receded dramatically since 2014, creating a severe budget deficit in Saudi Arabia ³⁸and the fear that any cut in production may cause the kingdom to lose market share and benefit their strategic competitors.  

LIKELY SCENARIOS

Tensions will continue among economic development, diversification and social control, on the one hand, and the power struggle between nationalists and Islamists, on the other. The arguments for various scenarios are both economic and political. The ruling MENA elites have yet to come to terms with the reality that economic reforms and strenuous social control are incompatible and that economic and political security are mutually reinforcing. This explains why governments’ attempts to create wealth and jobs hinge upon transparency and good governance.³⁹ While the struggle over power sharing in the region encompasses myriad actors and factions, the political contest often assumes its most visible form when Islamists are pitted against nationalists.

Development, Diversification and Control

One lesson learned around the 2011 uprisings was that greater social control through repressive policies has complicated matters and made a return to the old order possible only through violence and coercion. “This dynamic,” Marc Lynch writes, “can be seen most clearly in Egypt, where [President] Sisi has expanded his anti-Islamist campaign to include secular activists, journalists and academics. As a result, he has alienated increasingly large segments of the coalition that supported the [2013] coup.”⁴⁰

Throughout the region, expanding the private sector in the name of true entrepreneurship often runs counter to the governmental policies designed to impose social control.⁴¹ Given the impending depletion of hydrocarbon resources, per capita income will dramatically decline, turning them into middle-income-level countries, resulting in the exit of millions of temporary foreign workers. This presents a major problem for the expansion of the private sector in the Gulf countries, as it has been dominated by migrants and expatriates.⁴²

With the boom years of migration to the Gulf states beginning to wane,⁴³ it is not unreasonable to assume that income taxation will become part of the policy toolbox as an incentive to private businesses to create wealth — something that modern oil-rentier societies have never known. ⁴⁴ In 2016, according to one study, most Gulf states were running deficits. Although these imbalances can be sustained by their cash reserves — estimated to exceed $754 billion — in the long term, policy makers will be faced with either cutting spending or raising new revenue. The first option requires cutting water and energy subsidies and other state spending on development projects, defense, education, health care and infrastructure.⁴⁵

Another scenario necessitates introducing a value-added tax (VAT). While cutting spending may not be prudent, given its anti-growth implications, imposing taxes — which at 5 percent would represent roughly 1.4 percent of the GDP of these economies — appears to offer the most politically acceptable long-term solution.⁴⁶ Because VAT is a tax on consumption, many governments deem it a favorable means of raising public revenue without giving up much private-sector activity. Introducing VAT is less costly than imposing a corporate or personal income tax.⁴⁷ Taken together, these measures will come as a shock to ordinary people, not only because they represent an absence of government subsidies and cash payouts, but also because they will require citizens to begin actively contributing to the maintenance of the government. This may incite more dissent about how their personal funds are being acquired and applied.

Expanding the Private Sector

The call for reforming the public sector and increasing its productivity has become alluring; however, even non-oil sectors in many Gulf Cooperation Council countries, according to the International Monetary Fund (IMF), are to some extent dependent on funding from oil revenues. Moreover, the private sector remains small in these countries. The energy industry is generally highly capital-intensive and thus less likely to become a sustainable source of productive jobs.⁴⁸ Economic diversification in this context requires a shift in focus, beginning with improving the business climate, strengthening economic governance and transparency, and curtailing regulatory barriers to competition. All these are essential for the private sector to grow.⁴⁹

The persistent over-reliance of the region’s oil exporters on oil rent makes these countries unlikely candidates to prosper in a decarbonizing world consistent with the Paris Agreement. A quick glance at the economies most dependent on oil as percentage of GDP shows that Saudi Arabia comes third after Kuwait and Libya, with roughly 45 percent of its GDP dependent on oil.⁵⁰ The data regarding fuel exports as a percentage of merchandise exports in 2015-16 indicate a similar finding.

In 2016, according to one study, in Libya, Iraq and the GCC countries (save for Bahrain) nearly 50 to 90 percent of general government revenues came from oil. ⁵¹ In oil-exporting countries such as Kuwait, Saudi Arabia and Qatar, more than 60 percent of nationals were employed in the public sector. The highest shares of this employment, widely regarded as protected jobs with high wages, have in fact lowered labor productivity throughout the region.⁵² How soon will these oil-exporting countries implement economic diversification, given that such a strategy is the key to their sustainability in the post-carbon era?

Consider, for example, Saudi Arabia’s “Vision 2030.” With nearly half of the population under 25 and the size of its workforce expected to double by 2030, the country can no longer afford an unproductive population.  At the same time, if more Saudis were absorbed into the workforce and expected to pay taxes, they might begin to seek expanded freedoms. There would be far-reaching implications if the old ruling bargain no longer worked. ⁵³ The good news is, according to one commentator, that the younger generation of Saudis display shifting attitudes toward adopting energy-consumption patterns aimed at ending wasteful behavior and fostering a commitment to energy efficiency. “They are marrying later and having few children, leading to lower consumption per household. In fact, they are generally more environmentally and ecologically conscious and are showing interest in climate change.”⁵⁴

From a macroeconomic perspective, experts tend to question the outlook of developing an agricultural economy in the oil-rich Persian Gulf countries, arguing that water shortages and seasonal droughts have adversely affected the availability of arable land, making it impossible to expect significant growth of the agricultural economy.⁵⁵ Neither could the prospects of developing the tourism industry be taken seriously, given the numerous successful competitors nearby.

Likewise, the development of heavy industries is neither appealing nor feasible, due to their costly infrastructures and the necessity of competing with established Japanese, Korean, European or American firms. Obtaining resale rights or licensing from credible and widely known companies may be a better alternative for MENA in order to gain some competitive advantage.⁵⁶ It is worth noting that the large investments aimed at developing technological industries will still fall short of addressing some of these issues, including but not limited to an unprepared workforce, the lack of an indigenous entrepreneurial culture and limited local participation in a private sector, not to mention the lack of effective R&D networks, an inability to attract and retain competent researchers, and governance constraints.⁵⁷

A knowledge-based economy in the region faces perhaps its biggest obstacle in the existing traditional administrative infrastructure. The systems in place cannot pave the way for a dynamic knowledge-based economy. The public bureaucratic structure has traditionally played a significant role in the economy and has consumed a large share of the gross domestic product.⁵⁸

This leaves the region with one credible alternative: utilizing the potential for trade development, facilitated by the highway and transportation industries. The attraction of these scenarios has to do with rendering economic transactions, including supplying goods to consumers and transportation to travelers, far more affordable. It is reasonable to assume that other development scenarios — including use of renewable energy sources, agriculture, knowledge and particularly tourism — depend largely on roads and transportation. Hence, the allocation of oil income to the improvement of economic infrastructure and the road-development industry is seen as one of the most effective ways to develop global trade in the region.⁵⁹

Nationalists vs. Islamists

The most likely scenario in the post-petroleum era is that the Islamist-nationalist fault line will deepen, preparing for a prolonged fight and more political rifts.⁶⁰ Ever likelier would be resurgent inter-Arab rivalries and geopolitics, pitting some countries in the Persian Gulf against others. The competition between nationalists and Islamists will continue. The myth of Pan-Arab nationalism (notably leaving out Persians, Turks and other ethnicities) and solidarity will be a thing of the past, as will the unity of Islamists who struggle with internal divisions and defections.⁶¹ Within Egypt’s Muslim Brotherhood (Ikhwan), some will strive for armed struggle with the state, while others advocate genuine reforms. It remains to be seen whether the traditional leadership will be able to maintain some measure of control over the divergent elements in the diaspora and at home.⁶²

In Egypt, the most likely scenario, Fawaz Gerges notes, as el-Sisi was re-elected for another four-year term in April 2018, “is that the Ikhwan will try to offer feelers to the former general about striking a reconciliation deal — a return to cold peace and coexistence between the state and the Islamic organization.”⁶³ This alternative might be plausible, given that, as Gerges goes on to argue, each side is primarily concerned with its own political survival and warding off the emergence of an organized internal challenge to its leadership. ⁶⁴

Far from transforming Arab economies into new hubs of dynamism and social mobility, neoliberal economic globalization policies caused structural liabilities, providing political fuel for the 2011 uprisings.⁶⁵ By reinforcing state patronage and corruption, neoliberal economic policies deepened socioeconomic problems, while at the same time giving rise to the increasing appeal and salience of Islamists. The intensification of economic problems undermined political moderation and ideological tolerance among competing factions. The outcome of the Arab Spring, save for Tunisia, has been grim but not without surprises. In Libya and Yemen, it has led to an era of renewed tribal polarization. In Egypt it has bolstered military entrenchment in politics.

Both Islamists and secular nationalists have led authoritarian governments, making it extremely difficult to differentiate their governance outcomes, if not styles. Regardless of any popular support they may have enjoyed, Mark Katz writes, radical Islamic revolutionaries have resorted to stringent authoritarian policies (Iran after 1979, Sudan after 1989, Afghanistan 1996–2001, Somalia after 1999, and Iraq since the mid-2000s). Similarly, despite their visionary promises, Marxist-Leninist and Arab-nationalist revolutionaries have also relied on heavy-handed and repressive measures. Sometimes this has led to a violent internal backlash against them, but at other times the resiliency of authoritarian rule has resulted in a deep public discontent with the revolutionary regimes and their ideologies.⁶⁶

UNPREDICTABLE SCENARIOS

Several factors account for why the oil age is quickly fading: fluctuating oil prices despite the 2017 Saudi blockade of Qatar, the Saudi-Iran proxy wars over Yemen and Syria, and U.S. support for Jerusalem as Israel’s undivided capital and the reaction of the Organization of Islamic Cooperation (OIC) to the move. All this, some observe, is a testament to the effectiveness of the U.S. strategy to scale back the influence of oil-exporting countries in world politics.⁶⁷ Yet a broader consensus holds that the post-oil era will be one of increasing domestic conflict and threats to human security in the region, some predictable and others capricious. The most immediate challenge facing MENA is stabilization to avert an economic and financial meltdown that would further compound the political problems.⁶⁸

The deep social polarization along sectarian lines could potentially threaten the political stability of the Middle East. The prospect of Yemen’s collapse into a failed state is ominous. Some experts have warned that this would pose threats to the internal security and external stability of their countries, while exposing the “GCC to the multiple sources of human insecurity emanating from the Horn of Africa-Yemen nexus.” ⁶⁹ Increasingly, experts warn that “Yemen is a state on the verge of catastrophe, as its capital, Sanaa, faces a very serious water shortage by 2026.”⁷⁰ The countries most likely to experience political upheaval according to the texture of their sociopolitical and religious tradeoffs are, sadly, the least capable of navigating this turbulent environment.

Saudi Arabia’s long-term policy of keeping Yemen weak and divided, as well as exporting a toxic combination of sectarianism and corruption to that country, has fueled a tragic war. Some 14 million people could soon become victims of the worst famine and outbreak of cholera seen in the world in a century.⁷¹ While the Houthis control the north, the real power in Yemen’s south and east rests with a fractious collection of armed groups and jihadists, including al-Qaeda, each sponsored by Saudi Arabia or the United Arab Emirates. Gangs of self-appointed Salafists rampage through the streets; kidnappings and assassinations are common. The Houthis, by contrast, have obliterated al-Qaeda in their areas.⁷²

Iran’s evolving domestic and regional role in the Persian Gulf is yet another unknown variable, its constantly shifting factional alignments often significantly altering the country’s foreign policy and international relations. Furthermore, the assassination of Jamal Khashoggi at the Saudi consulate in Istanbul on October 2, 2018, has further undermined the Trump administration’s strategy of joining with Saudi Arabia to restrain Iran’s growing influence.

Ostracizing Iran has foundered, in light of the Saudi failure in both the war on Yemen and the blockade of Qatar, combined with the unwavering support for the 2015 nuclear deal by the EU, China and Russia (a deal from which the Trump administration abruptly withdrew).⁷³ The problem is made even more contentious with the recent rumored attempt to transfer U.S. green-card holder Fethullah Gülen to Turkish authorities, a move the Trump administration now denies — purportedly meant to salve the relationship between Turkey and Saudi Arabia over the Jamal Khashoggi murder. ⁷⁴If the Trump administration’s position were indefensible before, it has descended to an even more ineffective nadir.

Future Stability

It is difficult to foretell whether there will be another regional uprising, and its outcome would be impossible to predict. The key question remains: Should people trust their governments to make the best decisions on infrastructure, comprehensive education and services in the face of the lack of transparency and the persistence of corruption? The answer remains unclear, given that many in the region prefer stability and economic benefits to constitutional changes and civil-political rights at least in the short term. This is clear not just throughout the Middle East but also in China, Singapore and other parts of the world. Additionally, in MENA, ruling elites face divided societies with different interests to try to harmonize. This makes the prospects for sustainable democratic transitions extremely complex. Additionally, as experts point out, the Trump administration’s unremitting support for the current governments, while overlooking the structural barriers that stand in the way of reinforcing the old order, is unlikely to produce stability or promote U.S. interests. ⁷⁵

Under such circumstances, one expert notes, exploring structural features of the military in terms of its internal cohesion and identity (patrimonial, corporate, institutionalized and professional) remains key to explaining each country’s political dynamics and future trajectory. ⁷⁶ Tunisia’s military has historically represented features of professionalism and distinctiveness, making the transition to democracy somewhat smooth, if not problem free. Egypt’s military, while institutionalized, has been far from professional, with enormous corporate and economic interests, making it a power contender heavily involved in politics. Libya, Syria and Yemen all have had militaries formed from among competing camps, and thus not distinct from the regime or the bureaucracy. The factionalized militaries in these countries were engaged more in internal repression than in fighting external enemies.⁷⁷ Such factionalized armies are far more common throughout MENA — including Libya, Syria, Saudi Arabia, Jordan, Morocco, Iraq under Saddam Hussein and possibly under the present leadership, as well as contemporary Iran. For this reason, many MENA regimes are more vulnerable than they appear. “If a future uprising coincides with a downturn in oil prices,” Sean Burns writes, “reducing the ability of states like Saudi Arabia to buy off internal opposition and bolster regional allies, many regimes may become prone to infighting and civil war.”⁷⁸

It should come as no surprise that, as a result of drastic cuts in these countries’ oil revenues, we will see a rise in unemployment and protests. These tensions, frequently exacerbated by social-media platforms, could undermine the integrity of the nation-state models. In countries such as Syria, Yemen and Bahrain, failure to build national coalitions that can maintain at least a modicum of stability is likely to further undermine political solutions desperately needed to meet the challenges facing the region. The restive, youthful population, having been so abruptly rebuked and persecuted over their democratic protests, would likely not engage in the same forms of peaceful dissent next time.

THE WAY FORWARD

The vagaries of oil markets, as well as shifting geopolitical considerations, have made predictions regarding the future of MENA erratic at best. Much remains unclear in the attempts of the ruling elites to diversify. In the post-oil era, the need to integrate the cost of environmental degradation into economic-development decisions has never been more urgent.⁷⁹

For now, the post-oil era has not yet fully begun, even as talk of investing in new technologies, tourism, healthcare and education takes place. In addition, the most oil-rich countries are caught in a region-wide security dilemma, fueled by sectarianism, proxy wars, and zero-sum political considerations, causing them to “remain both heavily militarized and highly insecure for the foreseeable future.”⁸⁰ Given the centrality of oil to the region’s political economies, the quality and structure of the post-oil era remains a political conundrum.⁸¹

For labor-abundant countries, such as Egypt, Iran, Iraq, Morocco and Syria, both trade and foreign direct investment (FDI) constitute a more realistic vision for the foreseeable future. ⁸²The oil-rich countries are likely to cut water and energy subsidies and introduce a 5 percent value-added tax. Ultimately, the most daunting challenge facing the region remains this: How will it participate in the emerging global division of labor? Depressingly, no one seems to have the answer, though some observers have suggested that further win-win deals might be struck within intraregional trade and linkages.⁸³

Absent such arrangements and the will to initiate political and economic reforms, the task of creating a propitious business and employment environment will be confounded by sectarian identity politics and unresolved local rivalries and conflicts. Moving beyond such divisive issues is no mean feat, but imagining a future for MENA without oil and planning ahead for its political and economic stabilization have never been more pressing. A shift in attitudes among younger Arabs is not enough. What is required is a shift in the attitudes and values of those already in charge. That realization is significantly correlated with economic and structural reform.

 

¹Melani Commett and Ishac Diwan, “The Political Economy of Development in the Middle East,” in The Middle East, 14th edition, ed. Ellen Lust (CQ Press, 2017), 106-161; 153-154.
²Sean L. Yom, “Introduction: The Middle East and North Africa in Comparative Perspective,” in The Government and Politics of the Middle East and North Africa, eds. Mark Gasiorowski and Sean L. Yom (Westview Press, 2017), 1-43; see 31.
³Mehran Kamrava, Troubled Waters: Insecurity in the Persian Gulf (Cornell University Press, 2018), 148.
⁴ Mehran Kamrava, Troubled Waters: Insecurity in the Persian Gulf, 122.
⁵Kristian Coates Ulrichsen, Insecure Gulf: The End of Certainty and the Transition to the Post-Oil Era (Columbia University Press, 2011), 1.
⁶Mehran Kamrava, The Modern Middle East: A Political History Since the First World War, 3rd Edition (University of California Press, 2013), 397-400.
⁷ Michael Mason, “Climate Change, Environmental Degradation and Renewable Energy,” Routledge Handbook of Mediterranean Politics, eds. Richard Gillespie and Frédéric Volpi (Routledge, 2018), 268-278; see 273.
⁸Ibid., 273.
⁹Ibid., 276.
¹⁰Ibid., 277.
¹¹Valentine M. Moghadam and Tabitha Decker, “Social Change in the Middle East,” in The Middle East, 14th edition, ed. Ellen Lust (CQ Press, 2017), 74-105; see 80-83.
¹²Ibid., 86.
¹³ Ibid., 86.
¹⁴Ibid., 86-87; for the MENA population in 2016, see the World Bank data available at https://tradingeconomics.com/middle-east-and-north-africa/population-to…, accessed on November 6, 2018.
¹⁵Sean L. Yom, 36.
¹⁶Ibid.
¹⁷Luay Al-Khatteeb, “Gulf Oil Economies Must Wake Up or Face Decades of Decline,” Brookings, August 14, 2015, https://www.brookings.edu/opinions/gulf-oil-economies-must-wake-up-or-f…, accessed on November 6, 2018.
¹⁸ Sean L. Yom, 38.
¹⁹Valentine M. Moghadam and Tabitha Decker, 97.
²⁰Sean L. Yom, 38. ²¹Robin Wright, Rock the Casbah: Rage and Rebellion Across the Islamic World (Simon & Schuster, 2012), 155.
²²Marta Antonelli, Francesco Laio, and Stefania Tamea, “Water Resources, Food Security and the Role of Virtual Water Trade in the MENA Region,” in Environmental Change and Human Security in Africa and the Middle East, eds. Mohamed Behnassi and Katriona McGlade Switzerland (Springer International Publishing, 2017) 199-217; see 200-202.
²³Ibid., 203.
²⁴Mahmood Monshipouri, “Stemming the Rising Tide: The Future of Water Conflicts in the MENA Region,” Georgetown Journal of International Affairs, April, 2015, http://journal.georgetown.edu/stemming-the-rising-tide-the-future-of-wa…, accessed on November 6, 2018.
²⁵Mehran Kamrava, The Modern Middle East, 400.
²⁶Ibid., 401.
²⁷Mahmood Monshipouri, “Stemming the Rising Tide.”
²⁸Ozden Zeynep Oktav, “Turkey’s Water Policy in the Euphrates-Tigris Basin,” in Environmental Change and Human Security in Africa and the Middle East, eds. Mohamed Behnassi and Katriona McGlade Switzerland, (Springer International Publishing, 2017), 239-255; see 248. ²⁹Muawya Ahmed Hussein, “Impacts of Water Scarcity on the Social Welfare of Citizens in the Middle East,” Middle East Viewpoints: The Environment and the Middle East: Pathways to Sustainability, 1 (February 2011).
³⁰Richard Javad Heydarian, How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings (Zed Books, 2014), 86.
³¹Ibid., 89.
³²Ibid., 89.
³³Ibid., 91.
³⁴Zahra Babar and Mehran Kamrava, “Food Security and Food Sovereignty in the Middle East,” in Food Security in the Middle East, eds. Zahra Babar and Suzi Mirgani (Hurst & Company, 2014), 1-18; see 5.
³⁵Ray Bush, “Food Security in Egypt,” in Food Security in the Middle East, eds. Zahra Babar and Suzi Mirgani, (Hurst & Company, 2014), 89-114; see 99.
³⁶Ray Bush, 100-114.
³⁷Kristian Coates Ulrichsen, 81 and 177-182.
³⁸Gareth Porter, “A Chance for the U.S. to Distance Itself from Saudi Arabia,” Middle East Eye, October 25, 2018, https://www.middleeasteye.net/columns/time-end-ruinous-us-alliance-saud…, accessed on November 1, 2018.
³⁹Mahmood Sarioghalam, “Transparency and Good Governance: A Road Map to Job Creation and Inclusive Growth,” World Economic Forum, Regional Agenda, Accelerating Economic Reforms in the Middle East and North Africa: A Private Sector Perspective, January 2017, http://www3.weforum.org/docs/Media/AM17/Accelerating_Reforms_MENA_.pdf, accessed on November 14, 2018.
⁴⁰Marc Lynch, “The New Arab Order: Power and Violence in Today’s Middle East,” Foreign Affairs, September/October 2018, https://www.foreignaffairs.com/articles/middle-east/2018-08-13/new-arab…, accessed on November 14, 2018.
⁴¹For a highly educational and illustrative view on this topic, see Mehtap Isik, “Getting Ready for the Post-Oil Age: The Entrepreneurship as the Rising Star of Development Policies in the Gulf States,” Modern Economy, Vol. 9, No. 1, 2018, pp. 125-148.
⁴²Melani Cammett, Ishac Diwan, Alan Richards, and John Waterbury, A Political Economy of the Middle East, 4th Edition (Westview Press, 2015), 337.
⁴³Ibid., 510.
⁴⁴Ibid., 352.
⁴⁵Deloitte, Value Added Tax in the GCC: Insights by Industry, Vol. 1 (2016), 1-37, see 6, available at te/xe/Documents/tax/whitepaper/whitepaperv1/dme_tax_vat-in-the-gcc-insights-by-industry-v1.pdf, accessed on November 18, 2018.
⁴⁶Ibid., 6.
⁴⁷Ibid., 6.
⁴⁸International Monetary Fund, Economic Diversification in Oil-Exporting Arab Countries, Annual Meeting of Arab Ministers of Finance, Manama, Bahrain, April 2016, https://www.imf.org/external/np/pp/eng/2016/042916.pdf, accessed on November 18, 2018.
⁴⁹Ibid.
⁵⁰Rosamond Hutt, “Which Economies Are Most Reliant on Oil?” World Economic Forum, May 10, 2016, https://www.weforum.org/agenda/2016/05/which-economies-are-most-reliant…, accessed on November 18, 2018.
⁵¹Simone Tagliapeitra, “The Political Economy of Middle East and North Africa Oil Exporters in Times of Global Decarbonization,” Bruegel, Working Paper, 5 (2017), 1-23; see 4, http://bruegel.org/wp-content/uploads/2017/04/WP-2017_05.pdf, accessed on November 18, 2018.
⁵²Ibid.
⁵³Dana El Baltaji and Glen Carey, “Saudi Arabia Looks to Post-Oil Age in Great Takeover: QuickTake,” Washington Post, November 9, 2017, https://www.washingtonpost.com/business/saudi-arabia-looks-to-post-oil-…, accessed on November 4, 2018.
⁵⁴David Hobbs, “How Saudi Arabia Can Become a Post-oil Economy,” World Economic Forum, May 19, 2017, https://www.weforum.org/agenda/2017/05/saudi-arabia-post-oil-economy-da…, accessed on November 5, 2018.
⁵⁵Ali Asghar Pourezzat et al., “Scenario Planning and Futurology of the Persian Gulf Post-Oil Economy,” Foresight 13, no. 6 (2011): 18-33, see 21.
⁶⁵Ibid., 22-24.
⁵⁷ Mehtap Isik, “Getting Ready for the Post-Oil Age: The Entrepreneurship as the Rising Star of Development Policies in the Gulf States,” Modern Economy 9, no. 1 (2018): 125-148, see 145-146.
⁵⁸Ali Asghar Pourezzat et al., “Scenario Planning and Futurology of the Persian Gulf Post-Oil Economy,” 30-31.
⁵⁹ Ibid., 25.
⁶⁰Fawaz A. Gerges, Making the Arab World: Nasser, Qutb, and the Clash That Shaped the Middle East (Princeton University Press, 2018), 399.
⁶¹Ibid., 395-401.
⁶²Ibid., 400.
⁶³ Ibid., 401.
⁶⁴Ibid., 401.
⁶⁵Richard Javad Heydarian, 75.
⁶⁶Mark Katz, “Radical Repression: War on Terror in Perspective,” Middle East Policy Council, https://www.mepc.org/commentary/radical-repression, accessed on November 14, 2018.
⁶⁷Murat Yetkin, “International Politics in the Post-Oil Age,” Daily News, December 16, 2017, http://www.hurriyetdailynews.com/opinion/murat-yetkin/international-pol…, accessed on November 13, 2018.
⁶⁸Melani Cammett, Ishac Diwan, Alan Richards, and John Waterbury, A Political Economy of the Middle East, 521.
⁶⁹Kristian Coates Ulrichsen, 58-59.
⁷⁰ Samuel Willner, “The Environmental Challenges Facing the Middle East,” Jerusalem Post, February 10, 2013, https://www.jpost.com/Blogs/From-Green-Finland-to-Yellow-Arava/The-Envi…, accessed on November 6, 2018.
⁷¹Robert F. Worth, “Can Yemen Survive Saudi Arabia’s War?” New York Time Magazine, November 4, 2018, 48-57, 69; see 50.
⁷²Ibid., 51.
⁷³ Vali R. Nasr, “A Saudi Murder Becomes a Gift to Iran,” New York Times, November 12 2018, https://www.nytimes.com/2018/11/12/opinion/saudi-murder-jamal-khashoggi…, accessed on November 12, 2018.
⁷⁴Veronica Stracqualursi, “Trump: Turkish Cleric Fethullah Gulen ‘Not Under Consideration’ for Extradition ‘at This Point,’” CNN, November 17, 2018, https://www.cnn.com/2018/11/17/politics/trump-fethullah-gulen-turkey/in…, accessed on November 18, 2018.
⁷⁵Marc Lynch, “The New Arab Order.”
⁷⁶ Sean Burns, Revolts and the Military in the Arab Spring: Popular Uprisings and the Politics of Repression (I.B. Tauris, 2018), 47-49.
⁷⁷ Ibid., 49.
⁷⁸Ibid., 49.
⁷⁹Maria Sarraf, “Assessing the Costs of Environmental Degradation in the Middle East and North Africa Region,” The World Bank: Environment & Strategy, 9 (April 2004), http://documents.worldbank.org/curated/en/780231468774275451/pdf/298630…, accessed on November 8, 2018.
⁸⁰ Ibid., 8-9.
⁸¹Ibid., 148.
⁸²Melani Cammett, Ishac Diwan, Alan Richards, and John Waterbury, A Political Economy of the Middle East, 510.
⁸³Ibid., 512.