Securing America's Future Energy

Middle East Economies and the Impact of Oil

  • Earlier this year, revolutions and civil war in the Middle East took the world by surprise, but the problems that motivated these revolutions had been apparent for many years: an inability of the countries of the Middle East to meet the economic aspirations of their people.
  • Oil and gas production alone is insufficient to meet these aspirations because employs very few people.
  • Oil producing countries thus have two options: to use their oil wealth to buy off dissenters or to invest their oil wealth to diversify their economies and create jobs.
  • So far, the countries of the Persian Gulf region have focused on buying off their people with gifts.
  • However, these countries have much greater growth potential than the rest of the Middle East; if the countries of the Persian Gulf choose to embrace economic reform, they may be able to meet the economic aspirations of their people.
  • By contrast, growth potential elsewhere in the Middle East is so limited that it seems unlikely these countries could ever deliver strong growth without fundamental changes, which may help to explain why the Arab Spring has been much more tumultuous outside the Persian Gulf.


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