Arabian Might; the Upside of High Oil Prices? A Golden Era of Wealth, and Possibly Real Economic Reform, in the Middle East

By Power, Carla; Sawy, Nada El | Newsweek International, June 27, 2005 | Go to article overview

Arabian Might; the Upside of High Oil Prices? A Golden Era of Wealth, and Possibly Real Economic Reform, in the Middle East


Power, Carla, Sawy, Nada El, Newsweek International


Byline: Carla Power (With Nada El Sawy in Dubai)

One might think that when Libya struck oil in the '50s, its monarch would have been thrilled. "I wish it could have been water," said King Idris. "Oil makes men idle, whereas water makes them work." If that's so, the Middle East should be napping now. With benchmarks for oil rising fast, the region's economies grew 5.6 percent last year and recorded the highest per capita growth rate in a generation. Even though OPEC ministers vowed last week to boost production, markets no longer believe the group can slake global demand. The price closed Friday at $58.47 a barrel, a new record.

The result is an unexpected golden era that shows no sign of ending soon. Last year Saudi Arabia based its budget on a forecast of $19 a barrel; the average price over the year was $35, giving Riyadh the biggest surplus in Saudi history. Stock markets are recording double- and even triple-digit growth regionwide. Playing the market, jokes Saudi diplomat Jamal Khashoggi, is the new national hobby. Tourists are flocking to Dubai and Morocco. Real estate and construction are thriving from Cairo to Abu Dhabi. "Calling this a boom," says Fawaz al-Siri, a Kuwaiti public-relations man, pausing from his 14-hour day for a filet mignon, "is a massive understatement."

But King Idris was right to be wary of easy money. The oil windfall could undercut the global growth that drives demand for oil, and threatens to erode the Arab will to reform by diversifying away from oil. Three decades ago, the Arab world poured its last oil bonanza into welfare programs that created high expectations--and deep bitterness when oil prices fell and the gravy train slowed. "The boom of the '70s and '80s produced bin Ladens," says Shafeeq Ghabra, president of the American University of Kuwait. "It produced people who want to destroy their own countries. So what is the worth of money?"

The good news: this boom could be different. Across the region, flabby oil states are getting stronger. In the pages that follow, NEWSWEEK examines some of the surprising stories that have been all but drowned out by war headlines. The king of the oil states, Saudi Arabia, has been seeing steadier, stronger growth in industries other than oil. Egypt, which once inspired the Arab world to follow a disastrous socialist path, is now the region's most important model for a burgeoning private sector. Per capita incomes are rising again in both countries after a long period of decline--a hopeful sign that Arab economies may be able to stop, perhaps even reverse, the worsening of misery that helps feed terror. Arif Naqvi, CEO of Dubai-based Abraaj Capital, the region's largest private-equity group, says the Middle East hasn't experienced such a shake-up since the aftermath of World War I, when the Great Powers carved up the region into nation-states: "This time round, it's going to be economic change. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Arabian Might; the Upside of High Oil Prices? A Golden Era of Wealth, and Possibly Real Economic Reform, in the Middle East
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.