Miracles in the desert
While large oil resources and access to a cheap labor force from South Asia have helped, changes are nonetheless impressive. It is all the more remarkable when one considers that substantial natural resources often prove to be a curse, with many conflicts being caused by disputes over the right to exploit natural riches. Think about the Biafra war, Angola, and those in Congo and Darfur, and the relatively peaceful ventures of the Arabian Peninsula’s tribal societies are looking especially positive. Forty years ago, many countries of the Western side of the Persian Gulf were in a shocking state of underdevelopment. In the Sultanate of Oman, no more than two primary schools were operating. Only modest social infrastructures were available and the country lacked nearly all facilities, including a modern port, roads and electricity outside the capital area. The landscape now has changed dramatically: in its 2008 Human Development Report, the United Nations Development Program classifies Oman as a High Human Development country. Similar changes occurred in Qatar, Bahrain and the United Arab Emirates. The Dubai that is now a funky world city with Western-style entertainments was nothing more than a small trading port the size of a village. The skyscrapers, the gigantic airports and shopping malls are the visible fruits of oil-generated investments but also of the commitments of local communities headed by visionary leaders.
The limits of the public redistribution model
The miracle that took place in these countries is structurally different from the industrialization process that took place in the Southern Cone of Latin America during the first part of the 20th century and in some Asian tigers during the second half. In the Gulf countries, development has been mainly about the redistribution of vast readily-available resources to small indigenous populations: oil was flowing out, money flowing in, and the task was to provide populations with infrastructure, health and education services. Little industrial effort has taken place.
While it sounds easier than governing millions of people without resources – and in many aspects it is – social-economic transformation can take its toll on societies simply because things move too fast. It is an accomplishment to go through radical changes without the emergence of violence or religious extremism.
Now another transformation is needed. Everywhere it is about diversification. For states whose revenues are as high as 70% oil-generated, this means finding something else to do than being rentiers. There are two reasons for this. First, fossil fuels may be running out. This is the most visible reason, not necessarily the most important. While Bahrain and Oman cannot expect to live for decades on oil and gas, Abu Dhabi and Qatar are endowed with enough reserves for the next century. Probably more pressing is the explosive population growth – a youth bulge. The region's ability to integrate newcomers will determine its continuing stability: large cohorts of young men combined with unemployment are often a recipe for disaster. Fossil fuel extraction, a high margin business, is not labor intensive: it feeds people but will not keep them busy.
What to do?
The public sector, which has provided the bulk of employment opportunities, is probably already at the limit of its absorptive capacity. For meaningful prospects to be offered, alternative sources of activity must be developed by the private sector. At the risk of oversimplifying, a series of regional specializations is being put into place. Dubai seems to be moving energetically into retail, logistic and real estate industries. Abu-Dhabi, its neighbor, focuses on culture (the Louvre and Guggenheim Museums are due to open in the next few years) and sustainable development (Masdar zero carbon city). Qatar is leading on information, communication and education (it is the home of pan-Arab network Al Jazeera and hosts branches of the Cornell, Carnegie Mellon, Georgetown, Texas A&M,…). Oman has also plans in tourism and industry.
These sectoral strategies are also commonly completed by ambitious plans for research and innovation to create the material conditions on which knowledge activities can thrive. The Research Council of Oman was created in 2005; Qatar National Research Fund was established in 2006; and the United Arab Emirates created their National Research Foundation in March 2008. The jury is still out on future success. Will it work? Is the research effort going to last? Is research a luxury you can afford only when revenues are high? It’s hard to know but will, in part, depend on obtaining the quick wins necessary for securing the continued support this activity needs.
A call for a free flow of ideas
Success in innovation and economic diversification will also be a function of openness to the flow of new ideas. For millions of youth to be productive and creative, they need the required training. Their ability to absorb imported knowledge and develop local capacity requires a culture of exchange and debate. The 2003 Arab Human Development Report examined the status of Arab knowledge in terms of demand, production and dissemination, and concluded that all three were ineffectual notwithstanding the abundance of Arab human capital. The missing links were seen as “either buried in dust or smothered by ideologies, societal structures and values that inhibit critical thinking, cut Arabs off from their knowledge rich heritage and block the free flow of ideas and learning”. Recommendations focused on education, participation and inclusion as the keys to unlock the potential provided by a massive number of young men and women.
But a risk is that, more fundamentally, Gulf countries remain bound by their traditional constraints. An extreme view is the late Arab scholar Hisham Sharabi’s concept of ‘neopatriarchy’: “Material modernization, the first (surface) manifestation of social change, only served to remodel and reorganize patriarchal structures and relations and to reinforce them by giving them ‘modern’ forms and appearances”. Practically, the emerging middle class is becoming a force in economic terms but with little involvement in political spheres. Development has created a middle class that remains mainly preoccupied with materialism. As long as civil society cannot act as the main driver of reform, the transition to long-term economic success as in South Korea, Taiwan and Singapore shall remain incomplete. For Gulf leaders and societies, the future agenda is not going to be painless: a further socio-cultural transformation, coupled with a respect for the traditional approach to religious faith, will require a carefully-designed approach. Not an easy task after forty years of deep changes.
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