Can the Gcc Weather the Economic Meltdown?
Middle East Quarterly › Vol. 17 Nbr. 3, July 2010
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Summary
As the storms of economic crisis gathered throughout Europe, Asia, America, and the rest of the world in late 2007, one area alone seemed immune. By mid-July 2008, oil prices had skyrocketed to almost $150 per barrel (p/b), higher than ever before, and the Gulf Cooperation Council (GCC) states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) seemed set to benefit from a huge financial surplus. This rosy scenario was short-lived; soon enough, the wave of economic disaster sweeping the world reached the shores of the Persian Gulf, damaging the petroleum export revenues as well as the oil-related and tourism businesses. But beyond having to cope with the dramatic economic turndown, the crisis has exposed an Achilles' heel in the oil-based economies of the region. The GCC countries' traditional reliance on foreign nationals for labor as well as their subsidization of the native population through make-work "white collar" jobs seems no longer sustainable and may have disturbing short- and long-run political effects.
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Can the Gcc Weather the Economic Meltdown?
As the storms of economic crisis gathered throughout Europe, Asia, America, and the rest of the world in late 2007, one area alone seemed immune. By mid-July 2008, oil prices had skyrocketed to almost $150 per barrel (p/b), higher than ever before, and the Gulf Cooperation Council (GCC) states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) seemed set to benefit from a huge financial surplus. This rosy scenario was short-lived; soon enough, the wave of economic disaster sweeping the world reached the shores of the Persian Gulf, damaging the petroleum export revenues as well as the oil-related and tourism businesses. But beyond having to cope with the dramatic economic turndown, the crisis has exposed an Achilles' heel in the oil-based economies of the region. The GCC countries' traditional reliance on foreign nationals for labor as well as their subsidization of the native population through make-work "white collar" jobs seems no longer sustainable and may have disturbing short- and long-run political effects.
BOOM TIMEDuring the four years prior to the onset of the crisis, the economic growth rate worldwide was impressive with global gross domestic product (GDP) real growth rate amounting to 4.5 percent in 2005, 5.1 percent in 2006, and 5.2 percent in 2007. ' Those economies under the juris...See the full content of this document
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