Changes in the Middle East's oil-producing countries: The use of oil dollars is not easy

The turbulent political situation that began in ***, Egypt and other countries actually caused the cold sweat in the oil-producing countries of the Middle East and North Africa. However, by increasing public spending, improving welfare benefits, and creating jobs, these oil-producing countries have not only been spared chaos, but the soaring international oil prices have once again brought rolling sources to the Middle East oil producers.

However, in the long run, even if the Middle East and North Africa’s oil-producing countries lying atop oil “black gold” can escape this catastrophe, they will not be able to sit back and relax, but still face changes in a single economic structure, create jobs, and create sustainable tolerance. Sexual growth, strengthening the management of the nation’s wealth, and meeting the political demands of the people and other challenges.

The easier it is for oil wealth to come, the easier it will be to increase the inertia of the reform of the oil-producing countries in the Middle East and North Africa. This is like warm boiled frogs. If you have only been satisfied with using the “oil dollar” to cool domestic grievances, then when one day the country can no longer tolerate the growing domestic dissatisfaction, turmoil will inevitably occur.

Because of the "chaotic" blessing?

Although this turbulence has exacerbated the tensions in the Middle East and North Africa, it has actually brought a "windfall" to the oil producing countries in the Middle East.

In February of this year, the turbulent trend was transmitted to Libya, the OPEC member nation. The price of Brent crude oil in the North Sea exceeded the threshold of US$100/barrel for the first time after the financial crisis, and then climbed to a high of US$120/barrel. Throughout 2010, international oil prices only oscillated in the range of 80 to 90 US dollars per barrel.

In order to prevent the turmoil from spreading to the country, Saudi King Abdullah, who has been abroad for several months to treat the disease, returned to the country in advance and asked the Saudi government twice to launch a series of policies to stabilize the domestic economy and social situation. The total cost is as high as 385 billion miles. Yal (about 103 billion U.S. dollars), which includes cash grants, housing construction, housing and food subsidies, tuition guarantees for overseas students, raising the minimum wage of civil servants, and unemployment benefits for the first time, trying to build money A wall that resists external turmoil. This move obviously worked.

The International Monetary Union (IMF) predicts that the economy of the Gulf Cooperation Council (GCC) countries will perform well in 2011 (except for Bahrain, which has already occurred), due to rising oil prices and expanding public spending. ), economic growth will reach 7.8%, of which Qatar's growth may even reach 20%.

The IMF also pointed out that the performance of the non-oil sector of the GCC countries is also very eye-catching, thanks to the economic diversification strategies implemented by these countries, including amendments to the foreign direct investment law, the initiation of cooperation between the public sector and the private sector, and the encouragement of joint ventures. . The purpose of these measures is to expand the tax base and stimulate employment, but the unemployment rate in some countries, especially young people, is relatively high, and Saudi Arabia is no exception.

Huge amount of oil wealth has also brought a large amount of fiscal surplus to Middle East oil-producing countries. The IMF expects that the fiscal and recurring project surpluses of the GCC countries in 2011 will reach approximately US$304 billion. Rising oil prices continue to improve the financial status of oil-producing countries in the Middle East, but in fact it also masks the problems of non-oil industry development. If we look at the ratio of the non-oil sector's revenue to the non-oil sector's GDP, the situation in Saudi Arabia, Kuwait and Oman is not as good as before.

Middle East and North Africa ** Warning

The cause of this political turmoil in the Middle East and North Africa is complicated. When explaining the reasons for the current **, Zoebir, a professor of geopolitics and international management at the French Marseille School of Business, emphasized the factors of high unemployment and an increase in the gap between the rich and the poor. He believes that almost all Arab countries are faced with some common problems, namely, corruption, the country’s wealth being invaded, the disparity between the rich and the poor, the increase in food prices and unemployment, the lack of popular support from the government, and especially the lack of social freedom for young people. The political appeal is not reflected.

These problems can all be seen as the result of neo-liberalism. Zubisi explained in an interview with a reporter from the First Financial Daily that “it is neo-liberalism that has led to Middle Eastern countries producing a comprador middle class. The interests of this class are linked to the interests of foreign trade or some non-productive industries, and these industries hardly create jobs."

Wu Bingbing, associate professor of the Arabic Department of Peking University, believes that the liberalization of Egypt under the support of the IMF is based on the premise of privatizing public companies and focusing on the financial sector, communications, and the Internet. “But these industries are targeted at relatively high-end people and can absorb There is very little employment, but on the contrary, the labor-intensive industries represented by the textile industry are shrinking, resulting in a large number of workers unemployed."

From this perspective, high unemployment rate and high inflation rate are inherent risks in the economic development of the Middle East and North Africa countries. The financial crisis has exacerbated the degree of these risks, and the rise in food prices has become the fuse of the ** outbreak.

In countries that broke out this year, except Libya, other countries are not major oil producers. When major oil-producing countries in the Middle East, such as Saudi Arabia and Qatar, emerged from the crisis in their home countries, they responded to the public’s dissatisfaction through large-scale benefit policies. However, Zu Bifhu believes that even if the current Huimin measure works, it is only temporary, because these countries cannot always buy money through people’s hearts.

In Zu Bihe's view, the major oil-producing countries in the Middle East spending money to buy people’s hearts is not an economic act, nor is it rational. “The families that hold power often do not distinguish between national wealth and personal wealth. They have not learned a lot of oil interests and have not Equally distributed to the people. Buying people's hearts with money is only temporary. What these countries want to do is create a better environment for economic development and employment instead of importing luxury goods with oil wealth."

The road to economic diversification

In fact, for a long time, economic diversification has always been the economic development strategy of the oil-producing countries in the Middle East and North Africa. Yang Guang, director of the Chinese Academy of Social Sciences’ West Asia Institute of African Studies, said in an interview with this reporter that in the past 30 years or so, this strategy has achieved certain results. Despite some detours, such as Saudi Arabia's development of wheat cultivation under conditions of severely adverse natural conditions, these countries still develop new industrial sectors in accordance with their national conditions and gradually change the economic structure that relies entirely on crude oil exports. Yang Guang believes that these advances are worthy of recognition. In the context of the new round of high oil prices, the strategy of economic diversification in oil-producing countries in the Middle East will pay more attention to exerting comparative advantages. Natural gas development, goods re-export trade, warehousing, finance and service industries will Become its key development industry.

Unlike Saudi Arabia, countries such as UAE, Qatar, Kuwait, and Bahrain have a small area and a small population. They do not have the conditions and comparative advantages for comprehensive industrial development. However, these countries are located at the shipping hub between Europe, Asia, and Africa. In the development of shipping and financial services, there is a natural geographical advantage. “For example, Bahrain has vigorously developed its offshore banking industry. In 2004, the output value of the banking industry and other service industries accounted for 60% of the GDP, and became a pillar industry. Qatar’s The opportunity of the Asian Games in 2006, large-scale expansion of the airport, trying to become the Middle East's aviation transit center." Yang Guang said.

How to spend "oil dollar"?

The continuous rise in international oil prices has brought a large amount of surplus funds to the oil-producing countries in the Gulf. The specific performance is a huge surplus of the current account of international payments. "After meeting domestic investment and consumer demand, there is still a large amount of surplus oil revenue. This part of the funds is what people commonly call "oil dollars." Yang Guang said. According to statistics, from 2001 to 2005, Saudi Arabia’s current account surplus increased from 9.5 billion U.S. dollars to 84.2 billion U.S. dollars.

Against this background, the oil-producing countries in the Middle East have also established “sovereign wealth” to specifically manage the “oil dollar”. According to data from the London International Financial Services Agency (IFSL) in March 2009, the assets under global sovereign wealth management in 2008 were as high as 3.9 trillion U.S. dollars, of which the sovereign wealth of the Middle East oil-producing countries accounted for 45%. According to data from the US Institute of Sovereign Wealth** in 2009, as of 2008, the assets managed by the Abu Dhabi Investment Authority and the Saudi Arabian Monetary Authority were US$ 627 billion and US$ 431 billion, respectively, making it the world’s two largest sovereign wealth. **.

How to manage the "oil dollar" has become an important perspective for people concerned about the economic development in the Middle East.

According to Yang Guang, the “oil dollar” of the early Gulf oil-producing countries was used for foreign investment mainly in the form of foreign bank deposits, holding foreign government or corporate creditor’s rights, and equity investment. At present, the Saudi Arabian Monetary Authority's official investment strategy is to invest in low-risk assets such as sovereign debt instruments. The investment objective of the Abu Dhabi Investment Authority is to obtain long-term, sustainable benefits and its asset allocation is more diversified. Yang Guang believes that overseas assets represent the participation of the Gulf oil-producing countries in the international financial industry and other industries, and are therefore an important manifestation of the diversification of the industrial structure of the oil producing countries in the Gulf.

Judging from the information available so far, the sovereign wealth of the oil-producing countries in the Gulf has penetrated into every corner of the world. Qatar’s sovereign wealth ** holds a 6.7% stake in British bank giant Barclays, and the London Stock Exchange Group About 15% of the shares and about 6.2% of shares of Credit Suisse. The Kuwait Investment Authority invested US$750 million in US asset management giant BlackRock in 2009. The Alba investment company of Abu Dhabi International Petroleum Investment Company is the largest shareholder of German manufacturer Dalem.

Future risks and challenges

With the advent of the era of high oil prices, Yang Guang believes that the oil producing countries in the Middle East once again ushered in a golden period of capital accumulation. However, the dysentery of these countries with a single economic structure has not yet been completely eliminated, and it also faces a greater challenge. How to meet the political aspirations of the domestic people.

Although international oil prices fell below US$40/barrel after the financial crisis, this year, under the influence of the turmoil in the Middle East and North Africa, they quickly broke the US$100/barrel mark, so that “roller coaster”-style oil prices fluctuate to give oil production to the Middle East. The economic stability brought about great uncertainty. Compared with the period of low oil prices at the end of the last century, the challenge facing the oil-producing countries in the Middle East is how to deal with the fluctuation of international oil prices. Yang Guang believes that for a long time, the economic status of Middle East oil-producing countries is still exposed to the risk of international oil market fluctuations.

In addition, Yang Guang also believes that the restrictive foreign investment policies implemented by the countries of Saudi Arabia and Kuwait in the upper reaches of the oil industry are not conducive to giving full play to the low-cost advantages of oil development in such countries, and may even lead to the flow of international oil funds and technology to emerging oil production and The exporting country eventually led to a reduction of its share in the international oil market and its influence on international oil prices declined. In addition, Yang Guang believes that “there are still many non-strategic industries in the Gulf countries that do not allow foreign direct investment to enter. With the globalization of the economy and increasing international competition, excessive restrictions on foreign direct investment are actually It can only restrict the pace of economic development and diversification of the economic structure."

With the rise of the middle class, the dissatisfaction with the monarchy in the oil-producing countries in the Middle East has become more and more severe. The political turmoil in the Middle East and North Africa has brought a huge psychological impact on the nationals of these countries. The Huimin measure may temporarily ease public dissatisfaction, but if the people’s political appeals are not met for a long time, the Middle East oil-producing countries will still face Huge political risk.

Wu Bingbing thinks that for the oil-producing countries in the Middle East, what the people most need now is the right of political participation in the future fate of the country. “The elite politics of these countries is basically out of touch with ordinary people. The major feature of the turmoil in the Middle East and North Africa is the people. Not only money, but also to live with dignity."

Wang Lockao, director of the Center for Middle East Studies at the Institute of International Relations at Peking University, also believes that authoritarian rule is currently unpopular in the Arab world. The risks faced by Middle Eastern countries are mainly from the political system, but he also pointed out that there have been some positive signals. For example, Qatar's Amir (head of state) Hamad promised on November 1 that Qatar will hold the first parliamentary election in history in the second half of 2013.

In the era of declining conventional oil and gas resources, Middle East countries with superior oil production conditions can still enjoy the dividends from oil. The advent of a high oil price era will also give more time to its economic restructuring, but this time the Middle East and North Africa The turmoil has sounded the alarm for the Middle East oil producer. How to make oil wealth benefit the people rather than only in the hands of kings and nobles. How to match the development level of the political system with the wealth of the country is the real challenge facing the Middle East countries in the future.