During the oil boom of the 1970s, Persian Gulf countries spent lavishly to transform their desert backwaters into shimmering modern cities, living high with the help of a huge foreign work force filling jobs citizens suddenly could afford to avoid.
Today, oil prices are at 20-year highs, but the world's largest oil producer, Saudi Arabia, is using part of the extra billions pouring in to make the kingdom run without all the imported help.
The government wants to put Saudis to work -- to ease the unemployment and the boredom that some people say leads youths into Islamic extremism -- but it will have to change attitudes that evolved out of the first spending spree.
|"In our society, men want to sit in comfortable, air-conditioned offices and order people around," said Suhaib al-Hussaini, 23, a computer engineering student.
"They don't want to go to the field and work with their own hands."
Oil-producing countries, many of which had drawn up this year's budgets based on expectations that oil prices would dip to US$19 a barrel, are instead selling their oil for US$55 a barrel and surpluses in their treasuries are piling into the billions, whether registered in riyals, dinars, dollars or euros.
During the 1970s and early 1980s, producers across the Middle East spent their oil bonanza to make life easier for their people.
In Saudi Arabia, the government built roads, hospitals, schools and airports and provided free or heavily subsidized health care and education. It began sending tens of thousands of students a year to colleges abroad, mostly in the US.
The spending spree began to wane in the mid-1980s, when oil prices fell and Arab birth rates soared.
With today's windfall, governments are spending much more cautiously, building up their foreign currency reserves and carefully weighing development projects for need. In several countries, there are calls to spend the extra cash on education, health and infrastructure or on civil servant pay raises.
Some people worry the money will be squandered.
"Even if we had all the world's oil riches, we won't see any of it because of the extent of corruption in our country," said Aidarous Nasr, an opposition lawmaker in Yemen, one of the region's poorest nations and a producer of about 400,000 barrels of oil a day.
For Saudi Arabia, which pumps 9.5 million barrels a day, foreign currency holdings grew by US$17 billion from January through the end of August. And that was before oil prices surged above US$50 a barrel.
Still, the government's only apparent extra spending has been a two-month bonus for security forces, which are involved in a major crackdown on Islamic militants, and a boost in funds for vocational training centers.
Crown Prince Abdullah has said most of the surplus will go to paying off the government's debt, which totals US$176 billion. But he also pledged to spend billions on infrastructure, education, housing and health projects as well as on loans to low-income Saudis to boost their employment prospects.
"It's pretty clear they're not going on a spending binge," said Brad Bourland, chief economist at the Saudi American Bank. "The character of what the government is doing with the unexpected oil revenues is much different than during the first oil boom."
Bourland said the rise in foreign currency reserves suggests the Saudi government is banking much of the windfall and investing in foreign securities.
The increase in spending on training young Saudis will help vocational centers and colleges nationwide increase capacity by 250 percent over the next seven years, said Saleh al-Amr, vice governor for development in the Organization for Technical Education and Vocational Training.
Omar Bafaqih and Mohammed al-Muhaidib, both technical college students, are happy to see more government aid for the vocational centers. But investing the money may be only half the battle in displacing the foreign work force that came with the last oil boom.
With escalating US-China competition and mutual distrust, the trend of supply chain “friend shoring” in the wake of the COVID-19 pandemic and the fragmentation of the world into rival geopolitical blocs, many analysts and policymakers worry the world is retreating into a new cold war — a world of trade bifurcation, protectionism and deglobalization. The world is in a new cold war, said Robin Niblett, former director of the London-based think tank Chatham House. Niblett said he sees the US and China slowly reaching a modus vivendi, but it might take time. The two great powers appear to be “reversing carefully
As China steps up a campaign to diplomatically isolate and squeeze Taiwan, it has become more imperative than ever that Taipei play a greater role internationally with the support of the democratic world. To help safeguard its autonomous status, Taiwan needs to go beyond bolstering its defenses with weapons like anti-ship and anti-aircraft missiles. With the help of its international backers, it must also expand its diplomatic footprint globally. But are Taiwan’s foreign friends willing to translate their rhetoric into action by helping Taipei carve out more international space for itself? Beating back China’s effort to turn Taiwan into an international pariah
Typhoon Krathon made landfall in southwestern Taiwan last week, bringing strong winds, heavy rain and flooding, cutting power to more than 170,000 homes and water supply to more than 400,000 homes, and leading to more than 600 injuries and four deaths. Due to the typhoon, schools and offices across the nation were ordered to close for two to four days, stirring up familiar controversies over whether local governments’ decisions to call typhoon days were appropriate. The typhoon’s center made landfall in Kaohsiung’s Siaogang District (小港) at noon on Thursday, but it weakened into a tropical depression early on Friday, and its structure
Taiwan is facing multiple economic challenges due to internal and external pressures. Internal challenges include energy transition, upgrading industries, a declining birthrate and an aging population. External challenges are technology competition between the US and China, international supply chain restructuring and global economic uncertainty. All of these issues complicate Taiwan’s economic situation. Taiwan’s reliance on fossil fuel imports not only threatens the stability of energy supply, but also goes against the global trend of carbon reduction. The government should continue to promote renewable energy sources such as wind and solar power, as well as energy storage technology, to diversify energy supply. It
RSS