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One of the Four Corners of the Arabian Peninsula

One of the Four Corners of the Arabian Peninsula

Despite or in spite of the far from peaceful happenings in one of the four corners of the Arabian peninsula, life carries on unperturbed elsewhere and the following is about what is happening in the opposite corner, i.e.:

One of the Four Corners of the Arabian Peninsula
Energy transition the buzzword, but a fossil future from the Gulf by ET Energy World

Energy ‘transition’ the buzzword, but a fossil future for the Gulf.

ABU DHABI, September 15, 2019  — In the vast air-conditioned halls of an Abu Dhabi conference centre, the world’s much-vaunted transition to clean energy is the buzzword in sessions of a top industry gathering.

But many executives and officials from oil-dependent Gulf states insist that while the change to renewables is essential, fossil fuels remain the future at least for the next few decades, despite the urgent need to fight climate change.

The debate has taken centre stage at this week’s World Energy Congress, with many officials calling for accelerating the process of moving to clean power sources and minimising carbon emissions.

Speakers addressed issues like the role of nuclear, hydrogen gas and other non-conventional sources of energy as a replacement for fossil fuels which currently account for over three-quarters of the world’s energy consumption.

However, delegates from oil-producing countries and particularly those in the Gulf argued that although the transition to clean energy sources must be supported, they will not be able to meet rising demand any time soon.

“For decades to come the world will still rely on oil and gas as the majority source of energy,” said the head of Abu Dhabi Oil Co. Jaber Sultan.

“About $11 trillion of investment in oil and gas is needed to keep up with current projected demand,” over the next two decades, he told the congress which was attended by representatives of 150 nations and over 400 CEOs.

Energy from increasingly competitive renewable sources has quadrupled globally in just a decade, but insatiable demand for energy particularly from developing economies saw power sector emissions rise 10 per cent, a UN report said last week. 

“All energy transitions — including this one — take decades, with many challenges along the road,” the CEO of Saudi energy giant Aramco, Amin Nasser, said at the conference.

Nasser said his country supports the growing contribution of alternatives, but criticised policies adopted by many governments that do not consider “the long-term nature of our business and the need for orderly transition”.

Addicted to oil 

Oil is still the lifeline for the Gulf states, contributing at least 70 per cent of national revenues across the region which has been cushioned by decades of immense profits from the flow of “black gold”.

Gulf nations have invested tens of billions of dollars in clean energy projects, mainly in solar and nuclear.

Dubai has launched the world’s largest solar energy project, with a price tag of $13.6 billion and the capacity to satisfy a quarter of the energy-hungry emirate’s current needs when it comes online in 2030.

But critics say the addiction to oil is a tough one to kick, particularly when supplies remain abundant and the massive investment in infrastructure necessary to switch to renewables is daunting.

“A global shift from dirty fossil fuel to renewable energy is economically, technically and technologically feasible… All that is missing is political will!” said Julien Jreissati from Greenpeace in the Middle East.

He said while the United Arab Emirates has put plans into action, “Saudi Arabia which has always made big announcements regarding their renewable energy ambitions is lagging behind as their projects and targets remain ink on paper.’

“There is no doubt that the world will leave oil behind. The only question remaining is when will this happen?”

Despite important technological advances made in the past decade, renewable energy sources still make up just around 18 per cent and nuclear adds another 6 per cent of the world’s energy mix. 

In the past decade, the adoption of wind and solar energy picked up rapidly as the production cost plummeted to levels close to that of oil and gas.

But the Abu Dhabi conference saw calls for accelerated innovation and “disruptive” technology to speed the transition as the world prepares for global energy demand to peak between 2020 and 2025, according to the World Energy Council.

Estonian President Kersti Kaljulaid said that sustainable and environmentally friendly energy practices must be aligned with national and global economic policies in order to have the required impact.

“It makes more economic sense to apply all green technologies globally, and if this happens we might go to being CO2-free energy users 5 or 10 or 20 years quicker,” she told the conference.

“I prefer that market forces, pushed by smart policymaking and legal space-setting, act quickly and save us all from the alternative.”

Related: Barkindo: Concept of what ‘peak oil’ means has shifted

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A globalised solar-powered future is wholly unrealistic

A globalised solar-powered future is wholly unrealistic

A globalised solar-powered future is wholly unrealistic – and our economy is the reason why is elaborated on by Alf Hornborg, Professor of Human Ecology at Lund University.

Over the past two centuries, millions of dedicated people – revolutionaries, activists, politicians, and theorists – have been unable to curb the disastrous and increasingly globalised trajectory of economic polarisation and ecological degradation. This is perhaps because we are utterly trapped in flawed ways of thinking about technology and economy – as the current discourse on climate change shows.

Rising greenhouse gas emissions are not just generating climate change. They are giving more and more of us climate anxiety. Doomsday scenarios are capturing the headlines at an accelerating rate. Scientists from all over the world tell us that emissions in ten years must be half of what they were ten years ago, or we face apocalypse. Schoolchildren like Greta Thunberg and activist movements like Extinction Rebellion are demanding that we panic. And rightly so. But what should we do to avoid disaster?

Most scientists, politicians, and business leaders tend to put their hope in technological progress. Regardless of ideology, there is a widespread expectation that new technologies will replace fossil fuels by harnessing renewable energy such as solar and wind. Many also trust that there will be technologies for removing carbon dioxide from the atmosphere and for “geoengineering” the Earth’s climate. The common denominator in these visions is the faith that we can save modern civilisation if we shift to new technologies. But “technology” is not a magic wand. It requires a lot of money, which means claims on labour and resources from other areas. We tend to forget this crucial fact.


Read more: Should we engineer the climate? A social scientist and natural scientist discuss


I would argue that the way we take conventional “all-purpose” money for granted is the main reason why we have not understood how advanced technologies are dependent on the appropriation of labour and resources from elsewhere. In making it possible to exchange almost anything – human time, gadgets, ecosystems, whatever – for anything else on the market, people are constantly looking for the best deals, which ultimately means promoting the lowest wages and the cheapest resources in the global South.

It is the logic of money that has created the utterly unsustainable and growth-hungry global society that exists today. To get our globalised economy to respect natural limits, we must set limits to what can be exchanged. Unfortunately, it seems increasingly probable that we shall have to experience something closer to disaster – such as a semi-global harvest failure – before we are prepared to seriously question how money and markets are currently designed.


This article is part of Conversation Insights
The Insights team generates long-form journalism derived from interdisciplinary research. The team is working with academics from different backgrounds who have been engaged in projects aimed at tackling societal and scientific challenges.


Green growth?

Take the ultimate issue we are facing: whether our modern, global, and growing economy can be powered by renewable energy. Among most champions of sustainability, such as advocates of a Green New Deal, there is an unshakeable conviction that the problem of climate change can be solved by engineers.

What generally divides ideological positions is not the faith in technology as such, but which technical solutions to choose, and whether they will require major political change. Those who remain sceptical to the promises of technology – such as advocates of radical downshifting or degrowth – tend to be marginalised from politics and the media. So far, any politician who seriously advocates degrowth is not likely to have a future in politics.

Mainstream optimism about technology is often referred to as ecomodernism. The Ecomodernist Manifesto, a concise statement of this approach published in 2015, asks us to embrace technological progress, which will give us “a good, or even great, Anthropocene”. It argues that the progress of technology has “decoupled” us from the natural world and should be allowed to continue to do so in order to allow the “rewilding” of nature. The growth of cities, industrial agriculture, and nuclear power, it claims, illustrate such decoupling. As if these phenomena did not have ecological footprints beyond their own boundaries.


Read more: An ecomodernist’s manifesto: save wildlife by embracing new tech


Meanwhile, calls for a Green New Deal have been voiced for more than a decade, but in February 2019 it took the form of a resolution to the American House of Representatives. Central to its vision is a large-scale shift to renewable energy sources and massive investments in new infrastructure. This would enable further growth of the economy, it is argued.

A globalised solar-powered future is wholly unrealistic
What will it take for us to seriously consider the roots of our problems? PicsEKa/Shutterstock

Rethinking technology

So the general consensus seems to be that the problem of climate change is just a question of replacing one energy technology with another. But a historical view reveals that the very idea of technology is inextricably intertwined with capital accumulation, unequal exchange and the idea of all-purpose money. And as such, it is not as easy to redesign as we like to think. Shifting the main energy technology is not just a matter of replacing infrastructure – it means transforming the economic world order.

In the 19th century, the industrial revolution gave us the notion that technological progress is simply human ingenuity applied to nature, and that it has nothing to do with the structure of world society. This is the mirror image of the economists’ illusion, that growth has nothing to do with nature and so does not need to reckon with natural limits. Rather than seeing that both technology and economy span the nature-society divide, engineering is thought of as dealing only with nature and economics as dealing only with society.

The steam engine, for instance, is simply considered an ingenious invention for harnessing the chemical energy of coal. I am not denying that this is the case, but steam technology in early industrial Britain was also contingent on capital accumulated on global markets. The steam-driven factories in Manchester would never have been built without the triangular Atlantic trade in slaves, raw cotton, and cotton textiles. Steam technology was not just a matter of ingenious engineering applied to nature – like all complex technology, it was also crucially dependent on global relations of exchange.

Sketch showing a steam engine designed by Boulton & Watt, England, 1784. Wikimedia Commons

This dependence of technology on global social relations is not just a matter of money. In quite a physical sense, the viability of the steam engine relied on the flows of human labour energy and other resources that had been invested in cotton fibre from South Carolina, in the US, coal from Wales and iron from Sweden. Modern technology, then, is a product of the metabolism of world society, not simply the result of uncovering “facts” of nature.

The illusion that we have suffered from since the industrial revolution is that technological change is simply a matter of engineering knowledge, regardless of the patterns of global material flows. This is particularly problematic in that it makes us blind to how such flows tend to be highly uneven.

This is not just true of the days of the British Empire. To this day, technologically advanced areas of the world are net importers of the resources that have been used as inputs in producing their technologies and other commodities, such as land, labour, materials, and energy. Technological progress and capital accumulation are two sides of the same coin. But the material asymmetries in world trade are invisible to mainstream economists, who focus exclusively on flows of money.


Read more: Decolonise science – time to end another imperial era


Ironically, this understanding of technology is not even recognised in Marxist theory, although it claims to be both materialist and committed to social justice. Marxist theory and politics tend toward what opponents refer to as a Promethean faith in technological progress. Its concern with justice focuses on the emancipation of the industrial worker, rather than on the global flows of resources that are embodied in the industrial machine.

This Marxist faith in the magic of technology occasionally takes extreme forms, as in the case of the biologist David Schwartzman, who does not hesitate to predict future human colonisation of the galaxy and Aaron Bastani, who anticipates mining asteroids. In his remarkable book Fully Automated Luxury Communism: A Manifesto, Bastani repeats a widespread claim about the cheapness of solar power that shows how deluded most of us are by the idea of technology.

Nature, he writes, “provides us with virtually free, limitless energy”. This was a frequently voiced conviction already in 1964, when the chemist Farrington Daniels proclaimed that the “most plentiful and cheapest energy is ours for the taking”. More than 50 years later, the dream persists.

The realities

Electricity globally represents about 19% of total energy use – the other major energy drains being transports and industry. In 2017, only 0.7% of global energy use derived from solar power and 1.9% from wind, while 85% relied on fossil fuels. As much as 90% of world energy use derives from fossil sources, and this share is actually increasing. So why is the long-anticipated transition to renewable energy not materialising?

One highly contested issue is the land requirements for harnessing renewable energy. Energy experts like David MacKay and Vaclav Smil have estimated that the “power density” – the watts of energy that can be harnessed per unit of land area – of renewable energy sources is so much lower than that of fossil fuels that to replace fossil with renewable energy would require vastly greater land areas for capturing energy.

In part because of this issue, visions of large-scale solar power projects have long referred to the good use to which they could put unproductive areas like the Sahara desert. But doubts about profitability have discouraged investments. A decade ago, for example, there was much talk about Desertec, a €400 billion project that crumbled as the major investors pulled out, one by one.

Today the world’s largest solar energy project is Ouarzazate Solar Power Station in Morocco. It covers about 25 square kilometres and has cost around US$9 billion to build. It is designed to provide around a million people with electricity, which means that another 35 such projects – that is, US$315 billion of investments – would be required merely to cater to the population of Morocco. We tend not to see that the enormous investments of capital needed for such massive infrastructural projects represent claims on resources elsewhere – they have huge footprints beyond our field of vision.

Also, we must consider whether solar is really carbon free. As Smil has shown for wind turbines and Storm van Leeuwen for nuclear power, the production, installation, and maintenance of any technological infrastructure remains critically dependent on fossil energy. Of course, it is easy to retort that until the transition has been made, solar panels are going to have to be produced by burning fossil fuels. But even if 100% of our electricity were renewable, it would not be able to propel global transports or cover the production of steel and cement for urban-industrial infrastructure.

And given the fact that the cheapening of solar panels in recent years to a significant extent is the result of shifting manufacture to Asia, we must ask ourselves whether European and American efforts to become sustainable should really be based on the global exploitation of low-wage labour, scarce resources and abused landscapes elsewhere.


Read more: Lithium is finite – but clean technology relies on such non-renewable resources


Collecting carbon

Solar power is not displacing fossil energy, only adding to it. And the pace of expansion of renewable energy capacity has stalled – it was about the same in 2018 as in 2017. Meanwhile, our global combustion of fossil fuels continues to rise, as do our carbon emissions. Because this trend seems unstoppable, many hope to see extensive use of technologies for capturing and removing the carbon from the emissions of power plants and factories.

Carbon Capture and Storage (CCS) remains an essential component of the 2016 Paris Agreement on climate change. But to envisage such technologies as economically accessible at a global scale is clearly unrealistic.

To collect the atoms of carbon dispersed by the global combustion of fossil fuels would be as energy-demanding and economically unfeasible as it would be to try to collect the molecules of rubber from car tires that are continuously being dispersed in the atmosphere by road friction.

The late economist Nicholas Georgescu-Roegen used this example to show that economic processes inevitably lead to entropy – that is, an increase in physical disorder and loss of productive potential. In not grasping the implications of this fact, we continue to imagine some miraculous new technology that will reverse the Law of Entropy.

Economic “value” is a cultural idea. An implication of the Law of Entropy is that productive potential in nature – the force of energy or the quality of materials – is systematically lost as value is being produced. This perspective turns our economic worldview upside down. Value is measured in money, and money shapes the way we think about value. Economists are right in that value should be defined in terms of human preferences, rather than inputs of labour or resources, but the result is that the more value we produce, the more inexpensive labour, energy and other resources are required. To curb the relentless growth of value – at the expense of the biosphere and the global poor – we must create an economy that can restrain itself.

The evils of capitalism

Much of the discussion on climate change suggests that we are on a battlefield, confronting evil people who want to obstruct our path to an ecological civilisation. But the concept of capitalism tends to mystify how we are all caught in a game defined by the logic of our own constructions – as if there was an abstract “system” and its morally despicable proponents to blame. Rather than see the very design of the money game as the real antagonist, our call to arms tends to be directed at the players who have had best luck with the dice.

I would instead argue that the ultimate obstruction is not a question of human morality but of our common faith in what Marx called “money fetishism”. We collectively delegate responsibility for our future to a mindless human invention – what Karl Polanyi called all-purpose money, the peculiar idea that anything can be exchanged for anything else. The aggregate logic of this relatively recent idea is precisely what is usually called “capitalism”. It defines the strategies of corporations, politicians, and citizens alike.

All want their money assets to grow. The logic of the global money game obviously does not provide enough incentives to invest in renewables. It generates greed, obscene and rising inequalities, violence, and environmental degradation, including climate change. But mainstream economics appears to have more faith in setting this logic free than ever. Given the way the economy is now organised, it does not see an alternative to obeying the logic of the globalised market.

It’s the rules which are the issue – not those who win. Theera Disayarat/Shutterstock.com

The only way to change the game is to redesign its most basic rules. To attribute climate change to an abstract system called capitalism – but without challenging the idea of all-purpose money – is to deny our own agency. The “system” is perpetuated every time we buy our groceries, regardless of whether we are radical activists or climate change deniers. It is difficult to identify culprits if we are all players in the same game. In agreeing to the rules, we have limited our potential collective agency. We have become the tools and servants of our own creation – all-purpose money.

Despite good intentions, it is not clear what Thunberg, Extinction Rebellion and the rest of the climate movement are demanding should be done. Like most of us, they want to stop the emissions of greenhouse gases, but seem to believe that such an energy transition is compatible with money, globalised markets, and modern civilisation.

Is our goal to overthrow “the capitalist mode of production”? If so, how do we go about doing that? Should we blame the politicians for not confronting capitalism and the inertia of all-purpose money? Or – which should follow automatically – should we blame the voters? Should we blame ourselves for not electing politicians that are sincere enough to advocate reducing our mobility and levels of consumption?

Many believe that with the right technologies we would not have to reduce our mobility or energy consumption – and that the global economy could still grow. But to me, that is an illusion. It suggests that we have not yet grasped what “technology” is. Electric cars and many other “green” devices may seem reassuring but are often revealed to be insidious strategies for displacing work and environmental loads beyond our horizon – to unhealthy, low-wage labour in mines in Congo and Inner Mongolia. They look sustainable and fair to their affluent users but perpetuate a myopic worldview that goes back to the invention of the steam engine. I have called this delusion machine fetishism.

A globalised solar-powered future is wholly unrealistic
Not the guilt free option many assume them to be. Smile Fight/Shutterstock.com

Redesigning the global money game

So the first thing we should redesign are the economic ideas that brought fossil-fueled technology into existence and continue to perpetuate it. “Capitalism” ultimately refers to the artefact or idea of all-purpose money, which most of us take for granted as being something about which we do not have a choice. But we do, and this must be recognised.

Since the 19th century, all-purpose money has obscured the unequal resource flows of colonialism by making them seem reciprocal: money has served as a veil that mystifies exploitation by representing it as fair exchange. Economists today reproduce this 19th-century mystification, using a vocabulary that has proven useless in challenging global problems of justice and sustainability. The policies designed to protect the environment and promote global justice have not curbed the insidious logic of all-purpose money – which is to increase environmental degradation as well as economic inequalities.

In order to see that all-purpose money is indeed the fundamental problem, we need to see that there are alternative ways of designing money and markets. Like the rules in a board game, they are human constructions and can, in principle, be redesigned. In order to accomplish economic “degrowth” and curb the treadmill of capital accumulation, we must transform the systemic logic of money itself.

National authorities might establish a complementary currency, alongside regular money, that is distributed as a universal basic income but that can only be used to buy goods and services that are produced within a given radius from the point of purchase. This is not “local money” in the sense of LETS or the Bristol Pound – which in effect do nothing to impede the expansion of the global market – but a genuine spanner in the wheel of globalisation. With local money you can buy goods produced on the other side of the planet, as long as you buy it in a local store. What I am suggesting is special money that can only be used to buy goods produced locally.

A globalised solar-powered future is wholly unrealistic
Locally produced goods. Alison Hancock/Shutterstock.com

This would help decrease demand for global transports – a major source of greenhouse gas emissions – while increasing local diversity and resilience and encouraging community integration. It would no longer make low wages and lax environmental legislation competitive advantages in world trade, as is currently the case.

Immunising local communities and ecosystems from the logic of globalised capital flows may be the only feasible way of creating a truly “post-capitalist” society that respects planetary boundaries and does not generate deepening global injustices.

Re-localising the bulk of the economy in this way does not mean that communities won’t need electricity, for example, to run hospitals, computers and households. But it would dismantle most of the global, fossil-fuelled infrastructure for transporting people, groceries and other commodities around the planet.

This means decoupling human subsistence from fossil energy and re-embedding humans in their landscapes and communities. In completely changing market structures of demand, such a shift would not require anyone – corporations, politicians, or citizens – to choose between fossil and solar energy, as two comparable options with different profit margins.

To return to the example of Morocco, solar power will obviously have an important role to play in generating indispensable electricity, but to imagine that it will be able to provide anything near current levels of per capita energy use in the global North is wholly unrealistic. A transition to solar energy should not simply be about replacing fossil fuels, but about reorganising the global economy.

Solar power will no doubt be a vital component of humanity’s future, but not as long as we allow the logic of the world market to make it profitable to transport essential goods halfway around the world. The current blind faith in technology will not save us. For the planet to stand any chance, the global economy must be redesigned. The problem is more fundamental than capitalism or the emphasis on growth: it is money itself, and how money is related to technology.

Climate change and the other horrors of the Anthropocene don’t just tell us to stop using fossil fuels – they tell us that globalisation itself is unsustainable.


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This article is republished from The Conversation under a Creative Commons license.

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The Conversation

Bahrain tops region for expat living

Bahrain tops region for expat living

The MENA’s Gulf area is home, though temporarily to numerous people from around the world, with nationals being a minority for decades now.  All the neighbouring countries to Bahrain rely heavily on this imported manpower to not only get things done but mainly to keep the respective economies going. Life and above all its quality aspect, therefore of the various expat communities in the different countries does, unlike in the recent past, account for much in the socio-political stratosphere of the various work environments. And, Bahrain tops region for expat living.

However, while the populations in the area are recently noticed to be somewhat slowing, especially if compared to the boom years that started around the early 2000s, there are varying differences in the communities’ growths. But that’s a different story.

Bahrain remains the best place for expatriates to work and live in the Middle East, even as it dropped to the seventh place globally from being on top of the list last year in the InterNations Expat Insider survey. 

With more than 20,000 respondents, it is one of the most extensive surveys about living and working abroad, sharing insights into expat life in 64 destinations. The survey offers in-depth information about expats’ satisfaction with the quality of life, ease of settling in, working life, personal finance, cost of living, and family life in their respective country of residence. 

Despite Bahrain losing ground in terms of working abroad and family life, expats are still generally happy with both aspects of life abroad. They also keep finding it easy to settle in this country, the survey said.  

Taiwan, Vietnam, and Portugal are the best expat destinations: all of them attract expats with their ease of settling in and good personal finances. While expats in Taiwan and Portugal are also extremely satisfied with the quality of life, those in Vietnam appreciate their great work life.  

At the other bottom of the ranking, Kuwait (64th out of 64), Italy, and Nigeria are the worst destinations for expats in 2019. While Kuwait is the country where expats find it hardest to settle in, Italy offers the worst work-life, and Nigeria the worst quality of life in the world, the study found, it said. 

After a first place in the Expat Insider survey in 2018 and 2017, Bahrain loses six places in 2019 (7thout of 64). These results may be affected by its sudden drop of 17 places in the Working Abroad Index(from 1st to 18th).  While Bahrain is still in the top 10 countries for career prospects and job satisfaction (10th), expats seem to be less satisfied with their working hours (3rd in 2018 to 27th in 2019) and their job security (5th to 19th). In fact, 62% are happy with the state of the economy, which is just about the global average (63%). Expat parents are also slightly less happy, ranking Bahrain 13th out of 36 countries in the Family LifeIndex (vs. 7th out of 50 countries in 2018). Still, more than nine in ten parents (93%) rate the friendly attitude towards families with children positively (vs. 81% globally), and expats keep having no issues with settling in in their new country (2nd): more than four in five respondents (82%) say it is easy to settle down in Bahrain (vs. 59% globally). They find it easy to make friends (68% vs. 54% globally) and to live in the country without speaking the local language (94% vs. 45% globally). 

Taiwan: Coming first out of 64 countries and territories in the Expat Insider 2019 survey, Taiwan stands out for its great quality of life (3rd place). Taiwan is rated best in the world for the affordability of healthcare, with almost nine in ten respondents (89%) satisfied with this factor (vs. 55% globally). Expats in Taiwan are also happy with the quality of medical care (92% vs. 65% globally) and their personal safety (96%vs. 81% globally). In addition to that, 78% agree that it easy to settle down there (vs. 59% globally), and88% find the locals generally friendly (vs. 68% globally). 

Vietnam: After ranking 14th out of 68 destinations in 2018, Vietnam is voted the second-best country for expats in 2019. Expats there are particularly happy with their career prospects (68% satisfied vs. 55% globally)and their jobs in general (74% satisfied vs. 64% globally). However, Vietnam is not only the highest ranking country when it comes to working abroad, it is also the best destination for personal finance(1st out of 64). In fact, 81% of expats are happy with their financial situation (vs. 64% worldwide), and75% state that their disposable household income is more than they need to cover daily costs (vs. 49%globally). 

Portugal: According to the Expat Insider 2019 survey, Portugal offers an excellent quality of life (1st worldwide) and a “relaxed lifestyle”, as a British expat highlights. It is one of the world’s best countries for leisure options (2nd): more than four in five expats (83%) are happy with the socializing and leisure activities available to them (vs. 65% globally), and almost every expat (95%) rates the climate and weather positively (vs. 61% globally). Moreover, Portugal ranks among the top 5 expat destinations where it is easy to settle in for the third year in a row (4th in 2019).

TradeArabia News Service
Gulf wealth: all that glitters is not gold

Gulf wealth: all that glitters is not gold

Gulf wealth: all that glitters is not gold

Gulf wealth: all that glitters is not gold. Little suggests that fabulously wealthy Gulf states and their Middle Eastern and North African beneficiaries have recognized what is perhaps the most important lesson of this year’s popular uprisings in Algeria and Sudan and the 2011 Arab revolts: All that glitters is not gold.

Gulf wealth: All that glitters is not gold

by James M. Dorsey, Sep 5

Saudi Arabia, the United Arab Emirates and to a lesser extent Kuwait have in the last decade invested billions of dollars in either reversing or hollowing out the revolts’ achievements in a bid to ensure that political change elsewhere in the region does not come to haunt them.

Qatar, in a counterintuitive strategy that has earned it the ire of the rulers of Saudi Arabia and the UAE, has sought to achieve the same goal by attempting to be on the right side of the region’s forces of change.

The irony is that both approaches, despite also involving huge investments at home in economic diversification, education, and healthcare, could produce the very result Gulf states seek to avoid: a region that has many of the trappings of 21st century knowledge states but that is incapable of catering to the aspirations of a youth bulge expected to annually increase the work force by a million people over the next 12 years.

UNICEF, the United Nations Children’s Fund, concluded earlier this year, that the region’s youth bulge was a double-edged sword. It could either pose a threat to regional stability or be an asset for development.

Turning the youth bulge into an asset “requires urgent and significant investment to create opportunities for meaningful learning, social engagement and work, all of which are currently limited, particularly for young women and the most vulnerable,” the UN agency said in a report entitled MENA (Middle East and North Africa) Generation 2030.

UNICEF arrived at its conclusion even though Gulf states have adopted grandiose plans that envision them becoming within a matter of a decade or two diversified, knowledge-driven economies that enact the social reforms needed to create opportunity for all segments of society.

The group’s conclusion applies as much to the wealthy Gulf states as it does to the Arab beneficiaries of their politically motivated financial largesse.

The problems with the flexing of the Gulf states’ financial muscle as well as the implementation of reform plans are multi-fold.

They relate as much to quality of the upgrading of services such as education as they are about how political intent shapes development efforts and how high domestic debt in countries like Egypt, where 27 percent of government expenditure goes to interest payments, and Lebanon, which spends 38 percent of its budget on debt servicing, benefits Gulf banks and stymies social and economic development.

Credit rating agency Fitch recently downgraded Lebanon’s credit rating to CCC from B- because of “intensifying pressure on Lebanon’s financing model and increasing risks to the government’s debt servicing capacity.”

Gulf scholar Rohan Advani notes that Gulf institutions account for most of the financial sector investment in countries like Algeria, Egypt, Jordan, Iraq, Tunisia, Libya, Syria, and Yemen.

“In Lebanon, just over 50 percent of the country’s bank assets are held by GCC-related banks, in Palestine this figure is 63 per cent, and in Jordan it is as high as 86 percent,” Mr. Advani wrote in a review of political economist Adam Hanieh’s study of Gulf finance, Money, Markets, and Monarchies.

Mr Hanieh argues that the bulk of the debt payments are to financial establishments whose major shareholders include Gulf institutions in a process in which “the Arab state…increasingly mediates the transfer of national wealth to large Gulf-related banks.”

Mr Advani warned that “indebted governments are compelled to intensify a politics of austerity, further trapping these societies in cycles of debt. Investments in social programs or infrastructural developments are often stalled. Popular movements are unable to realize their demands at the state level due to the requirements of foreign creditors and domestic capitalists. The ensuing scenario is one where alternative politics are asphyxiated and increasingly circumscribed by an atrophied status quo.”

That may well be the purpose of the exercise with economic diversification efforts in the Gulf being driven more by the need of autocracies to upgrade their autocratic style and create opportunity for a restive youth in a bid to ensure regime survival rather than by the acknowledgement of a government’s responsibility to serve the people.

The result is a flawed approach to all aspects of reform.

In Saudi Arabia, Crown Prince Mohammed bin Salman’s Vision 2030 economic and social reform plan that calls for greater private sector involvement has turned into a top down effort that emphasizes state control with the government’s Public Investment Fund (PIF) as the key player.

A combination of depressed oil prices and the recent replacement of energy minister Khalid al-Falih as chairman of the board of Aramco by PIF head Yasir al-Rumayyan, a close associate of Prince Mohammed, raises questions about the state oil company’s positioning in advance of a much-touted initial public offering.

Ellen Wald, an energy analyst and author of a history of Aramco, the kingdom’s main source of revenue, noted that at PIF Mr. Al-Rumayyan had overseen investments more geared towards speculative gains than the sustainable growth of Saudi wealth.

Ms Wald said that raised the question whether Mr Al-Rumayyan’s objective with Aramco would be to serve the company’s long-term interests or those of the PIF.

Aramco this year bought a 70 per cent stake in petrochemicals maker Saudi Basic Industries Corp for US$ 69 billion in an effort to raise funds for PIF and delay the Aramco IPO that had originally been scheduled for 2018 but has since been delayed until 2020 or 2021. The megadeal is expected to boost the oil company’s downstream growth plans.

Nonetheless, Ms Wald cautions that Mr Al-Rumayyan’s appointment “doesn’t necessarily bode well for Aramco, which is a different kind of company. It has to make stable decisions for the long term,” she said.

By the same token, UNICEF warned that poverty, violent conflict, restrictive social norms, patriarchy, rights violations and lack of safe spaces for expression and recreation were limiting opportunities as well as civic adolescent and youth engagement.

Gulf emphasis on geopolitical dominance, regime survival and return on financial investment produces short term solutions that often exacerbate conflict, produce little trickle-down effect and few prospects for long-term stability.

“As a result, adolescents and youth in MENA (the Middle East and North Africa) feel disillusioned, with girls and young women, refugees, those with disabilities and the poor being particularly marginalised and underrepresented,” the UNICEF report said.

“Youth unemployment in the region is currently the highest in the world. Education systems are failing to prepare adolescents and youth for the workplace, and markets are not generating urgently needed jobs,” the report warned.

Gulf wealth glitters but if the UNICEF report is anything to go by, it has yet to demonstrate that it can produce the gold of a development that is sustainable and benefits not only all segments of Gulf societies but also of those across the region that have become dependent on it.

Gulf wealth: all that glitters is not gold

James M. Dorsey

Written by James M. Dorsey, an award-winning journalist covering ethnic and religious conflict. He blogs using soccer as a lens on the Middle East and North Africa’s fault lines. The Turbulent World of Middle East Soccer

Dr James M. Dorsey is a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, an adjunct senior research fellow at the National University of Singapore’s Middle East Institute and co-director of the University of Wuerzburg’s Institute of Fan Culture.

A podcast version of this story is available on Soundcloud, ItunesSpotifyStitcherTuneInSpreakerPocket CastsTumblrPodbean and Castbox.

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World Energy Congress, to be held in Abu Dhabi

World Energy Congress, to be held in Abu Dhabi

The 24th World Energy Congress, to be held in Abu Dhabi next month, will see the presence of more than 15,000 attendees, including 4,000 delegates and 66 ministers. 

World Energy Congress, to be held in Abu Dhabi

15,000 professionals to attend World Energy Congress

Taking place from September 9 to 12 at Abu Dhabi National Exhibition Centre (Adnec), the prestigious event will cover an area of 35,000 sq m and will feature over 200 exhibitors, representing more than 150 countries altogether, said the UAE Organizing Committee. This year’s World Energy Congress, which will take place for the first time in the Middle East, will see more than 300 speakers among the thousands of global attendees during the four-day event. More than 80 sessions will be held during the Congress, focusing on the entire energy spectrum including oil and gas, electricity, coal, nuclear power and renewable energy, as well as transport, energy efficiency, finance, investment, consultancy and other sectors that are affected by the energy sector. It will provide an opportunity for business leaders, decision-makers and other industry professionals to discuss the trending topics of the industry as well as taking action to deliver a sustainable future through panel discussions and sessions.  At a press conference to announce the details of the congress, Faisal Al Dhahri (PR and communications director – Department of Culture and Tourism Abu Dhabi), Khalifa Al Qubaisi (acting chief commercial officer of (Adnec) and the chairperson of the International Congress and Convention Association), Dr Matar Hamed Al Neyadi (chairman of the 24th World Energy Congress) and Engineer Fatima Alfoora Alshamsi (CEO of the 24th World Energy Congress) participated. Dr Al Neyadi, Undersecretary at the UAE Ministry of Energy and Industry and chairman of the UAE Organizing Committee, said: “The World Energy Congress has gone from strength to strength with every edition. The large attendance, the diversity of exhibitors and the comprehensive conference programme for the 24th edition in Abu Dhabi signifies the importance of the Congress. “Boasting a rich history, the World Energy Congress has attracted a wide array of experts, business leaders and government officials from around the world and Abu Dhabi will be no different. “The UAE has outlined ambitious plans in transforming the energy sector including two of the largest solar generation projects in the world and we are proud that Abu Dhabi is the first city in the Middle East to stage this prestigious event, which is another feather to our cap.” The tri-annual event is now considered the ‘Davos of energy issues’, with every Congress enabling hundreds of global experts to convene, share and discuss the latest trends from around the world; it has also attracted distinguished speakers over the years. Prominent physicist and former Nobel Prize recipient, the late Albert Einstein, is among those to have shared his extensive knowledge as part of a lecture session during the Berlin Congress in 1930. Confirmed to take the stage in Abu Dhabi are Engineer Suhail Mohamed Al Mazrouei, UAE Minister of Energy and Industry, Dr Sultan Ahmed Al Jaber, UAE Minister of State and CEO of Abu Dhabi National Oil Company Group (Adnoc) and Awaidha Al Marar, chairman, Abu Dhabi Department of Energy. Also speaking are Saeed Mohammed Al Tayer, managing director and chief executive officer, Dubai Electricity and Water Authority;  Engineer Mohamed Al Hammadi, CEO, Emirates Nuclear Energy Corporation (Enec); and Musabbeh Al Kaabi, CEO, Petroleum & Petrochemicals, Mubadala Investment Company.  The World Energy Congress will also see a number of leading companies exhibit their services and products. Among those who will be offering their expertise are Emirates Water and Electricity Company, Abu Dhabi Global Markets (ADGM), Expo 2020, Federal Electricity and Water Authority (Fewa), Dubai Electricity and Water Authority (Dewa), Total, Siemens, Korea Electric Power Corporation (Kepco), Emirates Authority for Standardization and Metrology (ESMA), UAE Federal Insurance Authority and Industry and DP World. During the four days, the congress will also feature more than 30 side events including workshops and roundtables that will be hosted by various organisations. One of the notable side events to take place is the Start Up Energy Transition – 100 (SET100), which will feature the top 100 international start-ups showcasing the most innovative products and services that will address climate change and improve energy efficiency. Among other side events taking place is the World Economic Forum – Global Energy Transition and a workshop hosted by the UAE Ministry of Energy and Industry and the German Federal Ministry of Economic Affairs and Energy on how other nations can learn from German practices.  The World Energy Leaders’ Summit will see the attendance of global energy leaders while young professionals will be able to voice their opinions as part of the Future Energy Leaders’ Summit.

TradeArabia News Service

OPEC members could see profits decrease in 2019

OPEC members could see profits decrease in 2019

Which oil countries are stealing the spotlight? per Hadi Khatib who writes on August 22, 2019, that OPEC members could see profits decrease in 2019.

OPEC members could see profits decrease in 2019
  • OPEC earned about $711 billion in net oil export revenues (unadjusted for inflation) in 2018
  • Saudi Arabia accounted for the largest share of total OPEC earnings, $237 billion
  • India only imports between 4.5 and 5 million barrels per day of oil, but it is shaping up to be the biggest competitive space for producers

OPEC is still making money, despite challenges coming from every which way.

Be it falling prices, market volatility, regional insecurity, trade wars, armed conflict, talks of recession, US production, electric vehicles and renewable energy, or US Iranian sanctions, OPEC still finds a way to generate billions in revenues.

Now, mixed with current production leaders are a few new players making a splash.

OPEC net oil export revenues
 The U.S. Energy Information Administration (EIA) estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned about $711 billion in net oil export revenues (unadjusted for inflation) in 2018.

OPEC members could see profits decrease in 2019

The 2018 net oil export revenues increased by 32% from the $538 billion earned in 2017, mainly as a result of the increase in average annual crude oil prices during the year and a slight increase in OPEC net oil exports.

 Saudi Arabia accounted for the largest share of total OPEC earnings, $237 billion in 2018, representing one-third of total OPEC oil revenues.

EIA expects that OPEC net oil export revenues will decline to about $604 billion (unadjusted for inflation) in 2019, based on forecasts of global oil prices and OPEC production levels in EIA’s August 2019 Short-Term Energy Outlook (STEO), according to Hellenic Shipping News.

EIA’s forecasts that OPEC crude oil production will average 30.1 million barrels per day (BPD) in 2019, 1.8 million BPD lower than in 2018.

For 2020, OPEC revenues are expected to be $580 billion, largely as a result of lower OPEC production.

Important countries to watch for in the oil sector

Forbes lists 5 Most Important Countries To Watch For Oil Markets

5. India—Right now India only imports between 4.5 and 5 million barrels per day of oil, but it is shaping up to be the biggest competitive space for producers. 

India is the third-largest oil consumer in the world. Previously, the biggest competition ground for oil producers was for sales to China, but with 1.37 billion people, India has the potential to impact the market much like China has.

4. Saudi Arabia—This Arab Gulf nation owns the world’s most profitable (oil) company, houses the second-largest proven oil reserves in the world, and has the most spare capacity of any country. Oil from Saudi Arabia fuels much of east Asia. Aramco is also expanding its exports to India to compensate for lost Iranian oil.  

3. Russia—Russia can produce in excess of 10 million barrels per day, or one-tenth of the world’s oil production. Russia is not a member of OPEC, but as the vital piece in the OPEC and Non-OPEC Declaration of Cooperation.

Read: Global Oil Markets – OPEC vs US shale rivalry escalates

2. China—This country is the second-largest consumer of oil and is the largest oil importer in the world at around 10.64 million barrels per day. China is such an important oil consumer that any indication that economic growth in China is slowing sends oil prices tumbling.  

1.  United States –The U.S. is currently producing oil at record levels (12.3 million barrels per day according to the EIA). This is being driven by the shale oil industry. The U.S has shown its ability to impact other countries’ oil business, as it did with Iran’s exports in recent months. Presidential tweets also impact prices.

Author Hadi Khatib is a business editor with more than 15 years’ experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.

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