GCC, Oil and the Life in the Gulf
The Middle East can be considered one of the most diverse regions in the world due to its rich culture and history that enabled the region to preserve its heritage even in the modern world. Aside from this diversity, the region is also quite known for being the largest oil producer in the globe. Each country in the Middle East is said to possess significant oil reserves, causing many to believe that due to the high demand of oil around the globe, the region is thriving economically. However, while it is true that oil is abundant in the Middle East, oil’s influence could be seen clearly in the Persian Gulf where the members of the Gulf Cooperation Council reside. Although the demand for oil varied extensively through the years, the GCC owes its high quality of life and success to the abundance of oil in the region.
Although the entire Middle Eastern region has significant percentage of the total oil reserves in the glbe, it is in the countries close to the Persian Gulf where the largest concentration of these reserves are located. According to the report of the Robert Strauss Center (2008), the total oil reserves in the Persian Gulf is estimated to be at 728 billion barrels or 55% of the world’s total oil reserves. As of 2006, the region is producing 25.4 million barrels per day or 33% of the world’s demand. Produced oil from the region is shipped around the globe, primarily to Japan, China, India, Western Europe and the United States . However, around the 1960s to the 1970s, this high production of oil in the region was not as stable as compared to its current status given the problems in the region. According to Alasfoor (2007), the Gulf region had been in a series of continous rivalries especially due to the discovery of oil reserves across the region. Although there were Gulf nations – such as Kuwait and Saudi Arabia – who wished to establish an organization that would monitor the oil production industry of the region, the issues with Iran and Iraq had prevented negotiations from pushing through.
Upon the establishment of the United Arab Emirates in 1971 and the withdrawal of the British forces in the region in 1968, negotiations had restarted for the creation of an Gulf organization to unite the region. However, since the discussions were introduced by Iran and Iraq, many did not trust their word considering their growing hegemonies in their territories. Saudi Arabia, the other proponent of the negotiation process had sought the support of Kuwait, the UAE and Qatar to establish the likes of the Arab Industries Organization, which would revive Arab armament production in Egypt. With the negotiations in Camp David halting the conflict between the Israelis and Palestinias, Saudi yet again tried to establish another group that would unite the Gulf region, this time modeling it after the European Common Market and the Arab League. The first round of the discussions to establish this political/economic Gulf organization started in 1976 in Oman and by 1981, the Gulf Cooperation Council or the Cooperation Council for the Arab States was established in Abu Dhabi and its founding members are Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and the United Arab Emirates .
In the early periods of the GCC, Hvidt (2013) stated that sector performance of the member countries was quite weak as compared to their neighbors due to their fledgling attempts to industrialize their economies. However, when the group introduced economic diversification in the 1980s for the energy sector, the GCC countries were able to develop their industries to rival their Western counterparts. Although the diversification process would ensure the countries do not depend mostly on their oil reserves, the oil sector in the GCC countries remain quite high even at the present time. In Kuwait for example, the oil sector contributes to 90% of the country’s total export earnings and 93% to their state budget, leading to a 45% allocation to their GDP. Saudi Arabia’s oil sector provides 85% earnings from its oil exports and receives half of its GDP from the oil industry. Qatar also gained most of its GDP and earnings from the oil industry with oil exports bringing in 91% earnings and 46% GDP. The other member countries – United Arab Emirates, Oman and Bahrain – also report high contributions of the oil sector to their economic boom .
As a result of this contribution of the oil industries of the six members of the GCC, the quality of life in the region has dramatically improved in comparison to their fellow Arab nations. According to Alkraiji, El-Hassan and Amin (2014), the members of the GCC had invested heavily in improving the health sector for the past 40 years to ensure that infectious diseases and other illnesses would be prevented. While there are still imperfections to how the GCC handles the ever-changing health climate in their territories, health information networks are created to ensure the people are well-informed on how they can prevent illnesses and received quality healthcare. In Saudi Arabia, the government is now allocating 1.1. billion US dollars to improve their health informatics program to improve the quality of medical education in the region to boost the medical industry in the region . The efforts have recorded positive feedback from GCC citizens and even foreigners living in the member countries. According to Gallup Poll (2014), the region continues to have a high growth progress in improving infant mortality, life expectancy and birth rates; as well as healthy well-being. Life expectancy in the GCC countries now record 72 years for both men and women in comparison to their 1980 level of 65 years. Fertility rate had also increased up to 4.8% in countries like the UAE in comparison to their 2.6% levels in the 1980s. Many citizens are also reporting high thriving rates in their countries, ensuring that their quality of life is stable and continously improving.
In recent years, oil demand in the region has decreased significantly due to the appearances of other oil producing nations. and their demand for the GCC to reduce production. This request is to ensure that the region would not monopolize the oil market and increase their respective market shares. The oil demand has also been affected by the onset of crucial issues in the international arena. Al Soomi (2015) stated that despite these calls, the GCC remains firm regarding the percentage of market shares they have over the world’s oil market. Although the oil decline will definitely affect their growth, the GCC’s economies remain strong and assures their citizens that it would not affect their development .
A country or a region’s success can be caused by many factors and for the members of the Gulf Cooperation Council, their oil production capacity and reserves played a key role to their success. Although they were not showing these types of success in the early days of the GCC, it is clear that they used their oil reserves and production capacity to develop their territories and boost their economy. Their efforts have been successful and enabled these member countries to invest on critical sectors – like education, health and society – and improve the quality of life of their citizens. While the region still experiences problems on their oil sector due to the appearance of other oil sectors and changing lifestyles, the influence of oil in the GCC remains deep even if oil demand would slowly dwindle in the future.
References
Alasfoor, R. (2007). The Gulf Cooperation Council: Its Nature and Achievements: A
Political Analysis of Regional Integration of the GCC States 1979-2004. Lund: KFS Foretagsservice AB.
Alkraiji, A., El-Hassan, O., & Amin, F. (2014). Health Informatics Opportunities and
Challenges: Preliminary Study in the Cooperation Council for the Arab States of the Gulf. Journal of Health Informatics in Developing Countries , 8 (1), 36-45.
Al Asoomi, M. (2015, March 18). GCC's stance on oil production remains vindicated.
Retrieved June 22, 2015, from Gulf News: http://gulfnews.com/business/analysis/gcc-s-stance-on-oil-production-remains-vindicated-1.1473498
Gallup Polls. (2014). Life Evaluations in the GCC: Subjective wellbeing and health.
Retrieved June 23, 2015, from Gallup: http://www.gallup.com/poll/157064/life-evaluations-gcc-subjective-wellbeing-health.aspx
Hvidt, M. (2013). Economic diversification in GCC countries: Past record and future
trends. London School of Economics and Political Science, Kuwait Programme on Development, Governance, and Globalization in the Gulf States. London: London School of Economics and Political Science.
Robert S. Strauss Center: University of Texas at Austin. (2008, August). Oil in the
Persian Gulf. Retrieved June 22, 2015, from Strait of Hormuz Resource Database: https://www.strausscenter.org/hormuz/oil-in-the-persian-gulf.html
