Gulf Cooperation Council Report -- Hope for Middle East
June 6, 2007
The World Economic Forum (WEF) recently released a study on the future of the rapidly expanding countries in the Gulf Cooperation Council (GCC). Unlike much of the highly-publicized MIddle East, the GCC countries are fast-growing, have relatively high standards of living and are seeking to diversify their economies away from oil.
The report concluded that to succeed in diversification, the GCC countries would need to further educate their people to support business research and development. Currently, these countries must import foreign workers to fill this need.
However, the GCC countries have been ruled by family-based sultanates. These leaders realize that further education could be risky, since a worldly population may want to change the way their country is ruled. The leaders of the GCC must walk a fine line between modernizing their economies and creating further social disorder that could escalate into a series of regional civil wars.
What the modernization of GCC countries means:
These countries supply about 1/3 of U.S. oil. In addition, the War on Terror costs $600 billion. Finally, the oil-producing countries own up to $500 billion of U.S. capital. For these reasons, whatever happens to the balance of power in the GCC countries will immediately impact the U.S. way of life, not to mention your personal finances.
The report highlights the danger of the U.S. attacking Iranian nuclear facilities. The possible retaliation by Iran against military bases in the Middle East could spark an all-out regional conflagration and potentially lead to a global recession. This would make it nearly impossible for the GCC leaders to modernize their countries while trying to improve internal security.
The report also highlights a “best case” scenario, in which GCC countries continue their current attempts to broker peace in the Middle East while also continuing to develop their economies, as has been done in Dubai, UAE, and Qatar.
GCC Quick Facts (2006)
| Country |
GDP Growth Rate |
Oil as a % of GDP |
GDP per capita |
Literacy |
| UAE |
10.2% |
30% |
$49,700 |
77% |
| Qatar |
7.1% |
60% |
$29,400 |
89% |
| Bahrain |
7.6% |
11% |
$25,300 |
89% |
| Kuwait |
8% |
50% |
$21,600 |
84% |
| Oman |
6.6% |
N.A. |
$14,100 |
76% |
| Saudi Arabia |
5.9% |
40% |
$13,800 |
78% |
| Compare to: |
| U.S. |
3.4% |
N.A. |
$43,500 |
99% |
| EU |
2.8% |
N.A. |
$29,500 |
N.A.
|
| World |
5.1% |
N.A. |
$10,000 |
82% |
(Source: CIA World Factbook)
Action steps:
Although these countries’s economies have grown tremendously, they are still too risky to invest in directly. Instead, a well-diversified portfolio will enable you to take advantage of the growth envisioned in the peaceful scenario, and provide protection against the recession envisioned in the worst case scenario.
Source: WEF, “The GCC Countries and the World: Scenarios to 2025,” May 19, 2007
GCC Related articles:
Gulf Cooperation Council Summit, 12/13/06
Quartet, Saudi Arabia,--Mideast Peace Week , 2/7/07
UAE to convert reserves to euros , 1/3/07
Like this article? Sign up for your free email newsletter.
|
