Saudi Succession And Future Of The Gulf Economies – OpEd

By Abdel Aziz Aluwaisheg

The smooth, seamless transition in Saudi Arabia following the death of Prince Sultan and the immediate choice of Prince Naif as crown prince has calmed speculation about instability in the region. Time and again, GCC government systems have shown remarkable resilience and cohesion, even if that disappointed doomsday pundits who preach a one-size-fits-all model of governance.

While political stability has been a permanent feature of GCC countries for generations, their economies have been quite dynamic and rapidly changing. Robust economic growth, despite global slowdown and some regional hiccups, is a reflection of this combination of dynamism and resilience.

You may have missed it, but the combined GDP of the six GCC countries passed the $1 trillion mark a while back. In 2011, it reached $1.36 trillion, or triple what it was at the beginning of the decade. That is big news in any other place in the world.

During 2011, GCC economies have grown by about 7 percent in real terms on an average, a remarkable achievement in a period of weak global recovery. It is uncertain how we would fare in 2012, but GCC accumulated surpluses should make it possible for us to continue our upward growth, fueled if necessary by extra government spending, as has been the case since the current crisis began in 2008.

Regardless of what happens in 2012, GCC economies would at least double in size before this decade is over, topping the $2 trillion mark long before 2020.

The parameters of GCC wealth are well known. About 45 percent of the world’s oil reserves are here, as well 25 percent of gas. A third of the wealth in sovereign wealth funds is owned by GCC public entities. As for GCC citizens’ personal wealth, no one knows for certain, but it is estimated to be as high as $4 trillion. We may just have the highest concentrations of millionaires in the world!

GCC connectivity with the rest of the world is a fact of life. GCC airports bustle with travelers from around the world, and labor markets are dominated by expatriates. The GCC has some of the highest penetration levels of computer, Internet and social media use in the world. Internet reaches as high as 70 percent of total population in some areas; two-thirds of them use Facebook or other social media. That is why outsiders have always marveled at the ability of “Gulfies” to cling to ancient traditions, good or bad, while adopting the most advanced technologies.

Not all is good news, however. Open any newspaper in the Gulf and you will see repeated grievances about growing unemployment especially among recent university graduates, stagnating higher education curricula, school children lagging behind in math and science, and deteriorating infrastructures. Some complain about rapid depletion of oil and water resources and the degradation of natural environment.

We have the resources and know-how to face these challenges. What is then stopping us from doing so? If I were to guess, it is the legendary bureaucratic inertia — lethargy of public servants — and the weak oversight mechanisms to keep them honest. This is one area where reform is urgent and long overdue. Let us remember that public service reform was one of the lifelong passions of the late Crown Prince Sultan. The best way to immortalize his memory is to continue that reform.

— The writer is a Saudi economist