As oil prices continue to fall to around $40
a barrel, many oil-dependent nations are seeing
their main source of profit drying up.
One particularly frightening report from the
International Monetary Fund stated that most
Middle Eastern countries could run out of
money in just five years.
But the oil-rich Middle East has spent significant
wealth on trying to find new sources of income
once the petroleum economy becomes unprofitable.
Some countries have already begun to shift
their economies away from oil production.
So, can the Middle East survive without oil?
Well, the majority of the Middle East’s
oil comes from just six countries.
Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and
the United Arab Emirates produce more than
25 million barrels a day.
But despite the region’s oil heavy focus,
the country of Bahrain has already become
their first post-oil economy.
Bahrain stands as a model for other countries,
as they’ve never had much oil to boost the
economy.
There is instead an emphasis on banking, tourism,
manufacturing, and construction.
In fact, Bahrain is a main financial center
for all the surrounding oil money, and their
success is partially due to a unique niche:
Islamic banking.
Islamic or halal banking, is simply banking
that follows sharia law, and for many religious
people in the Middle East, it is a necessity.
In particular it prevents usury, or the charging
of excessive interest for loans, which is
prohibited in the Quran.
It also does not allow investment in things
like pork, alcohol, or tobacco, as those too
are prohibited.
The demand for this sort of specific care
has led to significant financial growth for
Bahrain and other countries like the United
Arab Emirates.
Saudi Arabia, which still sees around three
quarters of their revenue from oil, has begun
to diversify the output, and works to export
minerals like aluminum and gold to eventually
replace oil.
Additionally, many Middle Eastern powers are
investing in alternative energies.
Saudi Arabia is already setting itself up
to provide solar and nuclear power to the
entire Gulf Coast.
And while all these countries are looking
for lucrative income replacement, the richest
of the rich are actually investing in other
countries.
Qatar, which has the highest GDP per capita
in the world, recently promised to invest
$15 billion dollars in Asia, with about $200
million dollars worth of property purchases
in India alone.
But since the Middle East has spent much of
the 20th century raking in oil wealth, there
is considerably worry about the future for
the youth.
As extremely high paying oil jobs transition
into a more transit, financial, and service
industry many fear that oil-funded government
programs will end.
Saudi Arabia provides free education and healthcare,
with no taxation.
So even if those rich countries are able to
jumpstart alternative revenue sources, young
residents will likely have less job security,
fewer social benefits, and they’ll have
to work much harder than the current generation.
And before a post-oil economy arrives, there’s
no guarantee that Saudi Arabia will have enough
reserves to make it there.
If you want to learn more about the potential
for Saudi Bankruptcy as a result of cheap
oil, watch this video up top.
Or to find out who exactly controls the world’s
oil, and why, check out this video below.
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