In What Ways Are the Economies and Political Systems of the Middle East Oil-Led - Coursework Example

THE ECONOMIES AND POLITICS OF THE MIDDLE EAST The Middle East is well known for its massive production of oil in the world. In the region, oil playsan important role in both the foreign and domestic politics of almost every county in the region. Moreover, oil is a valuable commodity that any country may possess. This is because of the fact that it can be used as fuel directly and can be a source of foreign exchange if there is enough to export. However, many countries that produces oil face a number of problems as it has brought corruption, militarization, and foreign debt1. In addition, the oil wealth has brought down the national economies and has interfered with the strategies of development. Moreover, in most countries of the Middle East just like in most countries, mineral rights belong to the state and companies that produce oil must negotiate with the state to get the rights to produce oil or the exchange for lump sum payments of the oil produced2. The Middle East economies are mostly dependent on oil exports. Moreover, before the region discovered oil, it was influenced majorly by religious conflicts and wars over the available resources. The modern Middle East region is successful because of oil and is the backbone of the western economies. By 2011, the region’s economic rate had grown to 5.1% from 4.1% in 2010 and the changes are due to the availability of oil. In addition, high oil prices make the gulf countries to continue maintaining high market share that have negative impact on the world’s economy3. In 1960’s, the Organization of Petroleum Exporting Countries (OPEC) was formed to help governments calculate their anticipated oil easily and to gain control of oil in the region. The foundation helped its members to make substantial gains in the revenue they received from oil. In addition, the members were assisted in fighting competition in the industry. In addition, the foundation gained more membership and this includes countries in African and Latin America. The discovery of oil in the Middle East as well its consumption has had a great impact on the economic development of the region4. Before the discovery of oil, the Middle East was experiencing a deprived economy with little pastoral and agricultural economies and a small local caravan of trade. Things began to change in the first half of the 20th century where oil was discovered and oil began to be sold. Oil became a source of revenue to the rulers of Kuwait, Saudi Arabia among other countries. Moreover, the GDP of these states have increased drastically reaching a peak in the mid 1980’s. In addition, the government’s expenditure has grown as well5. Due to the large oil revenues obtained by the Middle East countries, there was a rapid economic growth. This included the development of the infrastructure, the development of hospitals and schools, the construction of new buildings, and the improvement of housing for the citizens. Moreover, the introduction of oil in the Middle East and other countries has led to the improvement of the standards of living of people. This is because they are now able to afford the basic needs of life. In addition, it has led to the development of social and living conditions and medical care. People are now doing business with the Middle East countries because they are stable and attract more business. Additionally, the tourism sector has grown, as they are now able to attract tourist by providing popular tourist destinations that are attractive. For example, Dubai has the only 7 star hotel in the world among many other attractive sites in the region. Through oil, Middle East countries like Saudi Arabia have encouraged the growth of the private sector especially in areas of natural gas exploitation, telecommunication, and power generation. The country has also attracted foreign investors who have advanced the economic development6. However, the economic modernization provides a short-term success and stable economic development this is because of its reliance on a single commodity that brings an imbalance between production and consumption. In addition, the extraction and sale of oil products is not enough for a stable economy. The Middle East countries need to depend on other sources of revenue as well as invest in the production industry that will more job positions thus reducing the rate of unemployment that is normally a beneficial factor to the economic development and success of a nation7. Moreover, new jobs will need the acquisition of new knowledge that will result in the attraction of new brains. Therefore, this will have a positive effect on the nation’s economy and economic modernization and a long-term effect of economic development. Since the introduction, utilization, and export of oil, many countries have experienced political stagnation in the region. Moreover, politics has led to the lack of a stable government that is accountable for the production of oil8. Additionally, these governments get revenues from the sale of oil thus taxing their citizens less thereby making the public will unlikely to demand for accountability as well as representation in their governments. Consequently, these governments provide their populations with genuine public goods ranging from education, health, employment, and social security among others9. Citizens value the economic and social conditions that are provided by the government and are content. Once satisfied with the welfare provision, the citizens are able to cope up the political situation in the region since they benefit from the government. The intention of the government is to provide the citizens with the social welfare so that they are able to control and gain political loyalty10. Those who disagree with the government are deprived of the citizenship therefore the ruling elites control the citizens and keep them away from politics by simply providing the welfare benefits. The Middle East countries also are lagging behind due to a political culture that is based on personal relations and ties. The political underdevelopment is brought about by the presence of authoritarianism whereby a leader is feared due to their Islamic believes. In addition, there is a perennial conflict between the Israel state and the Arab neighbors due to oil. OPEC came in to solve the Middle East problems for the sole purpose of centering policy and influence on the international oil prices11. In addition, there is heavy dependence on the Middle East oil by the western world that has maintained strategic military presence in the region. In some Middle East countries like Saudi Arabia, the dynamics of the internal political developments have made leaders remain preoccupied with the national finances as well as the massive debt incurred and other military expenditures. As the populations increase the region needs to create job opportunities for the younger population. Oil prices affect the political stability of the Middle East nations as well as the extraction and production of oil. For instance, there has been a massive increase in the cost per barrel since 201112. Therefore, the disruption of oil means that the oil prices will increase significantly. These disruptions are normally brought about by the conflicts between governments. Moreover, political unrest in the Middle East has led to instability to the energy markets. This is due to the supply disruptions and the fear of possible spread of unrest to major exporters. The governments of the region face a soft budget constraint and rely heavily on revenues generated from the domestic economy through oil exports and foreign aid. In addition, these governments find it difficult to manage the connection between the political and economic reform. Additionally, many of these governments are reluctant in reformations and when confronted by the opposition, they develop and implement policies that weaken the connection between economic restructuring and the political reforms13. In conclusion, the political and economic environments in the Middle East are majorly brought about by a shift in the international oil prices. Moreover, the revenues from oil and the exports have short-term effects on the Middle East countries. Those countries that discovered oil early in the Middle East have experienced a period of modernization where there has been some development in infrastructure, cities have become modern, and tourism has increased due to the popular and attractive sites14. However, the region needs to look for other avenues of making money other than oil only. Moreover, there is some political backwardness as the region is shaped by the nature of the economy, the religious issues and fear if the leaders who have the capability of providing the social benefits so that the citizens do not participate in active politics as well as social traditions. References Auty, R. Sustaining Development in the Mineral Economies: The Resource Curse Thesis. (Routledge, London, 1993). Auty, R. Ed. Resource Abundance and Economic Development. (Oxford University Press, Oxford, 2001). Beblawi, H. and G. Luciani. Eds. The Rentier State. (Croom Helm, New York, 1987). Chaudry, K. 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