The Oasis Scenario - Article Example

Student’s Name Instructor’s Name Course Date The Oasis Scenario Introduction The Oasis scenario presents a case similar to the oasis found in the midst of a desert. The oasis turns out to be the most important asset for the travelers in the desert since it provides cool water and a resting environment for the travelers. Apparently, the desert environment characterized by intense heat and sand surrounds the oasis. Based on the Oasis scenario, it is proper to regard the UAE and other GCC nations as an oasis of stability in a region that presents the greatest likelihood of political instability. The scenario also describes the regional instability challenge that poses significant risks to the continued development of the UAE. However, it is evident that the UAE has been able to reform its institutions and yield the necessary stability for its development. The UAE; just like other GCC countries has endeavored to develop strong identities by coordinating economic and diplomatic policies by using a strong internal market and technocratic governance. The paper presents the Oasis scenario in three parts. The first part provides an analysis of the current scenario and trends. The second part identifies the potential threats impeding the sustainability of the current model. Finally, the paper provides appropriate recommendations for the policy makers. The domestic energy crisis is one of the main challenges that the UAE has encountered from the onset of the 22nd century. The crisis emanates from the increasing demand of energy amidst the lower than proportionate increase in generation of energy (Smeets & Bayar 10). Overreliance on oil and gas resources has strained the existing oil resources since the country also depends on oil and gas exports for its revenue utilized in economic development. The energy crisis has created a significant challenge to policy makers thereby requiring them to diversify the energy portfolio especially in the generation of alternative energy. It is also imperative for policy makers to embrace less energy-intensive technologies such as wind and solar. Policy makers understand that the increasing demand for desalinated water and electricity has been responsible for the domestic energy crisis between 2007 and 2012. Despite the numerous efforts implemented by the government to address the challenge, the country has not addressed the issue adequately. By 2008, salaries generated by the private sector accounted for a mere 11% of the UAE’s GDP (Herton 183). It was also evident that foreign employment constituted the greatest percentage of the private sector employment. The result was a necessity for investment into the private sector to stimulate economic development. Between 2007 and 2012, the UAE has endeavored to transform the economy into a self-sustaining economy driven by its stable market (WEF 9). Some of the strategies that the UAE Government has implemented towards attaining the objective include reforming the labor market, the education system and the economic policy. The increase in foreign direct investment (FDI) as a result of the elimination of investment barriers also provides substantial evidence towards the decision of the UAE Government to create a robust and industrious private sector. In 2005, the country realized a record US $ 10 billion in direct FDI that accounted for 34% of the total foreign capital flow into the country (UAE Interact 76). The UAE is also an oasis of inward investment in the Arab World due to the fact that it is the leading country in the region in terms of the attractiveness to inward investment. The UAE considers the private sector comprising of both local and foreign investment to be the primary engine behind its sustained growth. FDI has also transformed the nation into an oasis of knowledge in the region following the influx of many foreign investors that have substantial .expertise in the various development areas. Foreign investors have played a significant role in transferring knowledge and expertise in professional areas that do not fall within the core competencies of the country (Ravens 137). FDI has also created new market opportunities by creating employment and establishing new business networks in the high value-added and knowledge intensive sectors. The country has plunged in an oil crisis following the excessive dependence on oil as the primary source of energy for its rising energy demand. The 2013 to 2020 period has continued to witness the impacts of the domestic energy crisis. In the next 40 to 70 years, the country will deplete its existing oil and gas resources. However, government investment in the generation of renewable energy will be capable of serving only half of the nation’s energy demand by 2020. The failure of the UAE Government to increase its investment in renewable energy implies that the nation may be unable to meet its energy demand upon the depletion of the existing non-renewable oil and gas reserves (Damen 1). The challenge on the policy makers will be increasing investment in the renewable energy sector. The installation of wind turbines into the rising number of skyscrapers is a probable The UAE also faces the challenge of plunging oil prices following the sharp falling of global oil prices in the towards the end of 2014 (Chen 155). Prior to the plunge in oil prices, the UAE just like other nations had witnessed a period of stability. 2015 also recorded low oil prices with the country anticipating marginal price increments in 2016. As a result, policy makers should opt for alternative sources of revenue rather than depending on oil and gas resources. It is apparent that the future of economic sustainability and development for the UAE revolves around its ability to create alternative sources of revenue that do not have any correlation with the oil and gas sectors. The success of the nation in developing alternative sources of income for the future are evident from the fact that the country has sustained an economic growth rate of at least 6%. Some of the alternative sources of revenue include increasing the contribution of the service sector to the development of the economy. The UAE considers the diversification into renewable energy as a relief on the dependence on oil and gas. As a result, the nation can increase its export earnings following the decline in the utility of oil and gas in the provision of domestic energy (Nour 17). The announced renewable energy projects in Abu Dhabi will cost an approximate US $ 1.25 billion. The UAE also understands that terrorism impacts negatively on the political and economic stability of the region. Consequently, it has implemented appropriate measures to combat terrorism thereby continuing to place it as an oasis of stability and economic development through the massive influx of foreign investors and expertise. It is evident that the Arab World has witnessed increasing regional instability. As a result, the UAE Government understands that the situation may result in terrorism thereby having an adverse impact on its economic development goals. Over the years, the UAE Government has enhanced its counterterrorism capacity and strengthened its international ties on counterterrorism (Shihab 250). Some of the strategies encompass impeding the funding of counterterrorism and improving its border security measures. The passing of the Federal Law No. 7 in 2014 as a replacement to the Federal Law No. 1 of 2004 indicates the decision of the Government to combat terrorism. The new law has buffered the existing legislation by imposing stricter punishments including forfeitures and fines and criminalizing additional conduct to deter dissident activities and terrorism. In essence, the decision of the UAE Government to invest in alternative sources of energy to create sustainable energy sources for the economy provides evidence to the challenge of increasing demand for energy in the nation. The UAE believes that its failure to meet the domestic energy demands will become an impediment towards its ability to maintain the nation as an oasis of economic development and security in the Arab World. The UAE Government announced to increase Abu Dhabi’s renewable energy capacity by 7% before 2020 (IRENA 13). This would see the emirate generate 1500 MW of renewable energy. Currently, the solar thermal capacity in the UAE is in excess of 100MW. In 2013, the nation added the solar photovoltaic capacity by 13MW. The government is also in the process of implementing the announced and approved 28.8MW wind power project, 100 MW solar photovoltaic and 100 MW waste-to-energy projects. The projects target to provide alternative sources of energy to the UAE to avert the overreliance on energy obtained from hydrocarbons (Haouas & Almasi 4). Dubai also announced to achieve a 5% power consumption of renewable energy which is equivalent to 1000 MW before 2030. The UAE has endeavored to invest in renewable energy despite the doubts emanating from other nations regarding the success and seriousness that an oil-rich nation such as the UAE while investing in renewable energy. The UAE Government also targets to increase the effectiveness and growth of the health and tourism sectors respectively. For a long period, locals have perceived healthcare in the Gulf and the UAE to be of low quality thereby opting for health services in the developed countries such as the West. The UAE Government understands the impact of the negative perception of the locals to the healthcare standards of the region. As a result, it has endeavored to improve staffing since that is the most crucial area that requires improvement considering the fact that it can acquire medical equipment easily. The UAE Government targets to achieve a 50% increase in the number of nurses and doctors per capita (The Economist Intelligence Unit 7). Moreover, the staffing objectives of the government target to fill the skills gap characterized by a shortage of physicians in occupational medicine, histopathology and infectious diseases. However, amidst the endeavors of the UAE Government to attain a growth in the medical sector and avert incidences of medical tourism, increasing terrorism still poses a great risk to the sustainability of the growth strategies. It is imperative that the policy makers should strengthen security measures by impeding the funding of terrorism and imposing more strict punishments and fines for terrorists. By so doing, UAE will be able to increase the effectiveness of the UAE as an FDI hub thereby sustaining the development of the economy and infrastructure. Finally, the 2021 to 2030 duration is the last phase of the oasis scenario. The Government and other investors understand that the need of increasing the generation of alternative energy and combating insecurity continue to be the strategic economic milestones that are imperative for the success of the country in the future. Policy makers have endeavored to curb regional terrorism and enhance political stability through the passing of more stringent security laws and the diversification of energy resources. The UAE Government has also portrayed its dedication towards developing strategic policies that empower and support the private sector thereby reducing overreliance on the public sector. The nation will also have adequate investments in renewable to provide alternative clean energy to the market thereby reducing overdependence on oil and gas as the primary sources of energy. The nation also understands the threat posed by its dependence on foreign experts towards sustainable economic development. In a bid to address the constraint, the policy makers have implemented appropriate institutional reforms in the education sector that will revolutionize career development in the country. As a result, the country anticipates having a professional and expert domestic population that will manage its economic development investments particularly in the technological sector (De Bel-Air 3). Conclusion A strong institutional base favored by the UAE Government has resulted in a strong economic growth. Abu Dhabi and Dubai will continue to be the economic hubs of the nation by accounting for over 90% of the nation’s GDP. It is imperative that the policy makers should implement measures that address the impending challenges to sustainable economic development in the UAE. The decision makers should target to diversify the economy by recommending investments in alternative sectors rather than oil-dependent sectors enhance the productivity of the labor force by improving the skills and technical expertise of the individuals and combat terrorism in the region to attain political stability. Investment in renewable energy will also play a significant role towards reducing overreliance on oil and gas as the principal sources of energy. Works Cited Chen, Damir Cosic, et al. "Understanding the plunge in oil prices: Sources and implications." The World Bank: Washington, DC, USA (2015). Damen, Noor, et al. "Integrating Wind Turbines in Skyscrapers." (2014). De Bel-Air, Françoise. "Demography, migration, and the labour market in the UAE." (2015). Haouas, Ilham, and Almas Heshmati. "Can the UAE avoid the oil curse by economic diversification?." (2014). Hertog, Steffen. "State and Private Sector in the GCC after the Arab Uprisings." Journal of Arabian Studies 3.2 (2013): 174-195. Hertog, Steffen. "The private sector and reform in the Gulf Cooperation Council." (2013). International Renewable Energy Agency (IRENA). Renewable Energy Prospects: United Arab Emirates. “Remap 2030: A Renewable Energy Roadmap”. (2015). Nour, Samia Mohamed. 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