StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Is Oil a Blessing or a Curse for the Middle East - Essay Example

Cite this document
Summary
The author of the paper under the title "Is Oil a Blessing or a Curse for the Middle East?" will begin with the statement that many less-developed nations might wish themselves to be so resource-rich as some of the nations within the Middle East…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92.1% of users find it useful
Is Oil a Blessing or a Curse for the Middle East
Read Text Preview

Extract of sample "Is Oil a Blessing or a Curse for the Middle East"

?Introduction: Although many less-developed nations might wish themselves to be so resource rich as some of the nations within the Middle East, the reality of the matter is that nations that typically experience a high level of valuable natural resources, such as oil, ultimately suffer as a result of their existence. This irony has long been the topic of a series of governmental, sociological, economic, and policy related research projects that have sought to understand and define this unique dynamic as it exists within some of the most resource rich, but developmentally depressed nations in the world. The reality that many nations face with regards to being nearly entirely dependent upon their natural resources as the basic foundation of their economies is referred to as both “renterism” and the “Dutch disease”. The first term, renterism has to do with the fact that these nations ultimately rent out the access to their resources in exchange for direct payments for such an agreement. Similarly, the term Dutch disease is with regards to the Dutch nation’s dependence upon the revenues from the natural gas fields in the 1960’s and 1970’s. For purposes of this brief analysis, the issue of the resource curse will be viewed within the prism of seeking to understand it as it is exhibited within the nations of Saudi Arabia and Iran. These two nations have been selected due to the fact that they are both regional powers that have defined their economies around the oil wealth that they possess; albeit through slightly different means. Moreover, even though a similar economic stance has been taken with regards to a centrally planned economy in both nations, the overall levels of extreme wealth and pervasive poverty, social divisions, non-democratic forms of governance, problems with radical forms of Islam, and a host of other byproducts of the uneven economic development that oil wealth dependence portends crates a great deal of similarity between these two nations. History and Background: Prior to the discovery of oil in Saudi Arabia and Iran, both of these regions were seeking to integrate at a rather rapid rate with the rest of the world by developing their economies and seeking to industrialize. Although it is not fair to say that these nations were particularly backwards as compared to their neighbors, they exhibited a relatively low level of growth and change as compared to Western Europe and parts of Asia at that time. It can be noted that within both Iran and Saudi Arabia, there existed and much more decentralized understanding of governance and power. Although it is not the purpose of this analysis to go into a great deal of defining the means by which resource wealth encourages further levels of despotism, it should be understood that once a high level of valuable resources are located within a given region, it necessarily encourages individuals within government to more fully and completely exert their control over these resources as a means of promoting sovereignty, stability, and deriving profitability; both for themselves and for the nation in general. A byproduct of this increased level of centralization and control is necessarily the loss of specific civil liberties and freedoms. Aside from the collapse of the Ottoman Empire and redefining the post-colonial borders, the discovery of oil and natural gas resources has had the most profound impact upon the course of development, politics, war, and even radical forms of Islam. With respect to the actual discovery of oil within the Middle East, Iran was the first in 1908 (Neilberg, 2012) followed by Saudi Arabia in 1923 (Jones, 2012). Oil came to be an even more coveted resource to which all developed nations sought to procure. Accordingly, it was not abnormal to merely take over another country as a means of extracting its mineral wealth and diverting it back to the homeland. Such a model was utilized for nearly 25 years as the British extracted oil wealth from Saudi Arabia and Iran (Mainuddin, 2007). The ways in which key actors within both Iran and Saudi Arabia sought to protect their national interest and these resources differed (Chaudhry, 1997). A series of uprisings against existing forms of governance and failed regimes resulted in Iran whereas Saudi Arabia initially set out to tax petroleum companies extracting oil from their land at 50% of revenue (Vidyasagar, 2005). It was soon determined by the reader that a more equitable and reasonable approach by the Saudis was the total and complete nationalization of the oil and petroleum industries within Saudi Arabia. Moving further down the road towards integration incorporation with the new dynamics of the world economy, Saudi Arabia and Iran were both primary signatories of the 1960s OPEC agreement (BRESSER-PEREIRA, 2012). Originally, OPEC was signed in Baghdad, Iraq by the nations of Iran, Iraq, Kuwait, Venezuela, and Saudi Arabia (Boschini et al, 2013). Its ultimate goal was of course the regulation and price-fixing that these countries would agree to within such a cartel. Oil and Natural Gas – Blessing versus Curse Prior to delving into a running list of the ways in which oil wealth can be detrimental to a given economic system or nation, it should be understood that nearly every negative externality that arises from dependence upon oil exploitation is the ultimate result of the mismanagement of the wealth that is derived from it. Accordingly, one of the first realities of it equitable and imbalanced spending of money derived from oil resources is with regards to the stereotypes that exists about much of the carefree lifestyle that a small percentage of the population of these nations enjoys while the remainder live in near abject poverty (Saad-Filho, 2013). This is somewhat surprising due to the level of public works, infrastructure improvement, and development monies that it been poured into both of these nations. However, when one stops to consider the reality of how oil and natural gas resources develop a nation’s economy, this comes as little or no surprise. For instance, if one considers the situation of Saudi Arabia, rather than training their own people as oil workers and hiring them out to the nationalized oil firms that they themselves are ultimately in control of, the Saudi Arabia and government chooses instead to import workers from around the globe and pay these workers salaries that are many times greater than the average salary that a Saudi national would enjoy (Herb, 2005). As such, this is a primary exemplification of how the so-called “Dutch disease”, referenced within the introduction constricts the nation’s ability to produce its own goods and makes it ultimately reliant upon the exportation and sale of its natural resources as a means of deriving economic sustenance. Similarly, one cannot analyze and discuss the issue of resource dependence and its impacts upon an economy or nation without discussing the way in which resource dependence ultimately leads to an undiversified economy. Even though the efforts taken by nations such as Saudi Arabia and Iran have helped to build the infrastructure that is required to develop different types of industries and services within these nations, the necessity to do this is nonexistent (Beblawi, 1987). Due to the fact that the government is able to generate massive amounts of revenue on an existing cash cow, little emphasis is placed upon encouraging the development of different types of industries within these nations. Instead, what is been seen as a situation in which the governments are oftentimes focused and intent upon laying the groundwork (building the roads, acquiring the communications network, improving the health care system, and revolutionizing the educational system); as such, they are somehow hesitant to directly invest and encourage the businesses and services which could ultimately provide a degree of sustainment for the economy in the eventuality that the natural resources are finally depleted (Sayigh, 1975). Moreover, another clear issue that arises with regards to the curse of natural resources is the overall level of misdirection, misappropriation, and corruption that takes place within nations that experience at high level of natural resource dependence. With regards to the Corruption Perception Index, Saudi Arabia scores a 66 with Iran scoring a 133 (Nesbitt, 2013). To put these numbers into perspective, Saudi Arabia’s score is comparative to nations such as Niger, Kenya, and Mali whereas Iran’s score is reflective of nations such as North Korea, the Russian Federation, Turkmenistan, and Burma. Naturally, Iran’s score is much worse than Saudi Arabia’s; however, neither nation should be understood to fall within moderately uncorrupt standards (Schwartz, 2008). Combined with this level of corruption and poverty that have previously been defined and described, the reader can and should integrate with an understanding of the means by which such a situation can often foster societal discontent; oftentimes by violent Islamic extremism (McFerson, 2009). This is of course not to say that oil wealth leads to Islamic extremism; rather, the dependence upon natural resources such as oil and gas leads to a situation in which a very large number of people are disenfranchised from the runaway success that others are experiencing (Rahnema, 2008). This in turn encourages them to turn to many movements that they otherwise might not consider as a means of providing some definition and meaning to an otherwise extraordinarily difficult existence. Naturally, in addition to just poverty, literacy rates, and the overall human development index for both Iran and Saudi Arabia are extremely low and can most directly be compared to some of the least developed nations of the world (Akarue.net, 2013) Another adverse effect that oil wealth has contributed to the nations in question is with regards to the decline in regional cooperation and pan-Arabism that has resulted. Whereas such a level dependence and relationships have been born from the postcolonial era, the nations that experienced a high degree of natural resource wealth soon began to drift apart due to the fact that they felt they no longer needed such a cooperation in order to achieve strategic or regional interest. Similarly, the demographics of the nations began to shift as a result of the increasing level of wealth and development of the government reflect population growth as a function of the optimistic bubble that such wealth generated within the national consciousness. As a function of this, many of the nations with the Middle East have demographic bubbles and societies that are unevenly distributed between old and young. For instance, within the nations of Saudi Arabia and Iran, it is estimated that nearly 35 what percent of the entire population is aging between 14 to 25 years old (Nazih, 1996). Whereas it is typical for society to be comprised of approximately 15 to 20% of individuals within this age group, such an uneven representation shows that the over optimistic outlook served to create an unrealistic expectation for the means by which such societies could continue to provide for their people. This oftentimes gives way to rapid population growth, immature and unstructured political systems, and an unpredictable demographic that my demand revolution (Hilson & Maconachie, 2009). Conclusion: As a result of the preceding factors which have been analyzed, the reader can note that that curse of oil resources far outweigh the blessings. Rather than utilizing the oil and natural gas to provide a rapid and effective improvement of the economic diversity and industrial strength that a given nation can provide, the resources are almost always employed with regards to ineffective and oftentimes wasteful projects that do little to improve the abysmally low Human Development Index (HDI) and poverty that is so pervasive within such systems (Busse & Groning, 2013). Although there are several benefits that can be derived from the great wealth that oil brings, on the whole, society is at a net disadvantage because of its existence in ample reserves). As a function of the greed, corruption, lack of development with regards to the human considerations of the populations within Saudi Arabia and Iran, the reader can come to the realization that the existence of oil and natural resource wealth within these nations creates a situation in which the government and economy becomes dependent upon the quick generation and easy access to capital. As in the classic case of the child raised in the lap of luxury, these governments display a fundamental lack of concern for the development issues plaguing their own people and are of the misinformed belief that the revenues from oil and gas generation will continue to exist indefinitely; regardless of the fact that many analysts point the fact that these resources will one day be exhausted. Accordingly, rather than viewing the wealth of natural resources as a net benefit and aid to the nations in question, it should be noted that they act instead as a net detractor to both the economic and developmental integrity of the systems that have been discussed. References Akerue.net (2013) Has oil wealth been a blessing or a curse for the Middle East? | Ben West. [online] Available at: http://akerue.net/blog/academic/2010/10/has-oil-wealth-been-a-blessing-or-a-curse-for-the-middle-east/ [Accessed: 1 May 2013]. Boschini, A, Pettersson, J, & Roine, J 2013, 'The Resource Curse and its Potential Reversal', World Development, 43, pp. 19-41, Academic Search Complete, EBSCOhost, viewed 2 May 2013. BRESSER-PEREIRA, L 2012, 'A graphic explanation on how a Dutch disease without costs exporters', Political Economy, 32, 4, pp. 700-702, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Busse, M, & Groning, S 2013, 'The resource curse revisited: governance and natural resources', Public Choice, 154, 1/2, pp. 1-20, Business Source Premier, EBSCOhost, viewed 2 May 2013. Hazem Beblawi, 1987. The Rentier State (Nation, State and Integration in the Arab World, Vol 2). First Edition Edition. Routledge Kegan & Paul. Herb, Michael. “No Representation without Taxation? Rents, Development and Democracy,” Comparative Politics 37, no. 3 (2005). Hilson, G, & Maconachie, R 2009, '“GOOD GOVERNANCE” AND THE EXTRACTIVE INDUSTRIES IN SAUDI ARABIA, Mineral Processing & Extractive Metallurgy Review, 30, 1, pp. 52-100, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Jones, T 2012, 'America, Oil, and War in the Middle East', Journal Of American History, 99, 1, pp. 208-218, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Kiren Aziz Chaudhry, 1997. The Price of Wealth: Economies and Institutions in the Middle East (Cornell Studies in Political Economy). Edition. Cornell University Press. Mainuddin, RG 2007, 'POLITICAL ISLAM: UNTANGLING THE CONCEPTUAL MUDDLE', Journal Of Third World Studies, 24, 2, pp. 109-128, Academic Search Complete, EBSCOhost, viewed 2 May 2013. McFerson, HM 2009, 'Governance and Hyper-corruption in Resource-rich Countries', Third World Quarterly, 30, 8, pp. 1529-1547, Business Source Premier, EBSCOhost, viewed 2 May 2013. Nazih N. Ayubi, 1996. Over-Stating the Arab State: Politics and Society in the Middle East. Edition. I. B. Tauris. Neiberg, MS 2012, 'EUROPE'S POWDER KEG', Military History, pp. 46-52, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Nesbitt, T. '2013, ‘Job opportunities key to sustained economic development', Middle East, 442, pp. 50-54, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Rahnema, S 2008, 'Radical Islamism and Failed Developmentalism', Third World Quarterly, 29, 3, pp. 483-496, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Saad-Filho, A, & Weeks, J 2013, 'Curses, Diseases and Other Resource Confusions', Third World Quarterly, 34, 1, pp. 1-21, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Sayigh, Yusif A., 1975. Oil in Arab Developmental and Political Strategy: an Arab View. In J.D. Anthony, ed. 1975. The Middle East: Oil, Politics and Development. Washington: American Enterprise Institute for Policy Research, Ch. 2. Schwarz, Rolf (2008) “The political economy of state-formation in the Arab Middle East: Rentier states, economic reform, and democratization', Review of International Political Economy, 15: 4, 599 -621 Vidyasagar, D 2005, 'Global Minutes: Oil Purse Or Oil Curse?', Journal Of Perinatology, 25, 11, pp. 743-744, Academic Search Complete, EBSCOhost, viewed 2 May 2013. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Is Oil a Blessing or a Curse for the Middle East Essay”, n.d.)
Retrieved de https://studentshare.org/history/1476674-ypis-oil-a-blessing-or-a-curse-for-the-middle
(Is Oil a Blessing or a Curse for the Middle East Essay)
https://studentshare.org/history/1476674-ypis-oil-a-blessing-or-a-curse-for-the-middle.
“Is Oil a Blessing or a Curse for the Middle East Essay”, n.d. https://studentshare.org/history/1476674-ypis-oil-a-blessing-or-a-curse-for-the-middle.
  • Cited: 1 times

CHECK THESE SAMPLES OF Is Oil a Blessing or a Curse for the Middle East

Root Causes of Turmoil in the Middle East

This paper 'Root Causes of Turmoil in the middle east' briefly discusses the principal causes of turmoil in the middle east, namely: the interests vested by the Western superpowers in the region; the contest for territorial control, and misspecification of boundaries, and etc.... From as far back as history records, the middle east region has been beset by armed unrest and turmoil, of every possible kind – between the Arabs and Israelis on territory, between two or more Arab nations on borders, between Arab nations based on alliances in the Cold War, and even within Arab nations in the form of interracial or ethnic conflicts....
7 Pages (1750 words) Research Paper

Effects of Globalization on US National Security Strategy

The US middle east Relationship: The Foundation 11 2.... middle east in the Face or at the Heart of Globalization 20 2.... US middle east Relationship in the era of Globalization 22 2.... Selection Of Documents The electronic databases Academic Source Complete, Jstor, GoogleScholar, Primary Research, ERIC and History Abstracts  were searched using a combination of the following key terms: globalization, US, middle east, security, national security, and strategy ....
41 Pages (10250 words) Research Paper

Middle Eastern Studies

Name: Instructor: Course: Date: Middle Eastern Studies Oil has only surfaced as an important commodity for the middle east during the ebbing decades of the 19th Century and well into the 20th Century (Gelvin 248).... ?? The second revolution is particularly significant as it marked the foundations for what are now (essentially) petroleum-based economies of the middle east.... Each state in the middle east-more or less- relies on rent income.... The involvement of Western powers in the oil wealth of the middle east has entrenched historical backgrounds....
6 Pages (1500 words) Term Paper

Oil in the Middle East is a Curse More than a Blessing

he export of oil is the main source of direct revenue for the middle east nations governments taking into account their lands are desert.... The paper "Oil in the middle east is a Curse more than a Blessing" discuses budget-forming industry, whose revenues subsidize all other industries, and ensure the prosperity of Iran.... the middle east is in possession of more than 66 % of the global oil reserve and gains millions of dollars daily from exporting oil....
2 Pages (500 words) Term Paper

Origin of the Marriage Rituals, Traditions, and Practices of Jewish Weddings

381) It is also believed that "Any man who has no wife lives without joy, without blessing, and without goodness.... Studying the origin of these age-old practices yields a great deal of exposure as well as delight.... This paper seeks to unearth the roots behind many such beliefs through an analysis of the origin of the marriage rituals, traditions, practices of Jewish weddings in Orthodox communities....
18 Pages (4500 words) Research Paper

Oil and Gas - A Resource Curse

Although many less-developed nations might wish themselves to so resource rich as some of the nations within the middle east.... Although many less-developed nations might wish themselves to be so resource-rich as some of the nations within the middle east, the reality of the matter is that nations that typically experience a high level of valuable natural resources, such as oil, ultimately suffer as a result of their existence.... The following discussion, Oil and Gas - A Resource curse?...
15 Pages (3750 words) Essay

The Oil Boom Effect on the International Relations of the Middle East

This coursework "The Oil Boom Effect on the International Relations of the middle east" seeks to examine the effects of this oil boom on international relations with a bias on regional conflicts and cooperation as well as the involvement of the international superpowers in the region.... This has led to the fast making of wealth by some nations, mostly those that are oil-rich in addition to the altering of the economic and political processes, not only to the countries exporting oil but also the whole of the middle east region as a whole....
10 Pages (2500 words) Coursework

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

"In What Ways Are the Economies and Political Systems of the middle east Oil-Led" paper argues that 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.... Revenues from oil and 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 sites....
7 Pages (1750 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us