OIL AND WATER

Today, with the ending, at least for the time being, of global strategic confrontation, the most important single element in the Middle East, for the outside world, is oil. Middle Eastern countries, now including the former Soviet republics in Transcaucasia and Central Asia, contain the largest proven resources of oil in the whole world, and more are being discovered all the time. But there is growing dissatisfaction with a fuel that pollutes the land, the sea and the air wherever it is used or transported and makes the world economy heavily dependent on the whims of such rulers as Hugo Chavez of Venezuela and Mahmoud Ahmadinejad of Iran. The kings and princes of Arabia are better trading partners than any of these, but continuing uncertainties about their future policies or even, in some cases, their survival make dependence on them uncomfortable.

For environmental and political as well as economic reasons, a continuous search has been in progress, first, for sources of oil other than the Middle East, and second, more important, sources of energy other than oil. In time, the advance of science and technology, which made oil first useful and then necessary, will make it obsolete, and replace it with cleaner, cheaper and more accessible sources of energy. The exploitation of natural gas may delay but will not prevent this ending. When it happens, those who depend on oil revenues will face a new and bleak reality, and the outside world will no doubt view the struggles and upheavals of the Middle East with the same calm detachment—or as some might put it, callous indifference—with which it now views the civil wars in Somalia and Liberia. Until then, the consumer countries—Europe and the Far East far more than the United States—will be anxiously dependent on whoever rules the oil wells and will have to devise and apply their policies accordingly. It will be neither a safe nor an easy task.

For the time being, oil remains the major, for some indeed the only, resource. In the oil-producing countries it provides most or all of their foreign currency earnings. Even in the Middle Eastern countries with little or no oil, there is a ripple effect, in the form of subsidies of one sort or another, labor migration, and, to a surprisingly limited extent, investment.

This overwhelming dependence on the export of irreplaceable and nonrenewable natural resources is obviously dangerous, and when these resources are exhausted or superseded, it will become catastrophic. Reserves of nonrenewable resources are already falling rapidly, and even renewable resources like water are used at unsustainably high levels. These exceed 100 percent in Israel, Jordan, the Palestine territories, Libya and virtually the whole of the Arabian peninsula. In addition, the loss from land degradation is currently estimated to cost 11. 5 billion dollars a year.

The oil states will face two crises, the first from exhaustion, the second from supersession. A few countries—Iraq, Saudi Arabia and the Transcaucasian and Central Asian republics—still have vast unexploited resources that could last into an indefinite future. The rest, notably Iran, are less well placed. In the course of the twenty-first century, they will find themselves bereft of what has become their main resource. In the Gulf states, from a global or even a regional perspective, this would be of relatively minor importance. The guest workers will return whence they came or go elsewhere; the states, with their very small populations, will return to the obscurity from which they briefly emerged. But Iran is another matter—a large area with a rapidly growing population, a powerful state supported, on the one hand, by a militant revolutionary ideology and, on the other, by an increasingly efficient machine of war. As the revolution approaches its Napoleonic or Stalinist phase, and as the oil resources of Iran approach exhaustion, the rulers of that country, whoever they may be at that time, will inevitably look toward the still vast resources of their neighbors.

The best prospect for the region would of course be a regional program of cooperation and development. The past record of the region and the character and habits of most of its present rulers make a bitter struggle much more probable.

In such a situation, those countries that have learnt to live and advance without oil revenues, such as Turkey, Jordan, Israel, Tunisia and Morocco, will be at a considerable advantage.

Figures for growth in incomes, exports, job creation, and school enrollment vary greatly in the region. Israel, with its relatively well-educated population and its high-tech industries, leads easily. It is followed by Turkey, with an upsurge of private enterprise in both domestic production and export trade. Some flourishing regional developments have even given rise to the phrase "Anatolian tigers," implying comparison with the soaring economies of East Asia. Of the Arab countries, Morocco, Tunisia and Jordan have the best records and show the greatest promise. Morocco and Tunisia have low military expenditure; that of Jordan is being reduced. All three, lacking exportable natural resources, rely heavily on human resource development. This is reflected in the figures for literacy and school enrollment, infant mortality and life expectancy. Tunisia has made notable progress in bringing education, from primary to university level, to its female population and enabling increasing numbers of women to play a significant part in public life

Most of the region lags behind other regions in exports, in private investment, in productivity, and in the efficient management of natural resources. Many have failed to improve or even maintain the already low living standards of their populations. Real exports per capita show an overall decline. This will worsen if, as some predict, oil prices remain flat or, at best, uncertain.

An even greater issue than oil—since it directly affects not just some but all the states of the region—will be water. The agriculture of the Middle East is no longer sufficient to feed its people, and the disparity will become worse. A rapidly growing population constantly requires more food. The need to house them and the consequent spread of villages and towns reduces the capacity to produce it.

Agriculture depends on soil and water. The Middle East lacks the great and fertile plains of other more fortunate regions of the world. Most of its surface consists of mountains and deserts with only limited areas of cultivated land dependent on rivers. Rivers present both technical and political problems.

The technical problems can, to a limited extent, be overcome by dams and irrigation schemes. The political problems, hitherto quiescent, will be aggravated by this kind of construction. The sources of many of the great rivers on which Middle Eastern countries depend lie in other regions not subject to their control. The headwaters of the river Jordan, vital to Israel and Palestine and Jordan, are in Syria. The headwaters of the Euphrates, lifeblood of Syria and still more of Iraq, are in Turkey. The Nile passes several frontiers in its long journey from its sources to Egypt.

In the past, this was not of great importance. It is now and will be more so as population growth creates an increasing demand for water, and technology an increasing capacity to control it. In the course of time, oil and gas may be exhausted or superseded. Water may be exhausted, but it will never be superseded, and in a not-too-distant future, water will become the outstanding issue between the nations of the region, exacerbating enmities and straining friendships.

Here, even more than with oil, there is a choice between conflict and cooperation. Turkey, the only country in the region with an exportable surplus of water, has from time to time offered to export it through pipelines or by sea. Such schemes came to nothing because of conflict and mistrust between the nations through which such pipelines would pass. In a peaceful Middle East, with a structure of regional cooperation, such schemes could be revived. More important, the countries might cooperate in projects of desalination. For the time being at least, this is the only answer to the water problems of the region. The waters of the sea are inexhaustible and could provide for all needs to an indefinite future. Desalination plants are already functioning in some places, but there are problems, two in particular. The first is that, with present technology and under present conditions, desalination is for most countries economically unworkable. The second is that desalination plants are dangerously vulnerable to attack, whether by terrorism or by conventional arms.

In the meantime, some interim measures can and probably will be adopted to secure a more economic use of existing water resources. Growing wheat in Saudi Arabia and vegetables and fruit in the desert emirates may have a certain dramatic value, but it is a wasteful misuse of water and will no doubt be abandoned when good sense prevails over display. A less obvious but nevertheless significant saving could be achieved by abandoning the growing of such water-intensive and nonessential crops as bananas. Even the great Israeli standby, the orange, will give way to other crops more suited to an arid climate. Significant experiments in desert and semidesert agriculture are already being pursued at research centers in Israel. These could serve as pilot projects for the whole region.

The economic crisis of the region is acute by any measure. To begin with, there is the unhealthy role of the state in economic life. According to the Arab Human Development Report 2009 (the fifth in a series, published by the United Nations Development Program [UNDP]), government revenues as percentage of GDP are 13 percent in the Third World countries, but they are 25 percent in the Middle East and North Africa. The oil states are particularly given to state domination of the economy: the comparable figures are 68 percent in Libya, 45 percent in Saudi Arabia and 40 percent in Algeria, Kuwait and Qatar. The unemployment rates for the Arab world are the highest in the world, and the UNDP report estimates that 51 million jobs are needed by 2020 to "absorb young entrants to the labor force who otherwise face an empty future." Despite all the oil in the region, tens of millions of Arabs are living below the poverty lines. Demography compounds the misery. The population of the Arab world is expected to grow some 40 percent over the next two decades.

A few years ago, it came to light that the total exports other than fossil fuels of the Arab world plus Iran amount to less than those of Finland. As the region becomes ever more dependent on food imports, there will be greater need for manufactured exports. A continuing problem is the lag in investment because of burdensome regulations, low privatization, poor and often deteriorating infrastructure, and underdeveloped financial markets. Far from attracting outside investment to the region, wealthy Middle Easterners tend to invest much of their money elsewhere. Conflict and insecurity could only aggravate these trends.

Of all the Arab countries, the ones with the best economic records are Morocco, Tunisia, and Jordan. All three function without the oil revenues that have distorted the growth of Saudi Arabia and the Gulf States. All three have avoided the disastrous statist policies that still encumber the economies of Algeria and Egypt. All three devote major resources to education and infrastructure. Tunisia in particular spends more than any other Muslim country on female education. All three have rapidly improving health conditions—including lower infant mortality and greater life expectations. These developments show very clearly the way to greater prosperity through peace to peaceful development. Syria and Iraq under the long rule of their Ba'ath parties showed with at least equal clarity the way to disaster through political and economic tyranny and domestic and foreign conflict. There can be little doubt which of these paths the people of Syria and Iraq would have chosen—if ever they were able to exercise a choice. Iraq was given a chance in 2003; its prospects look promising, but the weight of the past and the curse of oil (the easy money in the coffers of the state) weigh heavily on the new order.

The population explosion in the Middle East and North Africa is already producing another important phenomenon—migration of labor. Western Europe has, and in the not too distant future, Central and Eastern Europe will have, a relatively high standard of living and a low birth rate. Their southern and southeastern neighbors in North Africa and the Middle East share a low standard of living and a high birth rate. Modern travel and political relaxation make it easier both to reach and enter the various countries of Europe. Already the migration of labor, especially from Turkey and North Africa to Western Europe, is seen by many in these countries as a major problem. The peace process between Israel and its Arab neighbors, if it continues, may well produce similar results, as Palestinian and perhaps also other Arab labor is attracted to the expanding Israeli economy.

A significant element in the cash flow of the region is aid and donations of various kinds. By far the most important single source is the government of the United States, which provides a wide range of financial aid for both development and military purposes. The principal recipients are Israel, Egypt and Jordan, followed by Turkey and Armenia. (Further afield, Pakistan and Afghanistan have become big magnets for American military and economic assistance. ) Given the burdens of the American economy—huge budget deficits, a growing public debt—this aid is unlikely to continue in its present form. Military aid will dwindle as the danger of a military confrontation recedes. Economic aid will be seen as unnecessary where it is effective and useless where it is not. In Israel, where the military danger shows little sign of receding, military aid will probably continue. Economic aid will be more difficult to justify, as its place in the rapidly developing and increasingly sophisticated Israeli economy becomes less important. Aid to Egypt passes through the United States Congress on the coattails of aid to Israel and would probably not make it on its own—the more so at a time when Egyptian policy towards the American-sponsored peace process is seen as equivocal.

Considerable sums also come from abroad in the form of private donations, mainly from Jewish and Muslim communities in the Americas, Western Europe and Australasia. Most of this money is designated for development, education, welfare and other charitable purposes; some of it is diverted to overtly or covertly political aims. The distinction is not always easy to discern or maintain. Terrorist and subversive movements of various kinds, some of them state sponsored, are finding in Europe and North America a freedom of maneuver, both financial and operational, which they could not hope to find in the Middle East or North Africa.

They are using this freedom to devastating effect. The Iranian Revolution against the Shah took an enormous step forward when its leader Khomeini moved from Iraq to Paris, where he had uncensored modern communications at his disposal. Others are following and will follow this early successful example. Among the Turkish diaspora in Europe, especially in Germany, both the fundamentalists and the Kurdish separatists collect funds and organize subversion. To an alarming extent the internal struggle in Algeria is planned, financed and directed from France. The Iranian government's "Office of Islamic Revivals," concerned with the promotion of the Islamic revolution and its ideas in other Muslim countries, also locates its main financial and operational basis in Europe. At the same time the Islamic republic is itself threatened by increasingly sophisticated opposition groups using Western democratic freedom and modern communication to challenge the regime at home.

There are also transfers of funds within the region, some from governments, notably Iran and Libya, some from wealthy private individuals, mostly in Saudi Arabia and the Gulf. In Turkey, the only Muslim country in the region with free and contested elections, these transfers take the form of suitably disguised campaign contributions. Even in the older and more experienced democracies of the West, such contributions and their effect are difficult to follow and document. Their effect will be far greater in the newer democracies of poorer countries, with less experience in following the trail of money and measuring its impact. These tasks will however become easier as the flow of oil money diminishes and the democracies of the region become more experienced in detection and counteraction.

Tourism has been described as one of the best prospects for the region. Certainly there is room for improvement—at the present time the tourist revenues of the entire region are less than those of Mexico and about equal to those of Thailand in the 1990s. But the development of tourism, as of so much else, will depend on domestic and regional security. Great numbers of tourists are not likely to brave the dangers of war and terrorism.

With a few exceptions, the economic prognosis for the region remains bad. Productivity is falling dramatically, the creation of new jobs has stagnated, unemployment rates are the highest in the world. The poor are becoming more numerous and, comparatively, poorer. Major economic development will be needed to avoid disaster, and this in turn will presuppose the social, cultural and scientific changes needed to bring the Middle East into line with the developed countries of both West and East.