Oil wealth — a curse or a blessing?

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Oil wealth — a curse or a blessing?

Saudi Arabia remembers two important dates in its history: One is the day when King Abdul Aziz established the Kingdom, and the second is when the American company, Standard Oil of California, discovered oil in what was then a newly-established country. Today, 80 years have passed since that event changed the future of Saudi Arabia, when a long column of black oil sprang from the famous Well No. 6 and put an end to years of fruitless exploration.

Had King Abdul Aziz not unified the country, we would probably have witnessed never-ending conflicts between various small countries in the Arabian Peninsula; and had oil not been discovered, the country’s survival would have been in doubt due to the harsh conditions of the desert as well as the scarcity of both food and water.

The British attempted to explore oil before the Americans, but they soon became discouraged and left Saudi Arabia, after concluding there was no oil to be found in the desert. When Abdul Aziz requested cooperation in other areas, the British government in India responded by stating that the king would have to deal with his own problems. Furthermore, the British said that all they cared about was freedom of navigation for their fleet in the Gulf.

After this painful rebuff, King Abdul Aziz approached the Americans, who had no previous involvement in the region, but were willing to come from the end of the world to look for oil. There is even a story that the Americans told the British that they were only prospecting for water; they said so in order to avoid problems with London which felt that the Arabian Peninsula was within its traditional sphere of influence. Although oil was found in the 1930s, it was not commercially traded and exported until the late 1940s because of the international economic situation which followed World War II.

Had King Abdul Aziz not unified the country, we would probably have witnessed never-ending conflicts between various small countries in the Arabian Peninsula; and had oil not been discovered, the country’s survival would have been in doubt due to the harsh conditions of the desert as well as the scarcity of both food and water.

Abdulrahman Al-Rashed


Here we are now, in a new era of decline in the price of oil. This has created great doubts about oil's reliability as an economic resource — to the extent that the government’s policy has been to look for other resources and reduce its dependence upon oil. The planners of the new policy consider that business as usual — which is relying on oil as the sole source of revenue — will jeopardize the national economy, and possibly, even lead to its collapse. This is a great danger if the markets witness a sharp drop in oil prices given the progress made in the search for oil substitutes. Nobody can, of course, predict the future with any certainty, but relying exclusively on oil is not a viable strategy.

Today, there are those who consider oil a "curse" to the region, because of all the conflicts it has triggered in the areas of its exploration and export, and because it has invited many competing great powers from all over the world to secure it to their own markets; however, others have long regarded it as a blessing when wisely exploited and used.

This region — not just Saudi Arabia and the Gulf countries — is lucky since almost half of its countries possess oil fields and get easy revenues from them. Unfortunately, the problem was, and continues to be, the region’s proper management of its oil wealth.

When we recall what Saddam Hussein did with Iraq's oil wealth and what Moammar Qaddafi did with Libya’s, and now what Qatar is doing with its oil revenues, we cannot but feel sorry for what the ignorant among us have done to their countries’ immense wealth.

Oil is one of the depletable riches which come only once to the lucky nations. If they use it properly for education and development, it will change the future of their citizens for many generations to come. On the other hand, if they misuse it, it will destroy and impoverish them beyond the poverty they knew in their pre-oil days.

Abdulrahman Al-Rashed is a veteran columnist. He is the former general manager of Al-Arabiya news channel, and former editor-in-chief of Asharq Al-Awsat.
Twitter: @aalrashed
Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point-of-view