Arabs need a just regional order

Salah Nasrawi , Friday 14 Jun 2024

A new Arab order is taking shape, but there is still a need to overcome deepening regional inequality

Arabs need a just regional order


Policymakers and pundits agree that the day after the fighting stops in Gaza, the Arab world will wake up to a new regional reality-- one that may shift the region’s centre of gravity towards the rising economic powers.

Yet, there are increasing worries that the region is unprepared to deal with what could or should happen to ensure political and social stability if and when the guns fall silent in Gaza. As one geopolitical era gives way to another, the stakes of rising socioeconomic disparity at both national and regional levels are expected to remain high.

While the Gaza war has had a catastrophic impact on the Palestinian economy, the oil rich nations’ economies have continued to thrive at an unprecedented rate.

In a perhaps surprising coincidence, the horrific tragedy in Gaza comes amid reports that the rich Arab countries have doubled their wealth during the conflict, with questions being raised about whether that will impact the low-income Arab countries as well.

Moreover, there are abundant signs that the wealthy states are positioning themselves to benefit from the outcome of the war in order to consolidate their regional leverage regardless of which side ultimately prevails.

Viewing the long-term consequences of this in relation to the huge socioeconomic transformations in the region, one can easily notice the dynamics in play and how the disparity between the haves and have-nots in the region contributes to its enormous challenges.

A report about the growing wealth of the oil-rich states published before the war in Gaza started last October revealed that Saudi Arabia and the UAE collectively represented more than a quarter of the Middle East and North Africa’s (MENA) financial wealth in 2022.

The report, prepared by strategic management firm the Boston Consulting Group (BCG), found that Saudia Arabia represented 14.5 per cent of the financial wealth in the MENA region, while the UAE represented 13.2 per cent.

Saudi Arabia’s and the UAE’s financial wealth is expected to hit $1.3 trillion by 2027, and the combined financial wealth of the Gulf Cooperation Council (GCC) countries is projected to rise to $3.5 trillion in 2027, according to the report.

The findings are key indicators of a disparity that can explain the high levels of inequality in the Arab world when measured by the dispersion of income across the region’s income distribution.

This financial firepower of rising growth, wealth, and investments in the GCC countries manifests itself through a skewed income distribution, unequal access to wealth and opportunities, and consequently socioeconomic inequality in the region.

This is shown in the Arab nations’ income distribution index, which is terribly uneven, according to the International Monetary Fund’s (IMF) World Economic Outlook report for 2023.

While Qatar topped the index in 2022 with GDP per capita of $114,210.45 ($88,961.77 and $68,452.85 for the UAE and Saudi Arabia, respectively), Palestine was at $6,642.34 (the figures were $7,542.41, $10,408.31, $10,408.31, $11,793.82, and $12,809.17 for Mauritania, Morocco, Lebanon, and Jordan, respectively.)

Per capita income in Egypt, the Arab world’s most populous nation that has an economy struggling with heavy indebtedness and slow growth, stands at $17,123.03.

Awash with hydrocarbons, the Gulf region has huge potential. It accounts for 36 per cent of world oil production, 46 per cent of oil exports, 22 per cent of natural gas output, and 30 per cent of liquefied natural gas (LNG) exports.

It has vast reserves (52 per cent of the world total for oil and 43 per cent for gas) and low production costs.

With the current boom, a new form of financial power is rapidly taking root in the region as super rich countries like Saudi Arabia and the UAE pursue domestic and foreign policies based on outreach strategies.

As the Gulf countries earn a spot on the list of the world’s wealthiest nations, they are also turning their increasing wealth into prestige, influence, and power on the regional and global stages.

Driven by rising oil and gas prices and robust capital reserves, Saudi Arabia, the UAE, and the rest of the energy producers in the Gulf are drawing up the frameworks needed to capitalise on geopolitical change.

Today, a structural shift is taking place in the Arab world where the old system is decaying, the power of the historical centres is waning, and the weight and power of the Gulf nations is increasing.

The wealthy Gulf states are trying to build partnerships with the major world powers in an international landscape that is profoundly changing and bringing new heavyweights such as China and Russia into the arena.

This endeavour fits the argument that the ambitious leaders of the rich Gulf nations are solidifying their rule through a new discourse of modernity while recalibrating their foreign policies to fill a regional vacuum and benefit from regional uncertainty.

At home, they are finding an audience as they try to seize on this momentum to introduce mega entertainment, cultural, and sport projects directed at younger generations fed up with their rigid societies and longing to open up to the rest of the world.

The push into the arenas of music, film, theatre, the arts, architecture, publishing, and sports, all subsided by generous state funding, is meant to be the source of soft power generating a positive vibe and regional prestige across the Arab world for the super-rich countries.

Yet, there is another key factor and one that could skew expectations: the socioeconomic consequences unleashed by this huge regional disparity.

The Malcolm H Kerr Carnegie Middle East Centre reported in February that the MENA region is marked by exceptionally high economic inequality compared to other regions in the world.

The Covid-19 pandemic, the war in Ukraine, and the ensuing debt and food crises that have hit the region have further exacerbated socioeconomic disparities, and these have been subsequently impacted by the Gaza conflict.

According to the report, this has left the most vulnerable and marginalised segments of the population in some countries struggling to keep up with food shortages, price fluctuations, increases in temperatures due to climate change, water scarcity, land degradation, and limited government spending on public services.

Combating inequality has not been a priority of governments in the region, the report notes, underlining its implications for economic growth, social cohesion, and the potential to undermine political regimes.

Meanwhile, driven by grandiose ambitions and regional rivalry, the wealthy Gulf countries have started transforming their oil windfall into political power by seeking to make inroads in reshaping the region.

The risk of regional escalation has pushed the Arab Gulf states to do more to be involved in Gaza crisis-control and management for reasons of both political and economic self-interest.

While Qatar has established a role for itself as a key mediator between Israel and Hamas, Saudi Arabia and the UAE are playing major behind-the-scenes roles in international diplomacy in efforts to end the conflict.

By being actively engaged in the ongoing Gaza conflict, Saudi Arabia and the UAE are reassessing their roles on the regional and global stages at the expense of the influence of traditional heavyweights.

The rise of these Gulf powerhouses is likely to break the status quo because it will result in the debilitation of a system that has dominated the region’s geopolitics for more than a century.

For people across the region and primarily in historic centres such as Egypt, Iraq, Lebanon, Syria, and Yemen, the longer-term fallout of deepening regional inequality and the sidelining of their states will lead to existential questions.

The main question, therefore, is whether, as geopolitical tensions and their impact on regional economies remain challenging, the wealthy Arab states will be ready to help bridge the socioeconomic inequality gap in the region in order to preserve stability and prevent a backlash.

* A version of this article appears in print in the 13 June, 2024 edition of Al-Ahram Weekly

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