The historic Arab trade-off: Knowledge for oil

Nader Fergany , Saturday 28 Jul 2012

It is time for the Arab world to invest in its longterm future, which can only be found in knowledge production, as fossil fuels run out

If Arabs want to recover from this current historic slump, there is no other way but to adopt the goal of integrated Arab development by building their capability of knowledge acquisition. In other words, Arabs must recover through exchanging oil and rent appropriation for knowledge generation as part of a conscious project of Arab renaissance through effective Arab integration.

No doubt accomplishing such a human renaissance in the Arab world will require nothing less than a revolution in political outlooks across the Arab landscape, rebuilding the legal and institutional infrastructure of joint Arab action to move in the direction of effective Arab integration, and to achieve joint goals efficiently. This historic endeavour also requires capital to transfer a vision into a living reality.

Knowledge is acquired through two main methods: first, education, scientific research, and technology development. Knowledge also comes from people, but which people? Not the ignorant on the margins of modern life but the learned innovators, pioneers and action-takers. Hence, some people will enter the Age of Knowledge as leaders and masters while others will become followers and slaves. At this juncture we should ask if the Arabs will rise or fall among other nations in the coming era?

It is clear that the trade off suggested in the headline of this article is logical and indeed historicThe fate of vast oil revenues in oil-producing Arab states relies on several factors, such as world demand for oil, future discoveries of deposits and extraction patterns, and advances in the production and economy of alternative energy. So far, known and confirmed reserves indicate that fossil fuel wealth in Arab states will undoubtedly be depleted, perhaps in one or two generations at most for crude oil.

Many concerned Arabs have wondered what will be the fate of Arab states, especially oil producers, once the oil runs out. Knowledge, however, is inexhaustible and is continuously renewable to create progress and advancement. Thus, the proposed trade-off (knowledge for oil) is a winning exchange to initiate a renaissance in the Arab world.

No single Arab state alone would be able to acquire a prominent capability in knowledge generation; oil-producing countries especially will not be able to accomplish this historic endeavour by themselves. Success will only be possible through integrating Arab capabilities across the Arab world. Indicators show that some of the poorest Arab states in terms of capital score the highest on international knowledge generation indices, such as being published in reputable scientific journals and patent applications.

While fossil fuel reserves are concentrated in certain regions in the Arab world, revenues from oil and gas have directly shaped the rate and nature of economic growth in non-oil-producing Arab states as well. This happened through labour migration to Gulf States and aid from oil-producing states to struggling Arab countries. There is no doubt that oil revenues and vast capital assets have influenced regional politics in the Arab world, and relations of the Arab bloc on the international stage.

Everyone should realise that this God-given gift should not be squandered on buying expensive weapons that will be left to rust, while foreigners are called in, at a price, to defend Arab states whenever they are under threat. Or revenues are used to invest in Western economies that, despite their declared values and principles, do not genuinely sympathise with the rights of the Arabs. Meanwhile, Arab capital in the West is subject to depreciation during global financial crises or in the countries where it resides.

The time has come to utilise the resource gift Arabs possess in creating a long and prosperous future for themselves. Arab revenues from oil and gas exports in 2010 were estimated at about $502 billion, divided among 14 exporter countries.

One possibility is that a portion of oil and gas revenues in all Arab states should be deposited in an "Arab Integration Assistance Fund" to be used in building a productive knowledge society across the Arab world, that would guard the Arabic language and culture from stagnation and resuscitate them. If this fraction could begin at 10 per cent, the fund would have nearly $50 billion a year. This is not a huge percentage, considering it is an investment in a better future for the entire Arab nation.

To compare, one need only look at the weapons purchases of only four Gulf States from the US alone in the next four years, estimated at $123 billion (as reported by The Financial Times). Meanwhile, sovereign wealth funds of oil-producing Arab states in 2007 were estimated at about $3 trillion, and were predicted to reach $12 trillion by 2015 (Morgan Stanley estimates, 2009). A small percentage of these sovereign wealth funds would be enough to cover the entire budget ofthe proposed fund for many years to come.

As for the revolution in political outlook that is needed to accomplish this human renaissance project based on effective Arab integration, we can assume that it has started already as the tide of liberation sweeps across the Arab nation. It has already achieved successes that were unexpected by any standards, starting with the glorious people's revolution in Tunisia at the beginning of 2011 that inspired other Arab uprisings.

While it is true that not all the uprisings have concluded in a victorious successful people's revolution, and some revolutions are seriously struggling in what seems like a minor civil war, the engine of liberation has started and no one can stop it.

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