The World's Gas Station

In geopolitical terms, the Gulf region has increased in importance over the last few years. The decisive factor in that process has been the presence of large oil and gas reserves in the area as well as its ambivalent relationship with Iran. Christian Koch looks at the rise of the six monarchies which make up the Gulf Cooperation Council

photo: AP
Sheikh Zayed Road in Dubai: Oil has gererated considerable wealth in the Gulf region

​​Due to its rising strategic significance over the past decades, the Gulf region has become the focal point of worldwide attention and related concerns about global stability and security. No area captivates the daily headlines as much as the region that encompasses the member states of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) in addition to Iran and Iraq.

While in the past, the preoccupation about the Middle East was primarily defined by the Arab-Israeli conflict, this is today no longer the case and one can effectively argue that the center of conflict has shifted eastward to the Gulf region. In fact, it has been the Gulf that has taken center stage in the major conflict situations of the past decades.

An oasis of development and progress

Beginning with the 1979 Iranian Revolution, an event that is still defining the security environment in the region almost 30 years later, the Gulf has also witnessed the eight-year Iran-Iraq War, the invasion of Kuwait by Iraq in 1990 and finally the 2003 US invasion of Iraq and the downfall of the regime of Saddam Hussein.

While Iraq continues to struggle with bringing about a more stable domestic political environment, the current dispute over the Iranian nuclear program continues to hold within it the potential for another conflict. Iran and Iraq will therefore be major concerns as far as the security of the region is concerned.

To only see the Gulf as a region of war and permanent instability is, however, only part of the picture. In fact while much of the region is consumed by turmoil, stretching from Afghanistan to Iraq to Lebanon, the GCC states themselves represent an oasis of development and progress that is also pointing into a more positive and opposite direction than has been the case in the past.

Budget surplus of $3 trillion

Based on the high price for energy-related products, GCC states earned $350 billion in 2006 from oil sales which will further increase to $450 billion in 2008 based on conservative price calculations. According to the International Monetary Fund (IMF), the cumulative current account surplus since 2003 reached $700 billion in 2007 and will reach $900 billion in 2009. GDP growth stands above 5 percent on average, and trade surpluses surpassed $250 billion in 2005.

photo: AP
Iranian President Mahmoud Ahmadinejad, right, is greeted by Saudi Arabia's King Abdullah, left, in Riyadh, Saudi Arabia, 3 March 2007. The two country's diplomatic relations are tense

​​There has been a 74 percent increase in nominal GDP growth in the past three years alone. A study by McKinsey estimates that from 2005 until 2025, the Gulf region will likely accumulate a budget surplus of $3 trillion over half of which will be invested in the region.

This unprecedented development – and one only has to witness the construction activities and projects that are transforming the domestic landscape almost in an instantaneous manner – are grounded in the Gulf's role as the world's gas station. With all the various forecasts that abound when it comes to the future supply of energy in today's world, the one fact that sticks out is the preeminent position of the Gulf region.

Treasures of the soil

The Gulf contains two-thirds of the world's proven reserves of oil, produces more than one quarter of total world oil production and supplies nearly one-third of total world consumption. With the International Energy Agency stating that world oil demand is set to increase from 84 million barrels in the year 2005 to 116 million barrels a day by the year 2030, the Gulf's share of oil production in ratio to total world consumption is projected to increase to 33.0 percent by 2020.

Even outside of oil, the importance of gas equally suggests continued Gulf dominance as Iran and Qatar hold two of the three largest gas reserves. Rising energy demands leave the Gulf region as the only one in the world with significant spare capacity to meet growing demand, in particular from the Asian tiger economies.

Pressure on the monarchies

And finally, there is also a political, social and cultural component that must be mentioned. In a Middle East region characterized by stagnant political systems and autocratic regimes, the only significant political development taking place is in the GCC states where parliaments are increasing their functional role, where press freedoms are being expanded and where women are contributing in an ever expanding pace to the development of their own societies.

To be sure, the Gulf is far away from the democratic ideal that is an ultimate must, but the combination of a large youthful population being offered increased educational opportunities is a driving force that is pushing even the Gulf monarchies towards greater openness and representation.

The bottom line in this equation is the realization within the Arab Gulf States that they have as a result of the above developments a lot more to protect and also a lot more to lose if the region continues in its current cycle of conflict.

Security in the Gulf region – a global issue

Gulf security is thus not only a domestic but more importantly a regional as well as a global issue that cuts across a host of overlapping and complex factors including concerns about energy security, terrorism, weapons proliferation, border disputes, political development, education, human rights, just to name some of the more obvious examples.

What makes the issue more complicated is that there is at the same time an interaction between the immediate regional actors (the six GCC states, Iran, Iraq and Yemen), the wider regional neighborhood (Afghanistan, Pakistan, India, Syria, Turkey, Israel, Somalia), and the broader international community (the United States, Europe, and increasingly also Asian countries such as China and Japan).

The multilateral component

Within this environment, the GCC states are attempting to carve out their own role and to promote a policy of dialogue and cooperation that could ultimately serve as a basis for better and more structured security relations both within the region and with external actors. In that context, there is a lot of distrust when it comes to both the actions and policies of the United States and Iran, who tend to try to impress their hegemonic ambitions at the expense of the other states in the region.

What could help the Gulf to escape its dilemma is the involvement of the European Union, its member states and key Asian states, in other words not less but more international involvement. This is because the multilateral component that could force a different set of security relations over the region is a component that remains a missing piece of the puzzle. Given the Gulf strategic importance in reference to the issues mentioned above, this might exactly be the direction that things are in fact moving.

Christian Koch

© Christian Koch/ 2008

Dr. Christian Koch is the Director of International Studies at the Gulf Research Center in Dubai.

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