SPECIAL REPORT: “Boomtime in lands of oil and money: The rise in the oil price is driving investment growth,” by Roula Khalaf, Financial Times, 20 November 2007, p. 1.ARTICLE: “The Construction Site Called Saudi Arabia,” by Jad Mouawad, New York Times, 20 January 2008, p. B1.
ARTICLE: “Who’s Afraid of Mideast Money?” by Emily Thornton and Stanley Reed, BusinessWeek, 21 January 2008, p. 042.
The first story is cited just for the numbers. The Gulf Co-operation Council Six (Saudi Arabia, Kuwait, UAE, Qatar, Oman and Bahrain) are expected to hit oil export earnings in the range of $400b this year and $450b next year.
Between 2005 and 2020, it’s estimated that GCC will bank $3 trillion. About half is expected to stay in region, a quarter goes to the wider region, and a quarter hits the global streets looking for returns through SWFs. Roughly $1t is slated for local investment, which is why the region starts to rival Asia for its construction crane demand. Indeed, a lot of Turks, Indians and Chinese are doing the construction in the region, so they fight over worker bodies too.
The second story profiles a gargantuan petrochem plant going up in Saudi Arabia that will link the economy to a wide variety of global production chains, like cells, TVs, and thousands of other products. This factory is but a blip in Saudi Arabia’s planned $500 billion in internal diversification investment. The House is building four massive “economic cities” that intend to create about 1.6 million jobs.
Aramco wants to become a bigger Exxon Mobil, a serious supplier of petrochem products as well as oil.
No more “idle mode” for the Saudi economy, and yes, that’s a good sign.
So should we be afraid of all this oil money?
Like just about anybody else hoping to get deeply plugged into the global economy, Saudi Arabia and the GCC are running desperate races against their own demographics and the inevitability that the advanced world must move past oil—for environmental reasons alone.
The oil producers are facing their last great swing at the ball. Failure is really not an option here.
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Comments (3)
Very encouraging news - it's about time the Saudis spent their money on economic development instead of private luxuries and weapons systems they don't need. This post reminds me of "There Will Be Blood", a much misunderstood film that I highly recommend. It's about the connections between oil exploration and the creation of an economic infrastructure in Southern California at the turn of the century, which seems to be repeating itself this century on the Arabian peninsula.
Posted by stuart abrams | January 30, 2008 9:26 AM
This is wonderful news. Another item that came out a few months ago struck me as well. This was about KAUST and the $10B endowment from the King with a commitment to western style graduate level research and education. It is absolutely wonderful to see all of this money thrown at real solutions to real problems.
http://www.news.cornell.edu/stories/Oct07/saudiarabia.html
It will be a great day when we can look at global education statistics and bemoan the fact that the USA was just overtaken by Saudi Arabia in some key segment or when a MidEast country starts importing our best and brightest as Asia is already doing (Hello Singapore!).
John-
Posted by siberian | January 30, 2008 2:26 PM
I dunno. I'd be feeling a lot better if there was less talk about an elite grad school and more about vocational schools and the like for preparing the bulk of their populace for work.
On the plus side, it is nice to see Saudi sited for infrastructure building more than the gulf emirates is a nice change of pace.
Posted by Michael![[TypeKey Profile Page]](http://www.thomaspmbarnett.com/weblog/nav-commenters.gif)
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January 30, 2008 5:34 PM