Dr. Mohammad AlSabah: We Have Oil Without Utilization


January 5, 2012


Deputy Prime Minister and former Foreign Minister Dr. Mohammad AlSabah emphasized the importance of effectively and fundamentally utilizing the natural and oil resources of Arab countries in a manner that serves the development of these nations and lays the foundation for future generations.

This came during the activities of the Economic Research Forum held by the Arab Fund for Economic and Social Development at its headquarters yesterday under the title "Understanding and Avoiding the Oil Curse."

Mohammed AlSabah pointed out the Kuwaiti Generations Fund, launched 36 years ago, noting that Kuwait's oil revenues since the 1950s provided surplus liquidity that allowed for forward-thinking projects such as the Generations Fund. It is natural that the current rise in global oil prices will significantly contribute to advancing this progress.

He said: "During our visits to many Arab countries such as Algeria, Morocco, and Libya, we found oil but no actual exploitation of it."

Abdul Latif Al-Hamad, Chairman of the Board and Director General of the Arab Fund for Economic and Social Development, affirmed that 11 countries out of the 22 members of the Arab League, which are oil-exporting countries, account for 55% of the world's oil reserves and 29% of natural gas, making the hydrocarbon sector an economic pillar for these countries. This sector represents about 50% of their GDP and 80% of government revenues. Neighboring countries benefit from the oil-rich neighboring countries through labor revenues, capital transfer, as well as trade exchanges of products and services between oil-rich and non-oil-rich countries.

Al-Hamad said: "We are proud of our achievements and the sharing of ideas today, through which we can benefit from the exploitation of our resources in Kuwait in the right direction."

International Agenda

During the forum sessions, the Executive Director of the Arab Economic Research Forum, Ahmed Jalal, explained that many view the region today as an oil hub, and if there is an international agenda for the region, its main theme is undoubtedly oil.

Jalal said: "Oil is the basis of resources in this region, but the question lies in how to successfully use these resources to achieve the required development, as the issue is not that easy."

Paul Collier, Head of Economic Studies for Africa at Oxford University, discussed savings and investment decisions regarding the natural resources of rich countries, noting that the area of known oil fields represents 105,000 dollars worldwide, while in the Middle East and North Africa, it is 361,000 dollars.

He pointed out the importance of utilizing natural resources on sound principles to achieve economic development, as many countries still misuse natural and oil resources based on incorrect decisions in economic development.

Arab Integration

Majda Qandil of the Egyptian Center for Economic Studies considered that unbalanced resources provide the greatest range for Arab integration, and thus all Arab countries can benefit from the relative issue. She explained that the GCC countries represent 9% of the Arab population density, while achieving 30% of the total GDP. As for non-GCC Arab countries (Algeria, Sudan, and Yemen), they represent 30% of the Arab population density and have a share of 15% of the total GDP.

Mohammed Al-Jamal from Rice University stressed that heavy reliance on oil by oil-producing countries must be accompanied by growth fluctuations, and oil-producing countries must invest oil revenues effectively through government or private sector investments. Oil revenues may be subject to what is known as the Dutch disease, i.e., being affected by exchange rates.

He pointed out that all oil-producing countries, except Bahrain, Norway, and Qatar, have large oil savings, so they must establish good financial systems to transform them into meaningful investments.

He noted that Algeria, Kuwait, and Saudi Arabia can be considered in the same basket due to some financial policies they have adopted in recent years, while Bahrain enjoys the best banking sector in the region.


Source: Al-Qabas

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