Futuristic Organization of Arab Petroleum Exporting Countries- Eradication of Oil Resources.pdf

7/23/2019 Futuristic Organization of Arab Petroleum Exporting Countries- Eradication of Oil Resources.pdf

http://slidepdf.com/reader/full/futuristic-organization-of-arab-petroleum-exporting-countries-eradication 1/12

Futuristic Organization of

Arab Petroleum Exporting

CountriesEradication of Oi l Resources



Futuristic Organization of Arab Petroleum Exporting Countries Page | 1

Introduction to the Council

The Council is the supreme authority of the Organization, responsible for drawing up

its general policy, directing its activity, and laying down the rules governing it.

The Council is composed of the ministers of petroleum of each of the member

countries or an official enjoying comparable degree of responsibility for petroleum

affairs. The chairmanship of the Council rotates annually among the representatives in

the alphabetical order of their countries.

“The Organization of Arab Petroleum Exporting Countries (OAPEC) is a

regional inter-governmental organization established by an agreement signed in

Beirut on January 9, 1968 by Kuwait, Libyan (Kingdom of Libya at that time) and the

Kingdom of Saudi Arabia. The three founding members chose the state of Kuwait for

the Organizations' domicile and headquarters.

OAPEC is concerned with the development and prosperity of the world petroleum

industry by fostering close and fruitful cooperation among its members. It is guided

by the belief in the importance of building an integrated petroleum industry as a

cornerstone for future economic

integration amongst Arab countries and contributes to the effective use of the

resources of member countries through sponsoring joint ventures.

By 1982 the membership of the Organization increased to eleven Arab oil exporting

countries namely: Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Kingdom

of Saudi Arabia, Syria, Tunisia, and United Arab Emirates.

The OAPEC has four organs:

1 -The Council of Ministers




2 -The Executive Bureau

The Executive Bureau assists the Ministerial Council in supervising the

Organization's affairs.

The Bureau is composed of one representative from each of the member countries,

and are appointed by the country concerned. Each of them assumes chairmanship of

the Bureau by rotation according to the alphabetical order of the member countries for

a period of one year.

3 -General Secretariat

The General Secretariat plans, administers and executes the Organization's activities

in accordance with the objectives stated in the Agreement establishing OAPEC, and

with the resolutions and directives of the Ministerial Council. Its administration is

assumed by a Secretary General.

Its departments and committees shall carry out their task in accordance with the

Secretary General's instructions and directives within the limits of the powers vested

in him.

The seat of the Secretariat shall be the headquarters of the Organization.

4 - The Judicial Board

The Judicial Board is the fourth OAPEC organ created under the Agreement. It wasestablished by a special Protocol that was signed in Kuwait on May 9, 1978. The

Protocol was attached to the Organization's Agreement and came into effect on April

20, 1980. Judges of the Board (Tribunal) were first elected on May 6, 1981.

The protocol stipulated that the Tribunal shall consist of an uneven number of judges

of Arab citizenship, who shall not be less than seven and not more than eleven.




The Judicial Board (Tribunal) also has an advisory jurisdiction enabling it to give its

opinion on issues referred to it by the Ministerial Council. Its judgments are

considered final and binding on the parties of the dispute and shall be enforceable

in territories of member countries.”1

Information about the Topic

General Background and History of the Topic

The Arab World accounts for about 50% of the world's oil reserves, with

Saudi Arabia alone responsible for 19% of the total. Economic growth in the Arab

World has relied almost solely on oil reserves for sixty years. There has been an

increasing demand for oil from the BRICs (Brazil, Russia, India and China) and other

emerging economies may see oil demand increase by up to 50% by 2030 with a

corresponding rise in prices. With the knowledge of the reserves present, it is

estimated that oil will run out by about 2050. With the decline of oil revenues, the

Arab World will need to explore new directions for growth to sustain and develop the

region.

Currently, Arab countries' principal export is oil; because their economies are not

diversified and complementary, there is little regional trade. Ironically, though the

Arab states pioneered regional economic and political integration, the Middle East

today has the least intra-regional trade in the world. To date, only the GulfCooperation Council (GCC) (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the

UAE) has had any success in terms of trade integration, creating labour and capital

mobility and setting common standards in various areas of regulation. The growth of

trade in the Arab world may depend on economic diversification and political

commitments to peaceful coexistence, building on existing trade agreements such as

the Greater Arab Free Trade Area (GAFTA) and the Middle East Free Trade Area

1 http://www.oapecorg.org/OAPECEstE.html

http://www.oapecorg.org/OAPECEstE.html







(MEFTA).

While some Arab nations, such as Saudi Arabia and the United Arab Emirates (UAE),

are heavily dependent on the export of oil, a number of countries are starting to

branch out and move to more „sustainable‟ economic models2 in preparation for a

post-oil era. The growth of banking and Islamic finance, as a result of oil-fuelled

liquidity, could push economies in the Middle East to become more efficient and

equitable, promoting risk-sharing rather than speculation in a virtuous but vigorous

way. There is already evidence that this may be happening, for example, the

development of Sharia compliant hedge funds. Effective financial institutions may

also encourage the rise of the Muslim middle classes by popularising Islamic

insurance products that help use savings productively.

Other Arab economies have diversified in other directions. The United Arab Emirates

has a highly globalized economy that embraces new industry and generates 63% of its

income from commerce and tourism, despite possessing rich oil reserves. Dubai is

one of the world‟s fastest growing economies. The emirate leads the commerce and

tourism drive through a deregulated system, allowing substantial labour immigration,

which accounts for 75% of the City‟s population. It is also one of the most diverse

cities in the Arab world with different cultures coming together.

The potential energy shortfall of the post-oil economy is a key area of concern for

Arab states. However, the climate and geography of the Middle East make it a

potential world leader in the development and production of solar energy. Abu Dhabileads the region in preparation for the energy shortfalls of a post-oil economy and has

committed to building a $350 million solar power plant, the first of its kind in the

region. As part of the plant, a special economic zone is being set up dedicated to

alternative energy and sustainable technology3.

Regional stability may depend on intra-regional agreements such as the Arab Peace

2 ArabianBusiness.com (2008) Economic Diversification: The Road to Sustainable Development.

Retrieved from: http://www.guardian.co.uk/world/2008/sep/04/israel.palestinians 3 Arabian Business (2007) Abu Dhabi to build $350m Solar Power Plant.

http://www.guardian.co.uk/world/2008/sep/04/israel.palestinians







Initiative, which was endorsed by the Arab League at the Riyadh Summit in 2007 and

which later resurfaced at the 2008 Doha Forum on Democracy, Development and

Free Trade.

When it comes to demography, population increases in the Middle East have been

described as “shocking” and “overwhelming”. In Saudi Arabia 40% of the population

is less than 15 years old and in the Middle East and North African region population

has grown four times more since 1950.4

Expanding populations may be forced to choose between growing more food and

preserving scarce water supplies, particularly as Gulf countries already import 60% of

their food. Water is likely to become ever more politically and strategically

important, especially in locations such as the West Bank where access is restricted by

a lack of infrastructure.

To prepare for potential resource scarcity, Gulf countries are already cooperating with

and investing in developing countries that have similar cultural, religious, and

political backgrounds - such as Pakistan and India - to secure food supplies. In June

2008, Pakistan sought “US$6 billion in financial and oil aid in return for hundreds of

thousands of acres [hectares] of agricultural land, which could be tilled by the

Saudis.5 "These arrangements may become increasingly common in the future if

resource scarcity increases.

Availability of food is also closely related to the price of oil. Increasing oil pricesincentivise the production of biofuels, which in turn may inflate global food prices.

High food prices are thought to be at least partly responsible for political unrest in

poorer Middle Eastern states such as Egypt and Yemen.

Demographic change also presents significant employment and service challenges. In

the post-oil era, the future of the Middle East will depend on its people. The key to the

4 Martin, A. (2008) Mideast Facing Choice between Crops and Water, The New York Times. Retrieved

from: http://www.nytimes.com/2008/07/21/business/worldbusiness/21arabfood.html?_r=0 5 Janarshan, M. (2008), Gulf eyes oil-for-food pacts, Asia Times Online. Retrieved from:

http://www.atimes.com/atimes/Middle_East/JF20Ak01.html

http://www.nytimes.com/2008/07/21/business/worldbusiness/21arabfood.html?_r=0










region‟s success will be the creation of new jobs for the millions of young people

entering the workforce. Saudi Arabia has responded to this by committing itself to a

$500 billion investment to build cities, create jobs, and to diversify the economy. 3

However, many jobs are low skilled and labor intensive and much new investment is

in real estate.

Some suggest that commercial culture in the Middle East may remain wedded too

closely to patronage rather than meritocracy. The region will need entrepreneurs and

small companies to promote the growth of new, dynamic industries and capitalise on

the wealth derived from oil money and substantial flows of inward investment. This

in turn will depend to a large extent on governments in the region moving further

towards economic reform and a more open business environment.

Although venture capital may be lagging behind other sorts of finance in emerging

markets, some suggest that entrepreneurship is beginning to take hold across the

Middle East as younger people realise that trading ideas may offer a better route to

riches than land or oil.

Economic inclusion and social empowerment of women, youth and those of diverse

cultural backgrounds are critical goals with such a young population. Economic

development will also depend on developing an appropriate infrastructure both

institutionally and in terms of education and skills. Educational reforms should lead to

socioeconomic change that reduces the dominance of governments and family-run

conglomerates.

Some suggest economic prosperity will depend on an educated workforce delivering

competitive private services.6 The establishment of universally accessible, high

quality education services may help transform the growing young population into a

productive workforce. This may also require making use of human capital, perhaps

through greater access to the labor market for women through the diversification of

6 The GCC countries and the World: Scenarios to 2025. Retrieved from:

http://www.weforum.org/pdf/scenarios/GCC_report.pdf







industry.

Information technology may play a crucial role in economic development in the

region, enabling the spread of locally-generated content and e-learning, encouraging

social and economic growth and beginning to bridge the digital divide within the

region and between the Middle East and the West. Currently only 4% of people in the

Arab world have broadband access. Increasing access to the internet may be the best

way to promote democracy in the Middle East. As people become better informed,

demands for democracy may strengthen.

However, economic success in the Arab World may depend on the possibilities for

economic and political integration, developing attractive environments for investment

and the development of an advanced telecoms infrastructure with widespread

broadband internet availability and high levels of internet penetration in urban and

rural areas. Development of a common market, drawing heavily on the best of other

political and economic regional arrangements, particularly the EU, may make

regional integration a reality.

A better connected and more open business environment may become increasingly

attractive for business from outside the Arab world, notably Western financial firms

and venture capitalists. At the same time, the region may consolidate its position as

the leading locus of Islamic banking. The development of more meritocratic and

transparent business practices, growth of FDI and the transfer of skills from foreignmultinationals could further increase the economic dynamism of the Middle East.

High oil prices could allow massive investment in public infrastructure, particularly

health and education, to equip the Middle Eastern „demographic asset‟ with twenty-

first century skills. A socially conscious period of sustainable „investment to save‟

could be accompanied by a growing environmental awareness in the region,

particularly if Masdar City is deemed a success. Indeed, Masdar may become a new




paradigm for urban and infrastructure development in the region and beyond.

Burgeoning environmental awareness coupled to the need for energy solutions in a

post-oil era and the availability of young, skilled labor may lead to a proliferation of

start-up organizations with a focus on renewable energy and science and technology.

Some Arab governments are also able to invest their vast oil wealth in developing

energy technologies that would otherwise not be economically viable, in order to

ensure they eventually become competitive.

There may be a particular focus on energy and resource sustainability, particularly

focusing on food and water through improving agricultural methods, GM crops and

advances in desalination technologies.

Not all individual countries of the Arab World will be able to develop self-sufficiency

in farming and food production. Thus, states in the region may increasingly look to

sustainable food-for-oil exchanges notably with China, Pakistan and India. It is

conceivable that these kinds of relationships could also develop with other states in

the West. Many Arab states could be more seriously afflicted by resource scarcity,

particularly scarcity of water, another potential source of conflict between states in the

region.

A resource-hungry nation could take advantage of the desperation of Arab

countries to negotiate cut-price deals for oil in exchange for food. There is also the

possibility of different forms of exchange, for example, from a position of bargaining

strength China may seek to send some of its population to the Arab World to solve problems of overpopulation and pollution. However, this may simply increase the

resource scarcity problems of the region.

Some Arab states may develop their comparative advantage in areas such as flower-

growing which do not require much water and can be a high-value export. Certain

countries are likely to develop their tourism industries and perhaps their offerings for

green tourism and ecotourism for the Western market.




However, against a background of political unrest, potential conflict and insubstantial

public and private investment, society in the Middle East would remain in a state of

aborted development. The Middle Eastern „demographic asset‟ may remain under -

recognized and underutilized. Education, which in other regions is the way for youth

to make the transition to employment, could remain a failure in the Middle East. With

only patchy attempts to create new forms of employment on a relatively small scale in

richer states such as Jordan and Lebanon, the region could suffer from a significant

rise in unemployment.

Without provision of adequate education or employment opportunities in the region,

small-scale entrepreneurship, social or otherwise, touted as the most likely means of

creating jobs for 100 million extra people in the work force, may never materialize.

Record levels of unemployment particularly amongst young, low-skilled males may

create a tinderbox of political and economic unrest further reinforcing the huge

societal inequalities across the Middle East, where the middle class has been virtually

eradicated. The region could suffer an „exodus of talent‟ as what is left of the middle

class and intelligentsia leaves the region for better opportunities and more

security. As the region becomes less and less secure, demographic realities may be

kept in check only by an increasingly autocratic and theocratic set of regimes.

Certain countries, notably Egypt, may be especially prone to this mixture of extreme

theology and social deprivation that could culminate in revolution and overthrow of

existing rulers. In this instance there may be a case for identifying particularly fragileregimes and engaging sooner rather than later with alternative power centres in the

country in question.7

7 Pink, D. (2008), Parag Khanna: Embrace the Post-American Age, Wired Magazine. Retrieved from:

http://www.wired.com/politics/law/magazine/16-10/sl_khanna







Questions and Factors to Consider

A. Factors to Consider during Research

-

Early indicators for the possibility of eradication of oil resources:

Exponential rises in oil prices create further huge national wealth.

Saudi Arabia becomes ambassador of moderate Islam.

Internet use in the Middle East breaks the 100m user barrier.

The EU model of regional integration is responsible for significant trade

increases.

Iran develops nuclear weapons.

Masdar becomes the global standard in eco-urban design.

-

Treaties, Agreements, and Panels at work:

Formation of the EU Coal and Steel Community.

Formation of the Gulf Cooperation Council.

Creation of the Arab Peace Initiative.

Founding of Minhaj-ul-Quran.

B. Questions to Consider in Your Research

●

What methods should be used to attract domestic investment in health,

education and infrastructure?

●

What is the Battle for influence between Wahabbism and more moderate

Islam? How is it defined and why does it exist?

●

Progress of alternative energy storage and dissemination technologies

● How can oil help with the development of women‟s status in the Arab World?

How can Arab states promote development in the region and eliminateilliteracy and fight unemployment?




References to Review

- OAPEC: http://oapecorg.org/indexe.html

- Ulfelfer, J. (2007) Natural-Resource Wealth and the Survival of

Autocracy, Comparative Political Studies, Vol.40, No.8, pp, 995-1018.

Retrieved from: http://cps.sagepub.com/content/40/8/995.abstract

-

Free Exchange (2007) Oil as a corrupting influence, The Economist.

- Geoff Hilford (2008) Futuristic Middle East?

-

Heydemann, S. (2007) “Upgrading Authoritarianism in the Arab

World”, The Booking Institution.

- ArabianBusiness.com (2008) Economic Diversification: The Road to

Sustainable Development. Retrieved from:


-

McCarthy, R. (2008) Palestinians lose faith in two-state solution, The

Guardian. Retrieved from:


-

Martin, A. (2008) Mideast Facing Choice between Crops and Water,

The New York Times. Retrieved from:

http://www.nytimes.com/2008/07/21/business/worldbusiness/21arabfo

od.html?_r=0

-

Janarshan, M. (2008), Gulf eyes oil-for -food pacts, Asia Times Online.

Retrieved from:


-

The GCC countries and the World: Scenarios to 2025. Retrieved from:


- Pink, D. (2008), Parag Khanna: Embrace the Post-American Age,

Wired Magazine. Retrieved from:


- http://www.sigmascan.org/Live/Issue/ViewIssue/491/4/after -the-oil-

the-future-of -the-middle-east/

http://oapecorg.org/indexe.html



http://cps.sagepub.com/content/40/8/995.abstract


















http://www.sigmascan.org/Live/Issue/ViewIssue/491/4/after-the-oil-the-future-of-the-middle-east/































Documents

Futuristic Organization of Arab Petroleum Exporting Countries- Eradication of Oil Resources.pdf