MIDDLE EAST ECONOMIC SUMMIT (GC7)

INTRODUCTION:

? Gulf Cooperation Council (GCC), established in?Riyadh, Saudi Arabia, in May 1981, is a political and economic?alliance?of six Middle Eastern countries: Saudi Arabia,?Kuwait, the?United Arab Emirates,?Qatar,?Bahrain, and?Oman.

? The purpose of the GCC was to achieve unity among its members based on their common objectives and they're similar political and cultural identities, which are rooted in Arab and Islamic?cultures and their agreements focused on securities and economic coordination.

? GCC comprised some of the fastest-growing economies in the world, mainly due to an increase in oil and natural gas revenues coupled with a building and investment boom backed by reserves, etc.

? GCC member states depend on oil resources to grow their economies and compete with other nations around the world. The oil boom that was witnessed between the years 2002 and 2008 generated a lot of revenue for all six members.

? It is estimated that the average annual revenue was about $327 billion between the years 2002 and 2007. The oil revenue has also been very instrumental in enhancing the competitiveness of the nations and promoting economic growth in the region.

? In the last decade, GCC nations have strived to come up with measures and policies meant to ensure that they use their natural resources to remain competitive in the regional and global arenas. These efforts have resulted in the diversification of the economies and the dependency on oil as their major traded commodity. Other nations in the region have gone ahead to increase the public spending in other aspects of the economy to distribute the oil windfalls and ensure future sustainability.

? Most of the GCC nations have also adopted conservative monetary policies as a way of responding to global and local economic changes. Although these efforts have been very instrumental in the performance of the region in the global economy.

? But there are other important indicators like the structure of the economy, labor market, and governance that have remained less positive in the Gulf region.

“The recent global financial crisis has also demonstrated that the GCC members cannot entirely rely on the high oil process for economic growth”

?Therefore, coming up with a merit-based competitive economic structure remain a key issue of focus for most of these GCC nations. This needs a consistent and strong commitment towards economic reforms that can ensure that competitiveness is improved in all the member states irrespective of the current political or economic conditions. Such reforms begin with the understanding of the current competitive state of each of the member states. Based on the information on the level of competitiveness, the nations can come up with measures for economic improvement and initiatives that will enhance performance in the global market.

?Impact of the recent crisis on the GCC oil industries

?o??The oil industry is facing its gravest crisis in 100 years, leading to a steep decline in fiscal revenues for many countries in the GCC.

?“The dual crisis engendered by the conflict over price between Saudi Arabia and Russia and the COVID-19 pandemic has prompted a global, sector-wide downturn in the Oil and Gas (O&G) industry that has left the oil-dependent economies vulnerable in terms of fiscal revenue”

?o??The outlook in the O&G industry continues to be driven by the radical stay-at-home and social distancing measures adopted by governments globally to tackle the highly contagious COVID-19 virus, drastically affecting oil demand and the larger global economy.

?“The global economy is expected to shrink by more than 3 percent in 2021, making this the worst economic downturn since the Great Depression”

?o??The Middle East economies are highly correlated with global macroeconomic trends and the region’s GDP is also expected to fall on par with the global average.

o??Covid-19 sent the price of oil plummeting to all-time lows as people stopped moving around to limit the spread of the virus. With commerce resuming, the price has ticked back up, though a peak in demand may be years away.

?After the pandemic, the concept of economic development has changed in all GCC countries, they have realized that the oil industry will die pretty soon in the future as the world is progressing they don’t be fooled. The world’s economies are moving away from fossil fuels. Oversupply and the increasing competitiveness of cleaner energy sources mean that oil may stay cheap for the foreseeable future. The recent turmoil in oil markets is not an aberration; it is a glimpse of the future. The world has entered an era of low prices—and no region will be more affected than the Middle East and North Africa. Arab leaders knew that sky-high oil prices would not last forever.

?“ In 2016 Muhammad bin Salman, the de facto ruler of Saudi Arabia produced a plan called “Vision 2030” that aimed to wean his economy off oil”

?o??But unfortunately “2030 has become 2020,” because the oil revenues in the Middle East and North Africa, which produces more of the black stuff than any other region, have fallen from over $1trn in 2012 to $575bn in 2019, says the?IMF.

?“ It is also expected that the oil industry will be suppressed by some other industries in near future 2030-2035 like hydropower shortly which is a much more variable and much more cleaner source of energy”

??Potential Responses And New Strategies by GCC countries

?In the past years, a lot of problems emerged in GCC countries due to long-term detrimental changes in the climate. Out of these problems, the major ailments are the worldwide food shortage and a severe shortage of water, leading to depletion of the energy sources dependent on water in the form of dams, hydroelectric projects. The climatic changes have also directly impacted the energy sources by disturbing the continuity of the food chains leading to imbalanced production, consumption, and decomposition cycles. This will eventually dry out all the water reservoirs in GCC countries. Drying out of water reservoirs will in turn these livable and fertile lands into barren deserts rendering them unfit for living conditions. Among 6 GCC countries, only KSA (Kingdom of Saudia Arabia)?and UAE (United Arab Emirates) first started to have look for new technologies for energy production and they tried to shift income from the oil industry to other industries and sectors like trades, tourism, hydropower, etc. Other GCC countries like Kuwait, Qatar, Bahrain, Oman have not shown interest in the start but after KSA and UAE, they have also started thinking to figure out other resources as well.?In previous years, they relied totally on their oil industry and they didn’t even produce anything inside and they never build their economy, and almost everything was imported but now GCC countries have realized that if they will not start other technologies they will eventually go bankrupt. They cannot simply rely on the oil industry they need to start other income projects from the agriculture industry, livestock industry and high technologies, etc.

There is an urgent need to address these problematic circumstances to find a solution before time runs out. After years of research and workups, there has been a list of tentative solutions to start the cascades of events leading to the elimination of these problems.?The most noticeable step towards the said solutions is the concept of the Summit making the GCC countries join hands with Israel as soon as possible to start the worldwide projects. This union can be so useful because the necessities demanded these solutions is available, for example, financial aid, technology, and even the vision. It's just this union that’s awaited because it will put these resources together leading to a better worth living world. It is the dire need of the hour for the countries to put aside their conflicts and misunderstandings aside and start working towards the betterment of the world as a whole to save this precious planet where or civilization began.

?MIDDLE EAST ECONOMIC SUMMIT 2022

? The new GC7 summit will be held on January 11, 2022, in Riyad and it will comprise of 7 countries instead of the previous 6 GCC countries including Israel as a new member (Saudi Arabia,?Kuwait,?United Arab Emirates,?Israel, Qatar,?Bahrain, and?Oman).

? GC7 is a new organization that will help all GCC countries to make fast development to meet the latest energy crisis, help them make good relations with Israel.

? Israel can help GCC countries to make quick progress in dozens of areas of research and development (agriculture, water, and power sector). because they know they are financially stable countries.

? After the Abraham Accords ( a joint statement between?the State of Israel, the?United Arab Emirates, and the?United States of America reached on August 13, 2020)?the UAE and Israel have swiftly exchanged ambassadors and have normalized the relations between Tel Aviv and Abu Dhabi.

? As the UAE and Israel celebrate the first anniversary of the Abraham Accords, they have plenty of positive results to show. The national interest component of the accords is convincing.

? They are supposed to serve as the foundation for comprehensive peace across the GCC and gulf region. The authors of the accords aim to change people’s mindsets, from being enemies to being friends.

? Israel can promote its expertise in scientific research, desert agriculture, alternative energy, and other areas that provide unique value to partners in the GCC gulf region.

? Joint Israeli-Arab efforts to battle the coronavirus pandemic have demonstrated how picking the right causes can cut through political barriers that usually keep the sides apart.

? Large-scale commercial projects that can build regional ties should be given strong consideration, particularly the regional rail network that could ferry goods between Israel’s Mediterranean ports and the Persian Gulf. Additionally, the Neom “city of the future” development in western Saudi Arabia is a promising hub for Israeli-Gulf partnerships.

? Response to the COVID-19 pandemic has put a spotlight on medicine as one of the most promising areas for Gulf-Israel alliances.

? Trade, tourism, and investment have spread the riches around to some degree. Still, compared with other regions, the Middle East has one of the highest proportions of unemployed young people in the world. Oil has bankrolled unproductive economies, propped up unsavory regimes, and invited unwelcome foreign interference. So the end of this era need not be disastrous nad these new GCC-Israel reforms will create more dynamic economies and representative governments.

? Gulf states should identify new opportunities for Israel’s open participation in business projects, scientific activities, and sporting events that abide by international norms of inclusion and facilitate interaction in the absence of diplomatic relations. The COVID-19 medical research, Dubai Expo, Qatar World Cup, and Oman desalination center provide good examples.

? The growing cooperation between Israel and GCC states indicates that significant change in the political architecture of the Middle East is not impossible.

“These remarks by leaders in Israel and the Gulf reflect a softening of rhetoric as each recognizes the value of working together to address economic and security matters.”

Thus, the new GC7 summit will emphasize more on the inevitable need of the efforts to secure food production and availability, clean drinking water supply, and necessities like education, shelter leading to a better future in all GCC countries. Once these projects turn out to be a great success, the same patterns can be copied and implemented in other joining countries.

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