Are Dubai' problems the destiny of all oil-rich Islamic countries?

Submitted by Stuart Fagin (United States), Feb 25, 2009 at 23:07

It would certainly seem so. Most of the Islamic oil-rich nations lack an entrepreneurial middle class that is necessary if they are to develop an economy that includes components other than those connected to the petroleum industry. This is the uniform observation of those I deal with in my work in the oil patch who have had extensive ex-pat experience in these countries.

As Bernard Lewis has noted, the oil wealth of these nations has been a mixed blessing. The petrodollar endowment induces a lack of economic vigor in the population and an unhealthy reliance on ex-pat workers. It also has sheltered these nations from the consequences of policies which inhibit normal economic expansion, such as Shari'a compliant financing. As these nations' reserves and production dwindle (say by one-half every generation) they are destined to face economic destitution. Nations which may avoid this fate are those Malaysia and Indonesia which have large populations relative to their reserves and so cannot rely on petrodollars alone.

During my limited experience in these countries, I observed many young professionals avid to make something of themselves. It may be no coincidence that these are two of the most democratic countries in the Islamic world. Perhaps this is a good harbinger for Iraq. (I wonder if Dr. Pipes' gloomy prognosis for Iraq has been altered by the last round of elections.)

(Also, as a tennis player I would like to note that, Andy Ram's ranking (12th as of today) is for doubles, probably a lesser distinction than Peer's 45th rank in singles. Peer has been ranked as high as 15th. On the other hand, Ram has won a doubles Grand Slam championship with Jonathon Erlich; Australian Open 2008)

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