During 2000 to 2006, with the increase of oil price, Gulf Countries made sky-high economic growth pushing domestic development and investment overseas. However, since 2008, by the decrease of worldwide resource price, the countries found that they need to create more diverse economies other than oil exclusive revenue. The oil consumption deemed to shrink, oil price plummeting,1 and outbreak of corona impact, have faced the Arab world in 3 scenarios for the time being.
On the other hand, Saudi Arabia might have huge damage,4 since national budget to sustain 27 mn citizens is also huge and 69% of the population is their own citizen even if they have $444 bn foreign reserves.5
The next scenario is to create a robust economy restored in Dubai. It developed economic free-zone district to promote trade among foreign companies and financial institutions diversifying assets and industries, which will grow regardless of the oil production. 6
The last scenario is none of the above two. However, the worst scenario. With the economy collapsing, unemployment soaring, food price going up, social upheaval may be on the rise like the one in Arab Spring in 2011-2012. Oil industry was a recipient for the numerous emigrants of the region, whose remittances from oil-rich states produced 10% of GDP in some of their countries. 7 This causes social unrest when tourism also limits hiring people. Another uneasy recipe is refugees in Syria and Iran.
When one equilibrium is broken in a power-centralized system, uncertainty abounds in the next moment. However, this will be the best chance to reinvent the system. The news that Israel and the UAE will establish diplomatic ties hope to be the beginning of a change. 8