Futuristic Organization of

Arab Petroleum Exporting

Countries
Eradication of Oil Resources

Introduction to the Council

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

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.

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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 was
established 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.

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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 Gulf
Cooperation 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

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

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(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 worlds 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 Citys 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 Dhabi
leads 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.

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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 prices
incentivise 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

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regions 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

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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 foreign
multinationals 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 twentyfirst 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

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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 flowergrowing 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.

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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 underrecognized 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 fragile
regimes 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

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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 womens status in the Arab World?

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

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

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

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

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

The GCC countries and the World: Scenarios to 2025. Retrieved from:
http://www.weforum.org/pdf/scenarios/GCC_report.pdf

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

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

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