Presiding over a meeting of experts hosted by the Arab Center for Research and Policy Studies in Doha, former Qatari Oil Minister Abdullah Bin Hamad Al Attiyah stated plainly that allegations accusing OPEC members of deliberately driving down the price of crude were “ridiculous.”
There is “not a conspiracy,” the seasoned Qatari statesman and former Chairman of OPEC confirmed, calling the rumors “ridiculous.” Al Attiyah told attendees that despite rumors of a drop in crude prices in an effort to curtail Russia and Iran’s expansionist foreign policies “we are not conspiring against Russia and Iran.”
Al Attiyah’s keynote address explained, rather, that overproduction by both OPEC members and non-members was a “simple fact” of supply and demand: “There is simply a surplus of two million barrels of oil in the world market.” He later elaborated that the overproduction was a reflection of difficulty in implementing and guaranteeing OPEC’s market quotas.
ACRPS’ one-day symposium brought together officials, experts and researchers on economics, oil production, and climate change, and saw wide-ranging discussions on the history of the industry as well as the pitfalls of development that resulted from an oil economy.
Looking back, Al Attiyah reflected on the historical importance of and justification for the existence of OPEC, an organization founded in order to counter Western control of the world commodities markets and their consequent ability to dictate the economic fortunes of the Gulf States. OPEC was, Al Attiyah recalled, a vehicle of economic liberation for states in the Middle East and Central America. However, OPEC’s former chairman was quick to point out that the much-maligned exporters’ organization, often described as a cartel, was no longer the uncontested arbiter of world oil prices. The official recalled that while in the 1980s OPEC controlled the lion’s share of world oil production; today it produces only roughly 40% of the supply of crude oil in the markets. The only way to change the current situation and see OPEC regain its ability to swing the oil markets, Al Attiyah concluded, would be to cooperate and consult effectively with non-member producers, such as Brazil and Russia.
The statesman called the predicament facing OPEC members today, including those in the GCC, reminiscent of an earlier price war between Middle Eastern producers and European producers exploiting North Sea Oil in the 1980s. “History repeats itself,” explained Al Attiyah, and the Gulf should “learn the lessons” from the period between 1985 to 2000, when it faced down pressures from North Sea operators to bring down the price of oil. Despite hardships during that time, he recalled, the Gulf was able to construct an extensive petrochemicals and downstream products industry, and a generous social welfare net for citizens.
The address sparked debate at the conference, with participants questioning how to move forward from the current phase. Kuwaiti economist and commentator Amer Theyab Al Tameemi recalled how oil revenues turned Kuwait into one of the wealthiest countries in the world, but one in which “citizens relied on the state for everything.” This wealth, he said, allowed the Kuwaiti government to dominate and later marginalize the nation’s private sector.
Speaking of the Iraqi experience, former Minister of Oil in pre-invasion Iraq Isam Chalabi recalled how similar unaccountable oil revenues gave the government of Kuwait’s close, but not always congenial, neighbor to the north the power to preside over a corrupt vassal system for the past 13 years.
Addressing the meeting, Chalabi detailed how the Iraqi government abused the funds it received from oil revenues. He detailed how Iraq’s former Prime Minister Nouri al-Maliki had, during his eight-year rule, spent over half a trillion dollars with nothing to show for it. Speaking frankly, Chalabi opined to a receptive audience that, “If a drop in oil prices is what it takes to bring down [the corrupt government in Iraq], the more the better.”
Chalabi’s widely shared sentiments underscored the pressing need for Arab oil exporters to help balance the wealth granted by oil revenues with the need both to uphold good governance as well as to both anticipate and accommodate the rapid growth of renewable energy technologies, touted as a solution to the environmental problems produced by fossil fuels.
Those in attendance at the Doha meeting agreed that given the realities Arab oil exporters face there would be a difficult struggle ahead, and that any lifting of government subsidies on fuel and public utilities would be a painful choice. As one participant put it, officials “keep talking about belt tightening measures, but we’re not exactly used to wearing belts here in the Gulf.”
Assessing the current situation, participants observed that while Kuwait’s budget was balanced on a putative price of $45 per barrel, Saudi Arabia and other Gulf countries faced the very real prospect of slashing government support for educational reforms, infrastructure and economic development amidst the current drop in revenues. Discussion focused on the structure of the labor markets in the Gulf States, which rely overwhelmingly on the services and expertise of expatriates. The consensus was that if the GCC is to survive a sustained decline in the price of crude oil, then its members will need to train a native workforce, diversify economic activities, and start preparing for a post-oil world.
Al Attiyah criticized the Western effort to drive down oil consumption, citing in particular the hypocrisy of carbon tax proposals, asking participants to “Look at how much the price of a barrel of crude has dropped recently, but the price you pay at the pump [in Western countries] has remained the same,” and calling moves to implement a carbon tax to be levied on countries across the globe a “wolf in sheep’s clothing,” that would simply place countries in the GCC – which relied nearly entirely on hydrocarbon exports for their GDP – on the same footing as countries in which oil exports were negligible.
At the same time, the environmental imperative to adopt cleaner forms of energy across the board was a constant theme throughout the meeting. Mamdouh Salameh, an oil economist and conference participant speaking at the closing session, summed up sentiments on the issue, calling the rise of solar energy technologies inevitable, and predicting that alternative energies would soon become indispensable for oil exporting countries in the Gulf.