As oil prices began to tumble, some countries unleashed media campaigns attacking the GCC countries holding them accountable for the collapse ... as if they are the only oil producers and exporters in the world. These campaigns included reports that distorted facts, false accusations and exaggerations about the expected repercussions on their economies.
The first campaign was unleashed by Iran, and in which its “moderate” President Hassan Rouhani joined the chorus, blaming the fall in global oil prices on some GCC countries, a clear reference to the UAE and Saudi Arabia. He went as far as to threaten the Gulf states — saying they would regret helping in cutting oil prices.
What did the Gulf states do to receive this kind of vituperation? Did they increase production? The facts say certainly not. GCC’s production has remained stable in recent years, while the increased supply actually came from the US and Iraq. Going by what they say, the US should be the one held responsible for the price collapse.
Or is it the case that the “Great Satan”, as Iranians used to label Washington, is too powerful to be blamed? This is a well-known fact to anyone who observes closely oil and energy-related affairs.
The second blame campaign came from the West. Its media carried misleading reports of the GCC economies being on the verge of collapse. The Daily Telegraph, for example, wrote that if oil prices fall by 45 per cent, this would put an end to the tax-free life experienced by thousands of expatriates. None of these scenarios are likely to happen.
This is because the GCC countries had earlier tolerated oil prices plunging to $7 (Dh25) a barrel in 1998. Even then, they managed to keep growing and developing. Also, note that they are much stronger economically and politically now than in 1998. Security conditions in the Gulf are also much better than in the late 1990s.
The subject of energy prices and the proposed tax system has been on the GCC’s agenda for more than ten years and has nothing to do with the price fall. But it is connected with financial reforms sought by the GCC states and with reduction in energy wastage through subsidising. This means that the financial reform process will go ahead whether the price of oil is $200 or $10 a barrel.
Yes, the GCC countries are not alone with regard to feeling the impact of falling oil prices. However, they are more than capable of withstanding the consequences, thanks to sound economic policies, accumulated surpluses, and diversity and cooperation between all sectors of society.
GCC states work to address the consequences of oil price drops without putting the blame on one another. Others should do the same.
Iran already has its hands full with sectarian obligations in Syria, Lebanon, Iraq, and Yemen. Also, military expenditure represents a bulk of Iran’s budget, adding more burden to the already troubled country where citizens suffer from a severe economic crisis and growing unemployment.
For the US, share prices of oil companies have dropped significantly, while debts taken out by shale oil companies amounted to $260 billion. They now suffer from the problem of paying off these loans after the price collapse.
The media campaign against the GCC will not work ... the economies will achieve good growth numbers during this year and development projects are on track according to the predetermined schedules.
Also, Gulf states, notably the UAE, present an impressive model of development that is admired by the entire world thanks to rational and flexible policies, which have helped raise significant growth rates and contributed to raising the living standards of citizens.
This requires others, particularly oil-producing countries, to emulate this model of development, consistent with their internal conditions. They would be better off doing so rather than trying to impose their policies by force and sparking tension.
