| Kippreport.com

Making the Arab Spring Eternal

August 15, 2011 2:29 by Jay Akasie

When the 14th century explorer Ibn Battuta began his travels across most of the Arab world, he could take a money order from a merchant in Tangiers and cash it in Baghdad.

Few societies on earth could boast the sort of economic and cultural sophistication that the countries of the Arab world could during the Middle Ages. So it’s natural that Ibn Battuta’s name resurfaces when analysts question whether there will be a renaissance in the Arab world on par with what the Moroccan explorer once knew.

The political uprisings within many Arab societies earlier this year initiated profound hope and expectations that perhaps for the first time in centuries, the Arab world would once again take up a mantle of economic and cultural leadership. But just months later, this Arab spring has turned into a hot, stagnant, and somewhat uncertain Arab summer. Fleeting are the hopes that the changes would have a lasting effect.

In an exclusive investigation, Trends has found that the Arab world is still a long way from realising many of the changes that must take place before it can lead to a flourishing of free markets, peoples, and ideas. To be sure, there are many initial signs that the Arab world is pointing itself in the right direction. If the past six months of uprisings are any clue, the MENA region has a disproportionately high number of young people who are committed to challenging the oppressive regimes of the past century.

Indeed, the seeds of economic liberty and free and unfettered markets have been planted. But before they can be sown, or for any positive developments to play out, here are what leading authorities and analysts are saying must first take place in the Arab world.

ENDING OIL’S BONDAGE
It is truly a tragic phenomenon that tumult and turmoil actually help the Arab world’s economic prospects when it comes to oil.

According to the senior economist at the National Bank of Kuwait, Daniel Kaye, crude oil output of the OPEC countries excluding Iraq fell dramatically in March after the full impact of the decline in war- ravaged Libya began to be realized. Libyan output fell by 73 percent, but the drop was not offset by increased production from other OPEC members. The price of a barrel of crude is now well above $100. There were significant increases in Angola, Kuwait, Saudi Arabia and Venezuela, but overall, OPEC output dropped in that period.

“Other than a response lag, it is not yet clear why lost Libyan output was not fully replaced by other OPEC members,” according to NBK’s Kaye. “One possible reason is that Libya’s light sweet crude blend was not fully replaceable, so demand for other types of crude did not rise one-for-one. It has also been suggested that for the Libyan oil that was replaced, the longer cargo routes imply that more output was tied up in transit. This may have reduced recorded production levels where – as may be the case in Saudi Arabia – they are reported from sales.”

Nevertheless, OPEC has not changed its ways despite all of the upheaval in the Arab world during the past six months. Its passive- aggressive stance remains staunchly intact. “Relations within the group may have been affected by events in Libya and across the MENA region, but this is not seen as having a major bearing on the policy- setting process,” said NBK’s Kaye. “Although the overall changes in non-OPEC supply and global demand projected for this year could therefore be offsetting, this would still leave OPEC needing to increase production significantly – over and above that needed to compensate for Libya – for the world to avoid another inventory drawdown, much less to push stock cover back up to more comfortable levels.”

THE RISING DEMAND FOR GAS
Then there’s the rise of liquid natural gas. A Merrill Lynch study points to data that confirms worldwide demand for liquid natural gas is surging. Yet this is an energy source with tremendous potential that is not centered in the Middle East. “On a percentage basis, the strongest growth is coming from Latin America, especially Argentina and Brazil, but also Chile.

Argentina is just commissioning its second floating re-gasification facility – the first was built in a record nine month’s time. Both countries have been in the market bidding for physical tankers well ahead of their heating season this year and we expect to see strong demand growth from the region during the Northern Hemisphere summer,” states the Merrill Lynch report.

The future of world energy is slowly and surely drifting away from the Arab world. Despite the lip service and ‘green-washing’ public relations campaigns in the Arab world, little has been accomplished in acknowledging this fact, except, of course, in the emirate of Dubai.

That tiny sheikhdom has shown the rest of the Arab world what can happen when a long-range plan is put in place to think about a time when most of a society’s revenues do not come from fossil fuel.

DUBAI VS KUWAIT: WHICH IS A GENUINE PRIVATE SECTOR?
So why else does Dubai succeed on so many levels and why is it envied (secretly or otherwise) by many other Arab states?

Besides its long-range, non-fossil fuel planning, Dubai is able to create a free-market society, it has set up ingenious free zones that make it a…

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