GUNS AND BUTTER
The GCC (Gulf Cooperation Council) countries, led by Saudi Arabia, will spend $120 billion over the next few years to buy advanced fighter planes and anti-missile defense systems. They are spending even larger sums to placate potential revolutionaries within their borders with bread, if not circuses. Kuwait earlier this year distributed $3,500 to each citizen, and promised to provide them with free food for a year to celebrate its 50th anniversary.
The oil-rich countries of the Arab Gulf will continue to run large surpluses this year, even with all of their largesse, thanks to the run-up in oil prices. They can afford to pay for both guns and ghee, at least in the short term.
On its 30th anniversary, the GCC had an existential moment that could redefine its future. It not only circled the wagons and sent in the troops to put down a rebellion in Bahrain but also extended its reach to far-off Morocco and oil-poor Jordan. These new invitees, with their large populations, will make the current six-state Arab Gulf coalition into a new Club of Kings. The modern-day caliphs, a group of conservative, pro-Western monarchs, are defending a political system put in place by the Prophet Muhammed. They are seeking to immunize themselves from what they see as an insurrectionary virus infecting the region.
The tendency of young people to embrace technology is another threat to the defenders of the status quo. The growing ranks of educated youth are not interested in most of the jobs performed by workers from South Asia. Further entrenchment of the welfare state could stunt the development of new, knowledge-based economies with vibrant private sectors. If the GCC is serious about including Morocco, Jordan and other needy Arab countries, however, it could be forced to expand its economic horizons beyond oil. Aspirations are rising, and it will take a partnership of the public and private sectors to see that they are met. Kuwait, for one, is embarking on an ambitious development program that relies on such a union of minds and money. The “triple-P” initiative of public-private partnerships is off to a slow start, but it will be watched closely as a possible model for the future of the GCC.