Sustainable Growth and Security in the Gulf Cooperation Council: Recommendations for UAE

Introduction

The countries of the Gulf Cooperation Council (GCC) have witnessed a significant advancement in the economic field since the discovery of oil and natural gas in this region at the beginning of the twentieth century. The extensive extraction of mineral resources was implemented with the application of technologies and policies that did not consider environmental security and economic sustainability. The top priority for the countries rich in resources was the rapid financial development at any cost without due attention to environmental pollution or fossil fuel exhaustion.

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However, with the recent emergence of global concerns about sustainable growth and environmental protection, the GCC begins to enter the worldwide discussion of the possible ways to sustain natural resources and advance economies with the help of renewable sources of energy. During the post-oil period, the top priority for the countries of the Gulf, including the United Arab Emirates (UAE) as one of the most successful states in the region, is the development of national policies aimed at diversification of economies with the private sector and inexhaustible, environment-friendly, and cost-effective sources of energy.

In this paper, the case study of sustainable development and security in the GCC states will be researched. Firstly, general information about the region’s current economic and political situation will be covered. Secondly, the history of oil and natural gas discovery will be discussed with the identification of the effects it had on the global energy market and regional economies. Thirdly, the challenges obstructing sustainability in the GCC region will be presented with the following introduction of the UAE’s vision for future economic growth. Finally, the paper will provide a set of recommendations for the UAE to sustain its economic advancement under the influence of exhausting energy resources and rapidly emerging environmental concerns.

The Current Economic Situation in the GCC

Since its creation in 1981, the Gulf Cooperation Council has become a union of prosperous countries with their economic priorities set on the production and global supply of such natural energy resources like natural gas and oil. The countries that constitute this association include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (Ben Hassine & Harrathi, 2017). In total, these six states supply “about a third of the world’s known reserves” of oil “and about a quarter of its natural gas needs” (Al-Maamary, Kazem, Chaichan, 2017, p. 11).

The political and economic development of these states varies depending on their governments, but they share the overall role in the global market as the leading producers of oil. In terms of economic integration, there are strong export-import relations inside the union with substantial investments of the Gulf into the development of other Arab countries (Al-Maamary et al., 2017). Also, the region provides a great number of employment positions for migrant workers from less advantaged countries (Sillitoe, 2017). Indeed, the Middle East states significantly benefit from the economic advancement in the region and strive to invest in other spheres of the economy.

To present more specific information about specific states, one should mention that Saudi Arabia is one of the leading owners of oil reserves in the region. Qatar is the world leader in the production of liquefied natural gas (Al-Maamary et al., 2017). As for the UAE, it is one of the most investor-friendly states in the GCC due to the opportunities in the spheres of technology, tourism, as well as low taxes and support for small businesses. In several decades, UAE has emerged “from a small sparsely populated nation reliant on agriculture and fishing to a modern trading economy” (Abou Hana, 2017, p. 414). Therefore, the current economic success is based on cheap energy resources and the ability of the Gulf to invest in its further growth.

However, there are significant safety concerns in the GCC region. Due to its geographical location in the world’s most strategically important region, the GCC faces threats to its stability and safety. Indeed, three war conflicts have taken place here for the past thirty years (Al-Maamary et al., 2017). Since oil and gas have proven to be strategically influential resources, the conflicts over them currently impose a significant concern. Therefore, the union of the GCC states is driven not only by the interests of economic cooperation but also by the need to maintain collaborative security strategies aimed at the defense from the threats within the region and outside of it (Al-Maamary et al., 2017).

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Thus, the GCC experience is an example of successful cooperation capable of strengthening the “convergence and coordination in the economic, defense and security fields” (Al-Maamary et al., 2017, p. 11). That is why the Gulf maintains its relatively stable position in the world economy.

All in all, the states of the GCC are the main contributors to the global energy market. Since the Gulf plays such a significant role in the world economy, it is only natural that the policies these countries apply to the unsustainable use of fossil fuels influence the global economic and environmental situation (Ghadimi, 2016). However, to succeed in industrialization and urbanization, as well as establish the leading positions in the world of energy economics, these states have neglected the threats of pollution or resources’ exhaustion (Sillitoe, 2017). Accordingly, the strategies for sustainable development in these countries’ economies are in the interest of the global community as a whole. The geographical position

Discovery of Oil and Natural Gas in the GCC

The level of advancement the world observes in the GCC states now has not always been characteristic of the Gulf region. For many centuries, traders from these territories established commercial relations with India and Africa. Fishing and pearling were the primary sources of products for trading (Kubursi, 2016). Hot subtropical climate and landscapes comprised of mostly deserts, rocky hills, and dunes are not favorable for vegetation and are overall scarce in the means for agriculture (Sillitoe, 2017). However, the shipping of seafood and pearls significantly contributed to the wealth of the region and attracted traders from the bordering countries until the nineteenth century (Kubursi, 2016). The vector of development changed with the discovery of oil and natural gas reserves on these territories.

The first oil pools were identified as early as 1932 in Bahrain but did not incept any significant economic shift. Nonetheless, due to the Iranian crisis in 1951, the use of oil increased, and the ultimate boom in its extraction occurred in 1973 (Kubursi, 2016). Such a delay in oil consumption by the countries of the Gulf region might be explained by the lack of financial means and technological opportunities to extract and export fossil fuels. When the oil prices increased in 1973, the countries obtained opportunities and motivation to attract foreign investors and bust the development of the oil industry (Kubursi, 2016). Cheap oil and gas extraction provided UAE, Saudi Arabia, and other states of the region with the advantages of increasing revenues and encouraged building profit-oriented connections with foreign partners and demanders.

As a result of such rapid global shift toward natural gas and oil as the main sources of energy, the states of the Gulf began the fast developmental journey that has driven them from poverty to wealth in a very short period. The global economic community was and, according to Ghadimi (2016), continues to be dependent on exhaustible resources, thus directing financial capital flow at “energy-rich economies, particularly those with abundant oil and gas” (p. 68).

Thus, for example, the UAE achieved success in investing in city-building processes and technological advancement. As Abou Hana (2017) states, such UAE cities as Dubai and Abu Dhabi became the main trade and tourism hubs in the Gulf. The government implemented policies enabling the use of the strategic geographical location of the country and investment in innovation. In such favorable conditions, small businesses and medium-size entities started to grow and make a profit (Abou Hana (2017). Other GCC states also embarked in the same direction of fast development as a result of oil discovery.

Challenges for Sustainability

Since its economic boom during recent decades, the GCC has now encountered the harsh reality of exhaustion of non-renewable natural resources and damage to the environment. A range of complications linked to the limited focus of these countries on fossil fuels contributes to the difficulty of achieving the goals the governments and the union as a whole have set forward. The vast global market demand for petroleum makes the Gulf a very important participant of the world economy and forces the international energy market to depend on the region (Ghadimi, 2016). The fossil fuel reserves, on which the countries like Saudi Arabia, the UAE, or Qatar relied and used as the primary determinant of their financial success and global energy dominance, appeared to be finite.

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According to Kubursi (2016), the six members of the union share similar cultural, geographical, and economic features, and therefore, have the same difficulties in maintaining sustainable growth. Such a state of affairs cannot be ignored and should be adequately addressed by the leaders of the main countries contributing to the energy market. Before determining the ways of possible improvement of the situation, it is vital to identify the challenges that the states of the GCC encounter today.

Understanding Sustainability

The urgent need for sustainability emerges to be the global economic trend. It is generally accepted in the world of economics that the main element of sustainable growth is the ability to provide a continuous supply of resources (Sillitoe, 2017). As an economic element, sustainable development implies well-planned strategies and procedures that target both profitable uses of available resources and their protective distribution.

In the case of the states of the Gulf region, the issues of continuous economic growth were not included when establishing the policies for resource exploitation. According to Sillitoe (2017), until recently, the states of the GCC have prioritized fast industrial and urban development with no regard to the “destruction of natural resources and pollution” (p. 1). Indeed, such relentless and forced utilization of recently discovered resources allowed for rapid GDP increase and the successful establishment of a reputable place in the international economy. However, sustainability is the leading pivot of the twenty-first century since it embodies the stability of development in the areas of economy, politics, and environment in the future.

Finding Renewable Sources of Energy

The extraction and supply of exhaustible resources cannot be viewed as a permanent flow of revenue (Ghadimi, 2016). Any dependence on a finite resource is destined for failure if it does not comply with strategies for sustainable development. Now that the reserves of oil and natural gas are almost fully exhausted, the need to reevaluate the position of the GCC countries in the world economy becomes prevalent.

In addition, due to the sole reliance of the GCC countries on global prices for gas and oil, their economies become vulnerable, since they are based primarily on these fuels. Therefore, the region faces a challenge of finding potential sources of revenue from non-oil sectors of the economy; in other words, economic diversification is one of the priorities in the GCC policies for the future (Al-Sarihi, 2018). The governments seek to maintain long-term growth with reliance on renewable resources. However, the threat to financial stability is not the only issue that concerns the Gulf.

Climate Change

Environmental damages constitute the second area of challenges for the GCC countries. Climate change, air pollution with CO2 emissions are a threat to the whole global community. The effect of global warming that impacts the planet is proven to be linked to the pollution caused by heavy industries, including gas and oil production (Al-Sarihi, 2018). The failure of the GCC states to preserve environment-friendly technologies in the course of industrialization and the ultimate exhaustion of the natural resources have led to irreversible alterations in the ecosystem (Sillitoe, 2017). The deterioration of the environment in the harsh climate of the Gulf region calls for immediate action due to its “adverse impacts on non-oil economic sectors …, such as fisheries, agriculture, infrastructure and tourism” Al-Sarihi, 2018, p, 6).

These specific areas remain the only beneficial opportunity for the CGG states to maintain economic stability in the post-oil era. That is why it is crucial to resolve the identified issues promptly and invest in renewable energy.

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As an example of the GCC members’ failure to provide appropriate measures aimed at the reduction of harmful effects on the environment, it is relevant to introduce some facts. According to research, Saudi Arabia lacks “environmental and technological awareness among the public” and does not have a comprehensive “education on sustainable energy systems” (Al-Maamary et al., 2017, p. 12).

Similar concerns are observed in other countries of the Gulf region, which, being rich in energy resources, vastly use the extraction industries as their primary revenue contributors. However, one of the UAE cities becomes an example for other GCC states due to its endeavor to mitigate climate change effects. As Al Maamary et al. (2017) illustrate, Masdar City successfully survived the global financial crisis of 2008 and managed to become the first city in the world to run industries free of carbon emissions. Such a policy of sustainable energy use with proper attention paid to the environment justifies the perspective future of the region’s engagement in clean and continuous economic development.

GCC’s Diminishing Role in the Global Market

The third issue that imposes a challenge for the Gulf’s further economic growth is linked with environmental concerns. It addresses the increasing interest of the global energy market in reducing greenhouse gases and using renewable sources of energy (Al-Sarihi, 2018). Such a trend signalizes a future decrease in global demand for petroleum and might diminish the role of the GCC states in the world economy. The leading world nations are shifting their industries toward clean and environment-friendly sources of energy. The majority of investment projects and strategic programs encourage the innovation in alternative energy source sphere.

Under such circumstances, the technologies of oil and gas extraction with high levels of carbon pollution are being expelled. Therefore, it is even more vital to refer to the strategically new ways of economic development in the region that would ensure sustainability without reliance on fossil fuels.

UAE Vision of Future Economy

The growing threats to the economy of the GCC impose national concerns among the members of the unity. Some of the issues have already been addressed by the policies of several countries, including the UAE. As the official website of the UAE government indicates, the leading sectors that contribute to the UAE GDP include extractive industries (29.5%), “wholesale and retail trade; repair of motor vehicles and motorcycles (11.7%), and financial, constructive, and transformative industry spheres each constituting approximately 8% of GDP (“Economy,” 2019, para. 8). This implies that despite the obvious fact that oil and gas extraction are the most profitable areas of the economy, other important fields should be advanced with the aim of sustainable growth.

The government of the state was able to foresee the outcomes of a “bottom-up” policy of oil and gas extraction and started some initiatives in the direction of the advancement of non-oil sectors of the economy (Ghadimi, 2016, p. 68). The creation of free zones in the UAE allowed for the attraction of global corporations’ capital into the country on win-win terms with tax-free policies (Abou Hana, 2017; “Economy,” 2019).

The country starts to modernize its legislation and financial policies. Beneficial terms of work for start-ups and small entities of the private sector are encouraged by governmental support and contribute to the national GDP (Abou Hana, 2017). As the authorities observe the harmful effects of the industry on the environment, specific measures are implemented to reduce pollution and mitigate climate change threats. Thus, the Green Economy initiative has been introduced with the slogan “A green economy for sustainable development” (“Economy,” 2019, para. 48).

The plan for the UAE development also includes an advanced skills strategy, which prioritizes continuous educational efforts for all the citizens of the state. The extensive implementation of technology and innovation into the learning process is viewed as a way to the sustainable development of non-oil spheres of the economy (“Economy,” 2019). Renewable energy sources are also at the top of the list of priorities in the program for the UAE’s economic growth. However, there is a need to determine more precise strategic directions of work to preserve the completion of the national program.

Recommendations for the UAE

Even though the UAE has started to reform the economy toward sustainability and security, there remain significant areas for further work. The identification of the areas in which the UAE needs to move towards sustainable economic growth and security is determined by the above-mentioned challenges the GCC encounters. The authorities of the state need to initiate a green economy concerning environmental security, find sources of alternative energy sources, and invest in the development of such non-oil industries as tourism, technology, and agriculture.

Firstly, timely recognition of climate change forces policymakers to prioritize environment-friendly technologies in all sectors of industry. Environmental education is one of the important constituents of the nationwide changes toward sustainable advancement since it introduces the rational validation of the new patterns of behavior to the younger generations. As it has been mentioned, the government of the state has already introduced the plan for the implementation of an advanced skill strategy that prioritizes continuous learning (“Economy,” 2019). The explicit implementation of subjects on environment protection in schools and universities will be beneficial for the population because careful attitude will be a social norm capable of maintaining safe development.

Under the circumstances of the modern global concerns about global warming prevention and the reduction of greenhouse gas emissions, the UAE needs to integrate the philosophy of nature protection in all fields of the economy (Al-Sarihi, 2018). The harsh climate conditions in the region impose additional challenges for resource security. That is why the UAE needs to identify the most effective ways of resolving environment-related challenges. The strategies aimed at addressing climate change issues fall under two categories, which include mitigation and adaptation.

As Al-Sarihi (2018) states, mitigation implies “an anthropogenic intervention to reduce the anthropogenic forcing of the climate system” (p. 7). In other words, by applying mitigation efforts, the authorities should eliminate the causes of harmful effects, including the minimization of greenhouse gas emissions. The second strategy is adoption, and it underlines the importance of “adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects” (Al-Sarihi, 2018, p. 7). Adapting methods help to control the current problem with air pollution and other manifestations of climate change contributors using planting more trees or regulating water use. However, this method deals primarily with the consequents of climate change, whereas mitigation strategies address the causes of the problem.

Since the issue of solving the problem with environmental pollution is broad and time-consuming, it is not anticipated that the results will be achieved immediately. It is advised that the UAE integrate both approaches to national policies in terms of reducing the harmful effects of global warming. At the first stages of strategy implementation, adaptation methods will be more effective, until pure mitigation strategy is possible to use under the conditions of the green economy. However, the target of the whole intervention is the establishment of an environment-friendly industry. As statistics show, the fossil fuel industry is the leading cause of greenhouse gas emissions. Thus, it is imperative to shift from standard oil and gas extraction procedures to succeed in the utilization of mitigation strategies.

Secondly, in inconsistency with the first recommendation, the UAE needs to consider shifting to renewable sources of energy available from the region, including such natural power as wind, wave, or solar power. These resources are inexhaustible and, in the case of relevant production and use, cause no harm to the environment (Ben Hassine & Harrathi, 2017). The economic growth will be sustainable due to the possibility of planning and reliance on renewable energy. Adequate use of the climate advantages and geographical position might preserve the UAE a prominent place in the renewable energy global market.

AS Al-Maamary et al. (2017) emphasize, the UAE should prioritize the attraction of investors into the solar power industry in an attempt to make it the leading source of energy for domestic consumption. Such an approach will make it possible to preserve oil and gas resources for export and the future by limiting the scope of extraction and ensuring a sustainable presence in the global energy market.

Thirdly, according to Al-Maamary et al. (2017), the focus on alternatives to oil and gas might contribute to the overall economic advancement in the state. Such a tendency is conditioned by the opportunities to create new workplaces and attract more workforces to the evolving sectors. The attraction of human intellectual capital to industries other than fossil fuel extraction is a pathway to the long-term developmental efforts with an opportunity to become the world’s leader in alternative energy production. In addition, the emergence of alternative energy sources will benefit the domestic energy market, as well as enable improvements in this field in the future.

Lastly, the government should attract human force and investments to the development of non-oil sectors of the economy. According to the official website of the UAE government, the advantages of the state include its competitiveness and “ease of doing business” (“Economy,” 2019). Indeed, the free zones and tax-free small business programs contribute to the rapid growth of start-ups and profitable entities in the region. Therefore, it is crucial to use the strength the state has already achieved and utilize them for further growth. The economic sectors that are recommended to be prioritized include tourism, technology, innovation, and agriculture. By attracting investments into these spheres, the UAE will be able to ensure sustainable growth and security.

Conclusion

To summarize the case study, one should emphasize that the GCC states have enjoyed economic benefits as a result of oil and gas discovery in the Gulf region. The six members of the union contain one-third of the world reserve of fossil fuels and are considered the leading suppliers of petroleum on the global market. However, the fact that the primary means of the rapid development of these countries was reliant solely on exhaustible natural resources, the threat to the sustainability of the economy started to grow. In addition, the failure of the states to exploit environment-friendly technology for oil extraction has caused significant harm to the already deserted areas.

Also, the shift of the global community to green economies diminishes the role of the GCC in the global market and requires strategic changes in the economic system to adhere to new standards. Thus, the concerns of environment protection and sustainable energy sources become a priority for the GCC. As the case of the UAE shows, some policies have already been introduced to find solutions to the problem. However, to maintain sustainable economic growth and security, the UAE needs to eliminate threats to the environment, find renewable sources of energy, and invest in such non-oil sectors of the economy as tourism, innovation, technology, and agriculture.

Reference

Abou Hana, M. (2017). Innovation in the UAE: From first foundations to ‘beyond oil.’ Global Policy, 8(3), 414-417.

Al-Maamary, H. M. S., Kazem, H. A., Chaichan, M. T. (2017). Renewable energy and GCC States energy challenges in the 21st century: A review. International Journal of Computation and Applied Sciences, 2(1), 11-18.

Al-Sarihi, A. (2018). Prospects for climate change integration into the GCC economic diversification strategies. LSE Middle East Centre Paper Series. Web.

Ben Hassine, M., & Harrathi, N. (2017). The causal links between economic growth, renewable energy, financial development and foreign trade in Gulf Cooperation Council countries. International Journal of Energy Economics and Policy, 7(2), 76-85.

Economy. (2019). Web.

Ghadimi, H. (2016). Sustainable economic development planning in energy rich regions. The Journal of Energy and Development, 41(1-2), 68-84.

Kubursi, A. A. (2016). The economies of the Arabian Gulf: A statistical source book. New York, NY: Routledge.

Sillitoe, P. (2017). Sustainable development in the Gulf. In P. Sillitoe (Ed.), Sustainable development: An appraisal from the Gulf region (pp. 1-37). New York, NY: Berghahn Books.

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