The Energy Transition in the Middle East: The Outlook for 2040

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Published in partnership with the King Faisal Center on Research and Islamic Studies.

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The views and opinions presented here are solely those of the author and do not reflect the views of the United States Government, the National Council on U.S.-Arab Relations, or the King Faisal Center on Research and Islamic Studies.

Summary

Discussions about post-oil planning in the Middle East were rather common around fifteen years ago, when experts sought to focus attention on the need for economic diversification and consultancies aimed to help clients prepare long-term strategic visions.  Governments that had the foresight to recognize the scope of the problem and the political will to commit real resources to it, have already begun the lengthy, arduous process of changing public mind-sets, bureaucratic cultures, and regulatory regimes.  Some will succeed, gaining a competitive advantage over regional neighbors in terms of technology, efficiency, and productivity, making them valued partners for the international community in terms of maintaining peace and security in the Middle East.  Others will survive, but their growth will be stunted and they will struggle to explain to the international community how they are contributing to global efforts at climate change and why Western countries should continue to lend them political, military, and financial support.  Those governments that have not yet begun to address the problem probably do not have the time that will be required to accomplish all the necessary steps before peak demand arrives, their oil exports lose value and/or market share, and they can no longer maintain the patronage networks that are the backbone of regime survival.  In a sense, we can already see the outlines of the post-oil future taking shape around us and we can start to assess its impact on industry, governance, and society, even if oil itself will continue to have value for decades to come and energy companies transform to meet the needs of the global economy.

The Future is Now

One thing that we must keep in mind is that for most people who are currently reading this article, these fundamental transformations in the region will occur in our lifetimes.  This story begins in Canada, far away from the date palms and camel races of Riyadh and Abu Dhabi.  Jason Kenney, the provincial premier of Alberta province, ran in 2019 on a conservative platform of deregulation of the oil industry, in support of the profits from oil sands that it generates for Alberta’s residents.  He now finds himself shifting tack, as Alberta’s government seeks to develop investment in renewables and forms of energy with lower CO2 footprints, while at the same time proposing a fund that taxes carbon emitters to help pay for carbon capture and storage.  Investors and insurance companies have signaled that they are wary of projects that do not meet certain basic environmental criteria, and the Keystone XL pipeline will likely face serious obstacles from the new administration in Washington.[1]  The politics are not simple.  Oil sands from Alberta comprise the largest single source of U.S. oil imports and support for the oil industry is a mainstay of the Conservative Party’s platform.[2]  Even as the Alberta government explores energy diversification, it has also funded the Canadian Energy Centre to rebrand the image of Canada’s oil industries and backed indigenous groups that are willing to support energy projects through legal action.[3]  Kenney and the Conservatives in Edmonton are caught between the oil politics of the present and the climate activism of the future.[4]  This is what the energy transition looks like – oil producers and politicians having to reposition themselves to account for changing public, corporate, and governmental tastes.  It is a story that will play out throughout the Middle East over the next ten to twenty years.

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A Summit Amidst Uncertainties

Today, the 40th summit gathering of the Gulf Cooperation Council’s Supreme Council is taking place in Riyadh, Saudi Arabia. Founding President and CEO of the National Council on U.S.-Arab Relations, Dr. John Duke Anthony, is attending as an observer. He is doing so as The Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, presides over the meeting of Gulf leaders and/or their chief representatives.

The Gulf Cooperation Council (GCC) was formally established in the Emirate of Abu Dhabi on 25 May 1981, at a summit that this writer was privileged to attend, as he has attended every GCC Summit since. An Arab sub-regional organization that represents some of the world’s wealthiest per capita countries in a geographical swath lining the length of the western coast of the Gulf, the GCC region encompasses what is arguably the most strategically vital area on the planet. The GCC’s six member-states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In addition to all five of the member-states being a landward neighbor to Saudi Arabia, all six share maritime borders with the Islamic Republic of Iran.

Location of the Summit

This 40th GCC Heads of State Summit is the first time the summit has been held in the same location (Riyadh, Saudi Arabia) in two consecutive years. Observers differ regarding the reason. Some believe it is a testament to the effectiveness and importance of the GCC Secretariat that, from the organization’s inception in 1981, has been headquartered in Riyadh. Others hold to the view that the repeated focus on having Riyadh host the annual summits is but an echo of the United Nations, whose annual General Assembly Meetings are held in New York.

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The Road of Interdependence

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Introduction By Dr. John Duke Anthony

The author of the essay that follows heads the Gulf Cooperation Council (GCC). Founded in Abu Dhabi on May 25, 1981, the GCC is comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Its Secretariat, comprised of representatives of all six of the Member States, is headquartered in Riyadh, Saudi Arabia.

His Excellency Dr. Abdullatif Bin Rashid Al Zayani is the GCC’s fifth Secretary-General. He was appointed by the GCC’s Supreme Council, which is the organization’s highest decision-making body. The Supreme Council is composed of the Heads of State of the GCC’s member countries.

The GCC has long been viewed as the most successful sub-regional organization in modern Arab history.

Incorrect and Flawed Perceptions

Some take issue with this description. They disagree. In the eyes of some of the GCC’s critics, such a positive assessment is incorrect and misleading.

Some contend that the GCC has failed to live up to its aspirations regarding maximum cooperation. Others emphasize how the GCC has fallen short of integration. Still others point to the lack of success in forging a more unified set of achievements.

The GCC’s leaders do not deny that there is a significant measure of truth in these complaints. They acknowledge their shortcomings. They admit to their having failed to achieve what some had hoped and others expected the organization to accomplish at the time of its founding.

In fairness, though, one needs to ask: what organization’s achievements have not fallen wide of what its founders hoped to effectuate? No such organization exists. In this, the GCC is no different.

This writer was present at the GCC’s founding meeting. He has attended each of the GCC’s Ministerial and Heads of State Summits since then. He has experienced firsthand the heady atmosphere and the genuinely euphoric mood that accompanied the GCC’s establishment. He has witnessed firsthand also the genuinely jubilant climate that has followed many of its subsequent summits.

Regional Comparisons

Shortcomings and all, the six east Arabian Peninsula countries never cease to amaze. Their material progress has been and continues to be mind-boggling. The nature, pace, and extent of their modernization and development can be catalogued in myriad ways.

Lest one suspect such comments are a paid advertisement, which they are not, check them out. For comparison, examine the entire 22-country Arab region and, regarding the 16 other Arab countries, see if there is anything remotely comparable to what the GCC, as an organization, and its Member States as its components, have accomplished. One will not find it because it does not exist.

The unconvinced are urged to apply a different test. Use another set of contexts to test the viability and robustness of the GCC. Attempt to find another international organization in the region that meets with as much frequency. Searchers will not find a comparable example nor even a remotely similar one.

What one will discover instead is that the GCC Secretariat hosts and administers no fewer than 400 meetings a year. They will learn that, in some years, it hosts as many as 700 meetings. What is more, there are no absences; all six of the members convene to discuss common issues and challenges. No Arab organizational grouping and no Arab countries meet as regularly to anywhere near the same degree.

Additional Frames of Reference

Still not persuaded? Try another frame of reference.

To determine the robustness, and overall appeal and attractiveness to local and foreign investors of a given region, or even of a single country, the following test might be useful. Examine the nature, pace, and extent of people clamoring to enter the GCC region or one of its specific countries. Determine whether it could be classified as: (1) many, (2) some, (3) few, or (4) none. In many countries, the answer is either of the latter options. In the GCC region, it is the first.

Flip the coin and examine the trend from the opposite perspective. Ask how many people are trying to leave the region. Ask what the reality is in terms of the same four options. The answer will be between (3) and (4).

The reason for these positive realities is clear to specialists if not to generalists. It has to do with the six countries being globally distinctive in terms of their domestic safety and external defense. Search the globe and one will not find six other geographically contiguous countries or six identical systems of governance that illustrate these same realities.

In other words, the negative, pessimistic, and dismissive views that one will find in much of the media are at once incorrect, unfair, and misleading. The extraordinary frequency with which the GCC Member State representatives meet to further their countries’ and peoples’ progress is but just one example.

Agenda Items

Of related importance is the range of matters that the GCC brings members together to discuss: security, defense, intelligence, economics, commerce and trade, investment, and technology cooperation. In addition, the members meet regularly to plan operations pertaining to the members’ periodic security and defense maneuvers and exercises designed to enhance their common deterrence and protection.

These facets of the GCC’s forward momentum in matters of a material, social, and economic nature have no rival among any of the world’s other sub-regional organizations. More specifically, the region as a whole and each of its countries exhibit a range of truisms, certainties, and predictability that would-be investors find a marvel to behold. These do not, however, exist in a vacuum.

At The Helm: Preparation, Preparation, and Preparation

They are present alongside the author of the remarks that follow, His Excellency Dr. Al Zayani. Abiding by the strictures of three-year terms in office, Dr. Al Zayani is presently in his ninth year as head of the six-country organization’s Secretariat in Riyadh. What is it that to date has made this particular leader so effective in the eyes of his peers as well as his superiors?

Dr. Al Zayani, a native of the Kingdom of Bahrain, is a graduate of Sandhurst, Great Britain’s premier military academy. Upon returning to Bahrain, he began a period of service in his country’s armed forces and its Ministry of Defense for the next three decades.

From there, Dr. Al Zayani was transferred to Bahrain’s Ministry of Interior, which is not like America’s Department of Interior but rather, in close association with the administration of an effective system of civil justice, is focused on the maintenance of law and order. He served there as Bahrain’s Chief of Public Security with responsibility for all aspects of the Kingdom’s domestic security and safety.

After that, Dr. Al Zayani could have taken up a full-time teaching position—he holds a PhD and has taught at several universities. Rather than do so, however, he accepted an appointment at Bahrain’s Ministry of Foreign Affairs. He was serving in that role when he was appointed Secretary-General of the Gulf Cooperation Council by the GCC’s Supreme Council in 2011. Dr. Al Zayani was elected for a second three-year term in 2014 and elected yet again to a third three-year term in 2017.

In October 2018, Dr. Al Zayani addressed the National Council on U.S.-Arab Relations 27th Annual Arab-U.S. Policymakers Conference in Washington, D.C. In his remarks, Dr. Al Zayani stepped outside of his role helming the Gulf Cooperation Council’s Secretariat. In doing so, he drew upon his deep knowledge of public service to issue a personal call for a brighter future for the region’s people.

Dr. Al Zayani is mindful of the pessimism and feeling of hopelessness stemming from regional violence and turmoil. Despite this, he has charted a specific path forward through regional collaboration and cohesion. If national leaders were but to heed Dr. Al Zayani’s advice, they would realize the benefits in how it could breed optimism and bring shared peace.

The National Council is privileged to share here an edited transcript of his remarks.

John Duke Anthony, PhD
Founding President & CEO
National Council on U.S.-Arab Relations

THE ROAD OF INTERDEPENDENCE

By H.E. Dr. Abdullatif bin Rashid Al Zayani,
Secretary-General, Gulf Cooperation Council

Gulf Cooperation Council Secretary-General H.E. Dr. Abdullatif bin Rashid Al Zayani addressed the National Council on U.S.-Arab Relations 27th Annual Arab-U.S. Policymakers Conference in Washington, D.C., on October 31, 2018. This transcript of his remarks was lighted edited for publication.

Your Royal Highness, Excellencies, Distinguished Guests,

I am delighted to be with you this evening. It is a privilege and an honor to be among such a distinguished gathering of leaders in the capital of one of the world’s most important and powerful countries. I come before you to say a few words on some of the difficulties facing the Gulf and the Middle East. I do so also to briefly outline my vision, as a citizen of the region, of how such challenges might, in the longer term, be turned into an opportunity for genuine peace, stability, and prosperity.

Of course, any vision for the future must be rooted in the reality of today’s challenges. In the Middle East and North Africa (MENA) region, these geopolitical challenges are at once well known and exceptionally complex. Among the more intractable are those in and associated with Iraq, Libya, Syria, and Yemen.

Any vision for the future must be rooted in today’s challenges. In the Middle East and North Africa region, these challenges are at once well known and exceptionally complex.

The opportunity you have offered me is one that is seldom extended to someone in my part of the world.

It is not every day that one is asked to offer a vision of what may lie ahead. Even less frequently is one requested to suggest how one might best proceed to address the challenges they represent.

Lebanon as But One Example

Of the various challenges we face, Lebanon is but one among others. The structure of governance and the system of political dynamics in that Arab country are steered by Hezbollah (literally, “the Party of God”). People may differ in their descriptions of the party, but there is no doubt that many regard a significant proportion of it as a violent, sectarian, extremist militia.

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The Gulf Cooperation Council in the Rear View Mirror and the Front Windshield: Navigating the Shoals of Regional Uncertainties

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In Riyadh, Saudi Arabia, 9 December 2018 will witness the 39th summit gathering of an institution without peer. This writer, who is here in the Kingdom’s capital, is scheduled to be present as The Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, presides over the 39th Meeting of the Gulf Cooperation Council (GCC)’s Supreme Council, a grouping of Arab rulers and/or their chief representatives.

The GCC was founded in the Emirate of Abu Dhabi in May 1981 at a summit, which it was my privilege also to attend, by the sovereigns of the half dozen countries that line the entire length of the western coast of the Gulf. All six are adjacent to the Islamic Republic of Iran, their maritime neighbor. The GCC’s six member-states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE).

A Grouping of Strategically Vital States

Among the world’s 130 emerging and former foreign dominated countries, no other grouping of governments can be reckoned to be as powerful and influential as the GCC. The reason? Collectively, they control thirty percent of the planet’s proven reserves of oil, the vital strategic commodity on which the world’s economies rely.

It is of course true that America’s supplies of shale oil in the past several years have made an enormous difference in global energy production. Indeed, their discovery and accelerated output have catapulted the United States to the position of the world’s largest oil producer. Even so, America has long been the earth’s largest user, greatest importer, and most prominent waster of oil and gas.

There’s a compelling reason for the first two of these observations. Without hydrocarbon fuels, the standard of living, material wellbeing, and the overall level of comfort of every person in the United States would be lower. Despite this, the rest of the world’s peoples are puzzled as to why Americans also remain the planet’s single loudest whiner about the prices, usage, and role of such fuels. An abiding reason has to do with how relatively inexpensive many fuels are in the United States compared to other countries. Even so, this steadily depleting natural resource continues to be among the most important drivers of world economic growth.

GCC foreign ministers meet on the sidelines of the 10th GCC Summit in Muscat, Oman. Photo: Dr. John Duke Anthony, 1989.

In addition, the six GCC countries include within their midst the epicenter of prayer and pilgrimage for the Islamic world. The faith and spiritual devotion of the 1.7 billion Muslims’ worldwide – nearly a fourth of humanity – is anchored here more than any place else.
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Continuity Amidst Transformation: Reflections on Crown Prince Mohammed bin Salman’s Visit to the United States

Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz Al-Saud begins a visit to the United States today. He is reported to be planning stops in several cities, including Washington, D.C., New York, Boston, Houston, Seattle, and San Francisco. The occasion will mark his second official visit to the United States since Donald Trump assumed the U.S. Presidency and Mohammed bin Salman’s first official visit since assuming the post of Crown Prince in June 2017.

Roots of the Relationship

In considering the modern U.S.-Saudi Arabian strategic partnership, reference is often made to a meeting the Crown Prince’s grandfather, King Abdulaziz bin Abdul Rahman Al-Saud, had with U.S. President Franklin D. Roosevelt on February 14, 1945. That historic visit had the two heads of state sitting and exchanging views with one another aboard the U.S. Navy’s U.S.S. Quincy in the Great and Bitter Lake of the Suez Canal. Academics, scholars, media specialists, policymakers, and foreign affairs specialists of all stripes have ever since referred to that visit as “historic.”

Yes, that visit was historic in the sense that it occurred on a certain date in time. Except for the fact that those two outsized heads of state met each other for the first and only time then and there, however, the encounter was far less “historic” in the usual sense of the term than countless commentators have since made it out to be. To be sure, a myth about what transpired at that meeting is deeply embedded in the literature and lore of the American and Saudi Arabian peoples.

King Abdulaziz bin Abdul Rahman Al-Saud with President Franklin Delano Roosevelt aboard the U.S.S. Quincy in the Great Bitter Lake of the Suez Canal in Egypt on February 14, 1945. Photo: U.S. National Archives and Records Administration.

The truth, however, is that the so-called Saudi Arabian-American love affair dates not from the meeting between the U.S. President and the Saudi Arabian King in 1945. Neither does it stem from the discovery earlier by American engineers, aided by skilled Saudi Arabian Bedouin guides, of a Kingdom-based petroleum bonanza in 1938 the likes of which the world had never seen before and has not seen since.

Rather, the roots of the special relationship date from decades before – from 1917 onwards. The seeds of the extraordinary one-of-a-kind international special strategic partnership of the American-Saudi Arabian alliance that has lasted to this day were laid then by others. None among them were officials of either country’s modern government.

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