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...of oil money for the common man in Gulf nations, who is struggling to make both ends meet
Are high oil prices ($102/barrel) good or bad for the mid-east population? On the face of it, a layman would say that an economy, which revolves around crude oil must reap in huge profits; observe a surge in the general well-being and see the state coffers overflow with petrol dollars. Beyond doubt, the political and business leadership in the oil exporting Gulf nations is experiencing the mellifluous flow of dollars into their chests, the common man and the middle classes are however, beginning to feel the pinch. “I have been a resident in the Gulf for past 12 years now. We had never known what inflation was for so many years, but now we are beginning to feel the brunt of high food prices and essential commodities.” Toufail Ahmed told B&E from Dubai.
Saudi Arabia, where the inflation rate for the past decade had been well-nigh nil, the current level of 6.5% is certainly alarming according to experts. In Jordan the government has been forced to withdraw fuel subsidies, pushing the fuel prices up by almost 76%. Such a steep hike has certainly led to a cascading effect on foodgrain prices. In Bharain, where according to the Oil and Gas Affairs Minister Dr. Abdulhussain Mirza, “the oil industry is on the threshold of a golden era.” The rising prices are however perplexing, “..consumer price index was 104.64 points at the end of January compared with 104.07 points in December. Food, beverage and tobacco costs climbed 2.1% in January from December while housing costs were steady,” says the Bahrain government’s Central Informatics Organisation (CIO) .
The soaring prices in the Gulf are certainly an outcome of the spurt in the global commodities prices; the dwindling agricultural production; the slump in the dollar and of course, the now infamous sub-prime crisis in the US. All these factors are contributing in exacerbating the common man’s plight in the mid-east region, which according to the reports emerging from the region indicate towards a simmering discontent among the masses, leading to protests marches.
For all these years, the ruling classes in the mid-east region have adopted the carrot and stick policy to manage the masses. Both religion and strong arm tactics have been relentlessly used to keep a tight lid over all forms of discontent. The questions which many analyst are now asking- is the credibility of Gulf ruling classes coming under strain? Are the political risk management strategies of the Gulf ruler failing? And will a global economic downturn eventually lead to democracy taking roots in the region? One only wishes that the benefits accruing from an oil economy are fairly passed on to the poor in the Gulf.
B&E edit bureau: Atul Bharadwaj
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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