The area covering the Middle East and North Africa (MENA) occupies a key position in the geopolitics of energy. The area, which represents 5 per cent of the world's population, contains 66 per cent of world oil reserves and 45 per cent of world gas reserves. Some of these countries are rich or very rich. However, this windfall wealth is unevenly distributed and does not automatically lead to economic development. Actually, many of these countries suffer from what the economists call the ‘resource curse' (more specifically here the oil curse). The oil curse creates economic distortions that impede economic development. In addition, oil dependence has a negative impact on the quality of institutions, in particular when it concerns democracy and corruption. For most of these countries, climate change is not considered as a real issue and energy prices are heavily subsidised. Since oil was discovered in the beginning of the twentieth century, the Middle East has acquired a strategic importance for international superpowers. Among all MENA countries (twenty-one countries according to the World Bank), thirteen are net oil exporters and eight possess vast oil and gas resources.
In 2006, the oil reserves of Iran, Iraq, Kuwait, Qatar, Saudi Arabia, the United Arab Emirates, Algeria and Libya were estimated at 785 billion barrels, 65 per cent of the world oil reserves for 3 per cent of the world's population and 2 per cent of the world's GDP. These countries' oil resources represent about 80 per cent of OPEC reserves. Their gas reserves reached 77 trillion cubic metres, 43 per cent of world gas reserves. These eight countries all figure among the fifteen most important oil-exporting countries in the world. In 2006, they exported more than 18 million barrels per day. Access to these very cheap resources remains vital for the functioning of the world economy. Despite geographical diversification efforts, the world oil dependence on the Middle East is still large and will keep on growing in the coming decades, according to the projections of the International Energy Agency. The Gulf Arabic countries, which belong to the Gulf Cooperation Council (GCC), remain the main suppliers of crude oil to the world market. MENA oil and gas exporting countries can be divided in two categories. On the one hand, Gulf monarchies like Kuwait, Qatar and the United Arab Emirates are characterised by small populations, vast hydrocarbon resources, high revenues per capita and very low water resources. They are also considered as labour-importing economies, as they have a severe shortage of manpower.
On the other hand, some countries like Algeria, Iran, Iraq and Libya have large populations and lower oil reserves per capita. For some of these countries, oil rents have been related to the international context (sanctions). A key country lies in the middle: Saudi Arabia, with a huge resource endowment and a large and fast-growing population. With a population of about 24 million inhabitants, Saudi Arabia has the largest proven oil reserves of the world. The size of the fields and their flexibility enabled the kingdom to play an important role for many years as a market regulator, a swing producer, by modulating its production between 8 and 11 million barrels per day. Its capacity surplus enabled the kingdom to change the direction of prices during the 1990s. The fiscal situation of Saudi Arabia has a major influence on the evolution of crude prices. Due to its spare capacity (which has been drastically reduced since 2004), any decision to increase or decrease its production immediately prompts a market reaction. This production flexibility provides considerable power to the kingdom on the geostrategic world scene. The dramatic rise of oil prices has led to massive revenue transfers towards oil-exporting countries since 2004.
The net oil export revenues of MENA countries reached soaring levels during the last few years. For the year 2007, OPEC net oil export revenues attained $673 billion in nominal terms, of which $524 billion went to MENA countries ($194 billion for Saudi Arabia, $63 billion for the United Arab Emirates, $57 billion for Iran and $55 billion for Kuwait). These levels of revenues were the highest ever earned by these governments. In real terms, in 1980, OPEC oil export revenues were $535 billion (in constant 2000 dollars) in 1980, $554 billion in 2007. These large revenue streams have enabled many oil-exporting countries, especially GCC countries, to be the major lenders in the international capital market. In 2006, the current account surplus of the GCC member states was $205 billion (for 35 million inhabitants). It was almost equivalent to that of China ($250 billion for 1,300 million inhabitants), whereas the US current account deficit was almost equivalent to $790 billion.
These countries' surpluses are now major contributors to global adjustment. Moreover, at the end of 2007, GCC countries possessed a considerable investment capacity, estimated at about $100 billion. About 57 per cent of these assets were invested in Europe, 25 per cent in North America and 14 per cent in Asia.
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