Yes, if you think that the sanctions by some five emotional Arab countries against Qatar will not affect you? Think again. In fact, it has started. Just by looking at how the main players in politics and economy are behaving, you can grasp that something huge is looming as a result of this latest development in the Arab Gulf.
Qatar is a small country in term of geographical size and location, but with a massive economic strength in term of resources. Despite this, Qatar is dependent on foreign workforces, especially from India, Bangladesh, and Egypt. In fact, only 12% of its population is Qatari, while the rests are categorized as foreigners or others.
So, why does it matter to block or sanction a “small” country like Qatar despite what have happened in that region in the past 20 years? Does it matter how many troops Qatar has as compared to Iran or Turkey? Does it matter how much oil and gas reserves Qatar may have as compared to Saudi and Iran?
Arab countries have flourished in economy and finance since the 1990s thanks to the support from other Muslims countries in term of the supply of its labors and expertise. Qatar too has benefited from this foreign labor policy. Many of these were originally imported from Egypt for certain fields like engineering, academic, and health. Then it has been followed by Bangladesh, India (the Muslims minority), Afrika and Indonesia. There are others from western countries, but very insignificant.
20 years fast forward, Arab countries which have been blessed with rich natural resources are showing a lot of potential in other areas such as tourism, finance, education, health, and technology. I can bet that they want to do more despite that their main weakness is still in the manpower sector.
Saudi, for instance, has been trying hard to develop its own human capital through massive investment in the area of education and leadership. The small size of their skilled local workforce has never been able to cater the increase of demand for growth, despite that the growth should not be there in the first place. They only have the natural resources that other big corporations from the West have been vying for, such as the fossil fuels.
However, Arab Gulf is still important to the world in term of the stability of the economy. As an example, Saudi exports an estimated 1.5 to 2.0 million bpd of crude oil to China per month as compared to Iran at only 300-500k bpd per month. Saudi and the rest of Arab world combined would remain as the largest producer of crude oil in the future despite that Russia and the US have found their rightful place in the top 10 of crude oil exporters list.
Then if we go back to the issue of Qatar, what would be the most plausible impact on the world’s economy if things were to go wrong from here?
Impact 1: Unemployment Catastrophe in the Muslim World.
This is the most catastrophic situation that can hit the entire world. The Muslim population stood at about 1.2 billion as of 2016 and it is growing really fast. The Muslim majority countries are developing but at a slower rate compared to the 90s or even 10 years ago. Imagine what happen if the rest of foreign labors and permanent residents in Qatar and neighboring countries leave for much better opportunities elsewhere. Are there really better opportunities elsewhere while the economy of the world is slowing down, and China’s booming economy has reached the end of its phenomenon?
When the unemployment rate hits a new record high, the rest would be just a chain reaction effect. The people will start to grow discontent against the establishments and political downside would follow. Radicalism and dangerous ideas would begin to spread because historically, economic problems bring a lot of unexpected dangerous consequences.
Syrian refugees in the Arab Gulf for an example would not be able to find another home if in case the economic meltdown were going to happen. The poor Arab and Afrikan countries like Egypt or Yemen would have to borrow more money from the international lenders, and the world economy would just be having another “plastic surgery” with injections after injections into the problematic financial woes. There will be no turning back.
Muslim population would be forced to the wall and choose to either embrace the fact that they will no longer be able to have own control on its economy, or becoming a rouge opposition in this world of free idealisms. If I have one solution to this mess, the Muslim world should go back to the agriculture sector where most Western countries have already proven its huge benefits and effectiveness.
Impact 2: Increase of Crude Oil Prices
Since the day when Russia overtook Saudi as the newly crowned exporter of crude oil in December last year, and since the United States found their first shale fuel miracle. Things are not going so well in the Arab world. This problem began to escalate to a much worrying state when Iran and Saudi started to point their fingers at anything that has been whispered by the western allies. Well, you might not know that both Saudi and Iran have western allies nowadays!
There is an imminent probability that the Crude Oil prices might just go up again from here. There will be some nice and sweet news to the oil producers out there, but you have to think deeper to understand the impact to the world economy. Increasing of Crude Oil prices might just trigger the economic meltdown if it also triggers panic amongst the market players especially in the consumer products segment.
Rising crude oil value might also change the landscape of politics in certain countries where the local inflation rate is already at a high level. Countries depending on oil imports have to find a better solution to their resources security. Things are not going to be easy for China as an example which may force them to think twice about their relationships with the regional oil and gas players in Asia Pacific, especially with regards to the battling negotiations of disputed territories in the South China Sea.
Crude Oil price might as well remain where it is, and it is very plausible considering that the producers might not want to produce too much as it might reduce the price levels, or destabilize the region where it might bring economic downturn. This is very plausible if the situation remains as it is. But, no one can predict the future so we have to be prepared for the worst!
Impact 3: The Rise of Turkey and its Allies
Turkey as a country is not a mere insignificant nation. It used to be so insignificant due to the fact that they were forced to be in such state after they had lost the first world war in the early 1900s. But historically – Turkey was once a great civilization. There is no doubt about that. Turkey also has grown stronger since the second world war after they have institutionalized their education system and they also have improved their economy in the area of technology, tourism, and manufacturing.
Since Erdogan took power as the Prime Minister and then President of Turkey, their economy has thrived beyond our expectation. That was because they have been positioning themselves in the world politics in a more strategic approach, despite the fact that they are not rich with natural resources of fossil fuels. What they have only the skilled manpower which has been underestimated for nearly a century period of time.
When Turkey’s door was knocked by the Qatari government for help after the blockade by the 5 Arab countries led by Saudi recently, the immediate reaction was unbelievable! It was expected from a person like Erdogan to ride on this opportunity to show Turkey’s reemergence in the Muslim World as their hopeful leader, but not to the extent where it was pure and sincere. You know how a person can feel whether you are sincere or otherwise right?
Turkey is now a new superpower in the Muslim World, leaving other lame countries such as Egypt and Iran. Despite that, there used to be a lot more in numbers with Iraq and Pakistan on the list, but now – there is only one country that has all the strengths to remain standing despite how strong the storm might come as the tests.
With Turkey as the new player in the equation of this power struggle in the Arabian Gulf, economists find it hard to establish the outside factors that might influence how the world economy might move and where would be the direction from here onwards. My only opinion is that, once Turkey has found its market in the Muslim world like it used to be in the era of Ottoman Empire, then things might go in the opposite direction for the rest of the world.
Final Verdict: What is next and what should we do?
We can read and learn from the articles written by the well-known economists out there who might have just predict based on the facts or probably based on their instinct supported by their rich experience in the field. Some others, or the majority of us – the readers can start calculating the impending impact on our lives which is what matter the most.
As a start, we should save a lot more and stop spending. If possible, we should start purchasing lands and revive the agriculture sector be it as small as raising livestock or planting fruits or vegetables. There used to be the time when Muslim worlds were so urged to develop their countries with high rise buildings and artificial constructions, but now here is the time where we should go back to basic human needs.
If we need clean energy, we also need a cleaner water supply. If we must perform hajj or umrah, we also have to perform our duties as the leader of the ummah sincerely and truthfully. We need to act as an agent of trustworthiness – especially when the world is falling apart from extremism and egoism.
The economy is not just what we have learned from the university with the mumbo jumbo terms or definitions. The simplest way to explain economy is understanding the supplies and demands, while how to govern them. The economy will never grow with unfair interests charge, and with superficial economic solutions. Our economy can only thrive with just one policy – that is called the policy of trust and sincerity.
This has to begin from all of us as mere ummah or citizens. We should choose to purchase the supplies that are trustworthy and sincere. Act as a smart consumer by only buying what we need and not what we want.
In conclusion, a good economy policy at its simplest term is “being trustworthy in all of our actions for the benefit of our worldly lives”.