Middle-east Arab News Opinion | Asharq Al-awsat

Opinion: Oil wealth is no substitute for making good choices | ASHARQ AL-AWSAT English Archive 2005 -2017
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A general view shows Dubai’s cityscape on September 24, 2013. (REUTERS/Ahmed Jadallah)

There is a great deal of similarity between the UAE and Libya in terms of their circumstances and natural resources. However, each country chose a different political path that has led to completely different outcomes in terms of social and economic progress, a field which clearly tips the scales in favor of the UAE.

The disparity between the two countries is clear if we examine a few statistics. The UAE’s GDP is around 400 billion US dollars, while an optimistic estimate would put Libya’s at 70 billion dollars. Likewise, the UAE’s per capita GDP stands at 28,000 dollars per year, while Libya’s is approximately 6,000 dollars. While no global company would hesitate to invest in the UAE, there will be much foot-dragging when it comes to Libya, a country that would offer massive opportunities if only the security situation were more stable.

The UAE, founded as a federal state in 1971, is younger than Libya, which became independent in the early 1950s before Muammar Gaddafi abolished the monarchy in 1969. But the two countries have been associated with their oil wealth, which began to boom in the 1970s and was largely responsible for determining the pattern of the Middle East’s ties of friendship and enmity.

The population is almost the same in both countries and each is relatively large in terms of territory, particularly Libya, which is the 17th-largest country in the world. Oil production rates in each country are close, and both have huge existing oil reserves with the potential discovery of more, particularly in Libya, which was for years off-limits to foreign investors due to the international boycott during the days of Gaddafi.

Libya may have other relative advantages. Given its location on the Mediterranean coast, Libya is a short distance from Europe’s main export markets. Moreover, in some Libyan oilfields production costs are as low as 1 dollar per barrel.

The political choices of the leaders of the two countries have taken them down very different paths. The UAE chose political realism and engaged with its surroundings. This was represented in its position on the use of oil revenues during and after the 1973 October War. Abu Dhabi distanced itself from adventurism and focused on domestic development, using its oil wealth to build modern state institutions with the expertise available in the global marketplace, regardless of any ideological inclinations.

Libya did the opposite under Gaddafi, whose ideology and resource-depleting foreign adventures strongly influenced decision-making. Instead of employing its oil wealth in the building of institutions, domestic development and modernizing its economy and society, Libya instead busied itself with developing arms programs and exporting revolution in the Arab region and the world, without being internally strong enough to serve as a model for others. Even Gaddafi’s Green Book is a subject of ridicule across the world given its intellectual shallowness.

What has been happening in Libya since 2011 is the product of Gaddafi’s domestic policy, which created no strong institutions that could weather storms and crises. It is also the product of disastrous political and economic choices, choices that made Libya’s economy the worst-performing among the Middle East’s oil exporters.

Oil is not the only factor in the progress the UAE has made, and its current strong presence on the world map, whether economically, politically, or in terms of tourism. What is more significant is that the UAE succeeded in using and employing its advantages—geographical location, wealth, neighboring markets and acquired expertise—in the process of development. On the other hand, Libya has failed throughout its modern history to use its many relative advantages. Instead of becoming a booming center in the region, Libya has always been a source of tensions and insecurity. Who knows, Libya may have followed a course similar to that of the UAE had Gaddafi not come to power. Nevertheless, speculation is irrelevant to the writing of history.

The comparison between the UAE, which marked its 43rd National Day on Monday, and Libya, which is struggling to escape its current state of chaos, is justified by the degree of similarity in terms of potential, demographics, and wealth. But the more significant lesson, and this applies to many countries, is that good political choices which focus on fostering development, making use of relative advantages, and the employment of wealth at the service of humanity, are the factors responsible for progress and development, while adventures often bring devastation.