Harsh Realities!

Hussein Shobokshi Harsh economic signs are all over the place. There is no denying that fact at all. Stock markets are plummeting, currencies are under tremendous pressure, commodities are taking a great tumble. Most credible analysts are attributing this new situation to the dramatic fall in oil prices, which are reaching low levels that were never reached in many years. It is obvious that there is a major oversupply in the oil market, which is caused by a global economic slowdown. The question is how will this critical situation effect the Arab oil producing states in the Gulf. This situation is likely to last for years to come. It is considered to be a new paradigm not just a temporary state. The Gulf states have a serious situation on their hands and a lot needs to be done to soften the fall. Gulf countries should “plan well” for the post-oil era, to create technically-educated people capable of coping with the post-oil and gas era. Furthermore income source diversification is necessary, but GGC countries must adopt a clear and specific mechanism to achieve desired objectives. The importance of sovereign funds as means to reinvest money and highlighted focus on quality investments, guaranteed investments, and good return on investment, while avoiding non-secured investments will be an important new direction for these countries. Means to improve the Gulf investment ecosystem, overcome hurdles hampering foreign investments and channel foreign investments in accordance with GCC strategic plans to achieve development goals and maximize the benefit from these investments, to enact clear and transparent laws, in addition to tax policies guaranteeing returns. All these are not only requirements but a non-choice situation to the Gulf countries to move away from an oil based economy. United Nations Conference on Trade and Development’s (UNCTAD) foreign direct investment attraction index revealed that the GCC region is receiving less investment than projected according to GCC countries’ ranks. This means a lot must be done, and done fast. Forecasts show an opportunity to achieve additional growth of FDIs should the global markets steer away from major tremors in the coming years. The current bleak economic situation, as dark as it is, must be viewed as a unique opportunity for a dramatic change for the GCC economics that is long overdue.