Bahrain was the Gulf’s Tiananmen now comes the Chinese-style growth

Posted on 18 May 2011 with 2 comments from readers

Trying to make sense of the Arab Uprisings of the past four months and to understand what this means for the future of the Middle East and North Africa has become a major preoccupation for analysts who often draw parallels with events that followed the fall of the Berlin Wall in 1989.

Then all the former East European communist dictatorships were toppled, while in China there was a brutal suppression of the democratic opposition in Tiananmen Square. Twenty-two years later and the Chinese communist party is much changed but still very much in power, and China has enjoyed one of the most rapid rises to economic dominance in world history.

It is debatable whether this would or would not have happened under more democratic rule, but a centralised command economy is generally acknowledged as the more efficient economic development model.

Historic moment

Now could it be that in the Arab Uprisings of 2011 the suppression of dissent in Bahrain proves to be a less bloody version of the Tiananmen Square massacre that embeds the Gulf’s ruling elite and they then realize that the only future for them lies in rapid economic expansion?

The rise of ‘The New Gulf’ is charted in Edmund O’Sullivan’s 2008 book. He boldly extrapolates from the oil boom of the first decade of the 21st century to foresee a much more united GCC with a combined GDP that is the sixth largest in the world by 2030.

The Gulf Cooperation Countries comprise Saudi Arabia, Kuwait, the United Arab Emirates, Oman, Bahrain and Qatar, between them the greatest hydrocarbon resource on the planet. Used wisely this wealth can create an even stronger and more diversified economy with higher per capita GDP.

It is harder to imagine this now than when Eddie wrote his book. Since then we have seen a global financial crisis and property crashes across the GCC, particularly in Bahrain and Dubai though both Doha and Abu Dhabi also took a hit.

But oil prices have bounced back and gone higher over the past year, restoring the wealth of the GCC in the process. The National Commerical Bank of Saudi Arabia forecasts 5.3 per cent growth in the kingdom this year, up from 3.8 per cent last year. Oil revenues will top $225 billion this year, leaving the budget $17 billion in surplus in the kingdom.

Political unity

The uprising in Bahrain was countered with the deployment of forces from Saudi Arabia and the UAE, an impressive display of political unity within the GCC which has struggled to implement a customs union and so far failed completely with a common currency.

Aside from Bahrain the Gulf States have acted swiftly and with considerable strength to counter any internal dissent. Since February Saudi Arabia has arrested 160 dissidents, according to Human Rights Watch and the UAE has arrested five bloggers.

The ‘Day of Rage’ scheduled for March 11th in Saudi Arabia proved a defining moment when nobody showed up. Meanwhile King Abdullah has handed out $130 billion for housing grants and other social programs.

Could it be that the Arab Uprisings actually end up strengthening the Gulf regimes and forcing them into more proactive economic development programs? That is what happened in China after Tiananmen Square and it may be the same story for the GCC after the destruction of the Pearl Roundabout.

Of course there will still be bumps on the road ahead, and not necessarily from protestors. The oil price is now dropping as the global economic recovery cools, though world energy shortages will make this a temporary problem. Indeed, the future looks very bright for those countries richest in hydrocarbons.