What is Oil?

Oil is a liquid derived from petroleum that is used to help

create our high standard living. Its also the same liquid that creates
political tension and economical stagnation. In this essay Im going to
argue that oil is indeed the unforeseeable curse for both
exporting/importing countries in the MENA region. While some
countries have managed to structural and economical growth only
relying on oil revenues others have failed. These countries have a lot to
restore than just a malfunctioning economy
Before explaining why oil is regarded as a curse from my
perspective Id like to point out that the MENA region doesnt only
consist of Oil exporting countries. This region demonstrates a wide
variety of countries that are very poor in natural resources. But having
non-oil exporting countries in the region doesnt deny the fact that Oil
is still regarded as one of the most important commodities this region
produces, since it accounts for almost two-thirds of the worlds oil.
Most of the oil exporting countries rely on their oil revenues to keep
the economical wheel spinning.
Karshenas argues oil revenues should be regarded as temporal
catalyst, which help create the structural flexibility necessary for self
sustained growth. One reason among many why an economy
shouldnt only be relying on oil revenues is, that oil prices are currently
going down which might not affect some oil exporting countries
dramatically like the UAE for example but it will for sure affect other
countries like Yemen. Reduced oil prices have an immediate impact on
also lowering the oil revenues, which means that also countries
spending budget will be affected. Some countries have the luxury of
reducing the impact of the reduced countries by using revenue that is
generated by other sectors of the economy, which has been built while
the oil prices were higher. But others who lack these revenue buffers
will suffer from decreasing oil prices simply because of the lack of
diversification and the slow growth of exports due to technological
backwardness and inefficiencies in the manufacturing sector.
(karshenas)
Oil importing countries of this region will also be impacted by the
decline of the oil prices. While theyll be spending less on oil, their
share of oil will be very limited to due to the fact that oil is a vanishing
natural resource. Given that many of their production lines will be
interrupted which leads to less exports, their foreign exchange
currency will be affected, which will cause their economy to stagnate.
Oil has been the reason for unrests occurring in the MENA region.
The region has been an easy target throughout history given its
vulnerability. The stronger more powerful nations have been taking
control over the region to protect what their interests. By protecting, I

mean demolishing whole nations just for the sake of oil. Given that
Saudi Arabia accounts for 50% of the worlds oil supply, stronger
nations like the US have installed their forces to guarantee that
whatever comes out of the ground is theirs. Having external political
powers in the MENA region has lead to having corrupt governments
with no structural neither growth policies resulting in backwardness in
almost everything from culture to economical. The previously
mentioned created tensions between and within the countries of the
MENA.
It is noticeable that oil might have brought economic bloom for a
few Middle Eastern countries, but on the other hand it is very clear how
the rest of the countries were harmed by it. Oil is a commodity that
has to be treated very carefully in any economy given the power it
carries. Many Middle Eastern countries are now dealing with the
aftermath of the vicious cycle that oils create. And to be avoid the oil
curse and overcome these obstacles it is suggested that economies
use perfect substitutes to oil to try and minimize the risk that comes
with having to deal with this natural resource.