Tag: Iran
Nation-building isn’t a four letter word
Donald Trump yesterday followed in a long tradition of American presidential candidates and presidents who have forsworn nation-building.
George H. W. Bush said he was sending the marines to Somalia in 1992 to restore order and enable feeding the population. When Washington discovered that we couldn’t get out without leaving chaos behind, we turned the nation-building over to a UN mission (run by a US Navy Admiral) that failed. We are still fighting insurgent terrorists in Somalia.
Bill Clinton said in 1995 we would send US troops to a NATO mission to Bosnia and Herzegovina for only a year, to oversee implementation of only the military aspects of the Dayton peace agreements. He discovered the obstacles to peace implementation didn’t divide neatly into civilian and military components. US troops stayed for almost 10 years and some still remain. They likewise have stayed in Kosovo much longer than initially projected. In both Bosnia and Kosovo, their presence has had positive effects.
George W. Bush declared during the 2000 election campaign that US troops don’t do nation-building. But once he had invaded Afghanistan and Iraq he discovered that we couldn’t get the troops out without it. He then launched the two biggest and most expensive nation-building efforts since the Marshall Plan after World War II.
Barack Obama has been more disciplined than his predecessors: he pulled US troops out of Iraq almost completely (in accordance with an agreement and timetable negotiated and signed by his predecessor) and has tried to get them out of Afghanistan. The negative consequences of failure to build an inclusive state in Iraq, including Prime Minister Maliki’s turn to sectarianism and the rise of a Sunni insurgency, are documented in the Washington Post this morning. The consequences in Afghanistan are all too obvious: the Taliban are back in force and the Islamic State is trying to gain traction. Obama has said that one of his worst mistakes was failing to provide adequate assistance to Libya after the fall of Qaddafi.
When Trump yesterday declared an end to nation-building, he was repeating what his predecessors have said, and mostly regretted. The American people are reluctant to govern others, even if they are quick to tell others how to govern. Trump followed that tradition too, by announcing that he would somehow make sure that lesbians, gays, transgender and queer people are treated with respect abroad and honor killings stopped.
It is of course unfair to blame all the consequences of reluctance to do nation-building on American presidents.
First, because they are reflecting the real preferences of their constituents. Americans want their resources expended at home, not abroad. Many believe that 25% of the Federal budget is spent on foreign aid, even though the actual figure is less than 1%. If I thought one-quarter of my tax money was going overseas, I would want foreign aid cut too.
Second, because the task they are trying to avoid really is difficult and expensive. It is properly called state-building rather than nation-building, a term presidents prefer because it sounds pejorative. But what we needed in Somalia, Bosnia, Iraq, Afghanistan, and Libya is a legitimate organization that could govern on a particular territory. The people on that territory might or might not constitute a “nation.”
Given what we know about terrorist groups and their affinity for weak or fragile states that cannot fully control their territory, state-building is not optional. Without it, post-war Syria or Yemen will, like post-war Iraq and Afghanistan, provide haven to people who wish harm not only to their own state but also to us.
That doesn’t mean the US has to be responsible for the state-building. You break it, you buy it is the prevailing rule. The Russians and Iranians in Syria along with the Saudis and other Gulf states in Yemen should be thinking about that as they bomb with abandon. The UN is already stuck with the job in Libya, where it appears to be making slow headway in gaining traction for a national unity government.
But what kind of state-building will Russia and Iran, or the Gulf states, do? Not the kind of state-building that even Donald Trump says he wants. What presidents call nation-building may not be what they want to do, but it is not a four letter word either. If you want to keep America safe, you are going to have to figure out how to get it done.
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Why get Hezbollah out of Syria
I’ve got a piece in the Washington Post this morning: The right target for the U.S. in Syria: Hezbollah. It starts like this:
The military situation in Syria has turned against the U.S.-supported opposition over the past year, due mainly to Russian intervention. Now, the failed coup in Turkey and subsequent crackdown there stand to reduce the capabilities of a key U.S. ally. Without some rebalancing now in favor of the opposition to Syrian dictator Bashar al-Assad, the prospects for a satisfactory negotiated political transition are dim.
In a dissenting internal memo last month, 51 State Department diplomats advocated attacks on Syrian government forces to end their aggression against the country’s civilian population, alter the military balance and bring about a negotiated political solution. President Obama has focused instead on fighting terrorism in Syria, but U.S. targets are limited to Sunni extremists such as the Islamic State and al-Qaeda affiliates.
There is also a Shiite terrorist organization in Syria: Lebanon-based Hezbollah. It should not be immune.
That’s all I can reproduce without getting into trouble with the guardians of intellectual property. Go to the link above for the rest.
I don’t advocate an ultimatum backed with the threat of force lightly. But I also don’t see how allowing the Syrian wars to continue can be justified. Doing nothing is also doing something. It has consequences.
The US proposal to cooperate with Russia in attacking Jabhat al Nusra as well as the Islamic State makes the Hizbollah question even more urgent. If implemented, the US/Russia agreement will further weaken the opposition to Bashar al Assad, which relies–like it or not–heavily on Jabhat al Nusra capabilities. While the Americans are proposing as part of the agreement that the Syrian air force be grounded, no restraint on its ground forces (or those of Hezbollah) is proposed. Nor would it be possible to enforce.
So Faysal Itani is correct when he suggests that implementation of the agreement will make things even worse for the Syrian opposition than they’ve been to date, which is pretty bad for the past year. Aleppo is under siege and will likely fall, sooner or later. Idlib is at risk. Barack Obama, who doesn’t think US national security interests are at risk in the fight against Assad, could leave office presiding over mass atrocities the US has pledged to prevent and further undermining prospects for the negotiated settlement the US says it wants.
I am however sympathetic to the Administration’s aversion to taking up the cudgels against Russia, Iran and even the Syrian regime, as it lacks Congressional authorization for that kind of state-on-state fight. But I doubt any Congressional authorization is needed for the fight against a non-state actor like Hezbollah that has killed many Americans. The existing Authorization to Use Military Force, passed to bless the war against Al Qaeda, has already been stretched to cover the Islamic State and Al Qaeda affiliate Jabhat al Nusra, both Sunni extremist organizations. Why won’t it stretch to cover Shia Hezbollah as well?
The main purpose of an ultimatum to Hezbollah would not be to widen the Syrian war. It would be intended to get Hezbollah to withdraw to Lebanon and end its participation in the Russian/Iranian coalition supporting Bashar al Assad, thereby encouraging him to get serious about the UN-sponsored peace talks. Washington would of course continue to have a problem with Hezbollah even in Lebanon, where for decades it has weakened the Lebanese state, distorted Lebanese politics and planned the murder of innocent civilians in half a dozen countries.
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Iraqi Kurdistan’s future
Some colleagues asked me to offer my view of the future of Iraqi Kurdistan. Here is what I told them:
- A Martian could be forgiven if he arrived today on earth and concluded that Iraqi Kurdistan will be independent by November.
- President Barzani has promised a referendum by then and even the Martians know that Iraqi Kurds would vote overwhelmingly for independence if given free choice and opportunity.
- The Kurdistan Regional Government (KRG) case for independence is strong: Iraqi Kurds have been brutally treated by their own government, chased from their country and even attacked with chemical weapons; they have governed themselves sort of democratically for decades and treated minorities well by regional standards; they have fought the Islamic State courageously and welcomed people of all ethnicities displaced by the fighting.
- One of my pro-independence friends argues that Iraq is like former Yugoslavia: a failed state that has disappointed all its inhabitants and needs to dissolve into its constituent parts.
- Another friend asks why Washington would not welcome another stalwart and more or less democratic friend in the turbulent Middle East.
- So why do I think independence won’t happen?
- To make a long story short: the KRG lacks well-established borders, the means to defend itself, the needed internal political cohesion, the required economic resources, the good relations with its neighbors and the required support of the world’s great powers to become a sovereign state.
- Before explaining in depth, let me make an important distinction: political independence is something you declare. It is an expression of political will, sometimes unilateral.
- Sovereignty is something you acquire, largely through recognition by other states, which sometimes requires the defense or conquest of territory. The KRG already has a large measure of independence. What it lacks is sovereignty.
- President Barzani’s proposal is a classic process for achieving independence: a referendum followed by a unilateral declaration.
- It would do little or nothing to establish sovereignty.
- For that, the KRG would need to have in the first place well-established borders that none of its neighbors would contest.
- That is simply not the case. Baghdad has not and will not accept the KRG’s right to all the disputed territories the peshmerga seized in the confusion of 2014, when the Iraqi Army collapsed in Mosul and other parts of the north under Islamic State attack.
- The Iraqi Army today is in no condition to contest KRG control of Kirkuk, parts of Diyala and parts of Ninewa province, but Baghdad won’t accept the fait accompli either. A declaration of independence now would leave a giant unresolved border problem that sooner or later would likely be resolved by force.
- I don’t really see how the KRG will ever be able to defend itself from the rest of Iraq if Baghdad gets its act together, which to some degree it seems to be doing. In fact, there might be nothing so likely to unite Shia and Sunni Arabs in the rest of Iraq than a KRG declaration of independence.
- How does a KRG with a population of 5.2 million defend itself from an Arab Iraq of perhaps 28 million? Only by reaching an agreement that would likely involve the surrender or compromise of Kirkuk and other disputed territories.
- The KRG lacks the internal political cohesion for a deal of that sort and many other requirements of sovereignty and independence. Just last month a Sulamaniya delegation was in Baghdad forswearing any intentions to go for independence.
- The PUK and Gorran have no intention of letting President Barzani be the George Washington of the KRG, or even allow him an unconstitutional third term. He has locked the opposition Speaker out of parliament, which is unable to meet even to decide how the referendum will be organized.
- Kirkuk’s governor wants his province to become a region, separate at least initially from the KRG. Some in Sinjar are resisting incorporation into the KRG. One observer even sees signs of Balkanization of Kurdistan.
- Resources are also a problem. At oil prices of $100/barrel or above, KRG officials thought production of 500,000 bpd might enable them to replace all the money Baghdad was supposed to be sending. At $50/barrel, the production required is presumably close to 1 million bpd. Current exports are a bit more than 500,000 bpd.
- The KRG is an oil rentier state. Even with recent tax increases and reductions in subsidies, it has precious little revenue other than from oil.
- The consequences for the KRG economy are dramatic. Civil servants are going unpaid, the economy is in crisis and the enormous influx of people displaced by the Islamic State has increased the stress. The 1.4 million people on the government payroll, including those fighting the Islamic State, are being paid erratically.
- Kurdistan’s difficult neighborhood is an additional problem. All the KRG’s oil is exported to Turkey, which has greatly improved its relations with the Iraqi Kurds. But Ankara under current conditions is still unlikely in my opinion to welcome a KRG declaration of independence, for fear of incentivizing the Syrian Kurds or its own to head in the same direction.
- Iran is even harder over against KRG independence, for fear of what it would mean for its own province of Eastern Kurdistan, where the Iranian Revolutionary Guard Corps is chasing Kurdish guerrillas and occasionally shelling across the border into the KRG.
- Syria no longer counts for much in regional politics, but KRG independence would not be a welcome move there either. The KRG could expect none of its neighbors to offer it diplomatic recognition and exchange of ambassadors.
- Most of the great powers will be even more resistant than the KRG’s immediate neighbors. The United States will fear that a referendum and independent Kurdistan would strengthen Russia’s case for the independence of South Ossetia and Abkhazia as well as the annexation of Crimea and eventual annexation of Ukraine’s Luhansk and Donetsk provinces, not to mention Bosnia’s Republika Srpska.
- Europe, in particular Germany, is hard over against independence.
- China would agree: it wants no precedents that Tibet might want to follow. Russia might be more amenable, though Moscow would be wise to contemplate the issue, since an independent Kurdistan is likely to be strongly pro-Western (and its own constituent republics might be getting ideas).
- To summarize: if you can’t expect recognition by any of your neighbors or your best friends, if you don’t have the money to pay the bills, if your internal politics are divisive and you will not be able to defend the borders you claim, my best advice is don’t try it.
- The Kurds would be wise to wait for a more auspicious moment. It may well come, possibly within the next five years. They will know the time is right when they have Washington and Baghdad’s concurrence, recognition by Iran and Turkey, revenue to cover their expenses, a functioning parliament and a leader who attracts support from Sulamaniyah as well as Erbil. Stranger things have happened.
What, my colleagues asked, if the KRG went ahead despite the circumstances. What would happen?
I answered maybe nothing, since without recognition of sovereignty declarations of independence evaporate pretty quickly. Kosovo’s in 1991 didn’t work, nor did the Kurdish Republic of Mahabad declared in 1946, another colleague noted. But it is also possible a Kurdish declaration of independence would spark a wider war in the Middle East, involving Iran and Turkey even more directly than the current conflict. That would not be good news.
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No end in sight
How can Daesh (that’s the Islamic State, ISIS or ISIL to the uninitiated) be defeated and what will happen thereafter? If you want the more upbeat official story, read Brett McGurk’s testimony. Here are some thoughts that have crossed my screen lately.
Everyone should expect a generational fight. Though Daesh is losing territory rapidly in Iraq (47% of its maximum) and Syria (20%), it is good at what it does, resilient and adaptable. It has recruited at least 40,000 foreign fighters from 120 other countries. It has overt affiliates in more than half a dozen countries as well as a covert worldwide network devoted to smuggling, finance and terror, as illustrated all too clearly in this week’s Istanbul airport bombing. Even after it has lost all its territory, Daesh will go to ground and continue terrorist attacks of that sort.
The Coalition arrayed against Daesh is large (nominally 66 countries) and organized but still clumsy and far from fully integrated. It will hold a July 20 “summit” in Washington focused on its five “lines of effort”: political/military coordination, blocking foreign fighters, Daesh finance, stabilization of areas retaken from Daesh and counter-messaging. This is in addition to the nine US “lines of effort.”
There are contrasting narratives that avowed opponents of Daesh espouse, leading them to opposing conclusions.
The Russians view Daesh as the product of destabilization of Syrian government institutions, whose maintenance is vital to stem the extremist tide. In order to ensure the survival of state institutions, they support Assad and want reconciliation between him and at least some portion of the opposition. They also think their military intervention has gone pretty well, delivering some Western respect and easing Western pressure on Ukraine. But they are concerned, based on the Chechen precedent, about the enormous cost and difficulties of an Assad victory in Syria. They have flatly refused to pay for any reconstruction when approached by a government-linked expert.
The Saudis have an almost diametrically opposed narrative. They believe Daesh is the product of Iranian-sponsored sectarianism in both Iraq and Syria. Iraqi Prime Minister Nouri al Maliki helped the Islamic State to revive in Iraq after the American withdrawal by governing in a blatantly sectarian way dictated by Iran. ISIS’s ability to gain ground in Syria is attributable to the regime, which released extremist prisoners, has bought oil from Daesh, and focused its military attacks against moderates, all with backing by Iran. The Saudis take the threat of Daesh seriously and believe the fate of Iran’s effort to establish itself as the Middle East hegemon will be determined in Syria. The Kingdom recognizes that its own Wahhabi ideology has contributed to Daesh‘s appeal and is committed to reforms that will change that in the decades to come.
Iraqis are fighting and dying to take turf from Daesh, but the aftermath of victory is a big and unsolved problem. Inclusive governance is what the country needs but seldom gets, in particular in Baghdad. Shia militias were too active in Tikrit in the wake of victory there over Daesh, rendering the town unsafe for Sunni returnees initially. Only once local leaders and reconciliation mechanisms were put in place was the stabilization effort more successful. At Ramadi, the governor has been doing well but there is much more damage and a lot of demining to be done. At Fallujah, there is less destruction but a serious humanitarian crisis, with 85,000 civilians fleeing from the city and living in unacceptable conditions in the desert. UNDP resources are grossly inadequate to the stabilization effort it has been tasked with.
Little planning has been done for stabilization in Syria. What is needed there is a political settlement. Sunni alienation and grievance are the the problem, enormously aggravated by the presence of Hezbollah. Ignoring it gives the impression that the West will support “ABS”: anyone but Sunnis. Post-Daesh, governance needs to be far more inclusive.
The Kurds in both Iraq and Syria are getting a lot of Western support because they are willing to fight Daesh. The support should be more conditional. The US should insist that Iraqi Kurdistan reach a pact with Baghdad and that the Syrian Kurds help with peace talks between Turkey and the PKK, which is closely tied to the Syrian Kurds.
Looking ahead, there is a real risk that with Russian and Iranian support the Syrian regime will manage to capture Aleppo as well as Raqqa, form some sort of “national unity” government with elements of the loyal opposition and rewrite parts of the constitution. The US might then declare victory and abandon the field entirely, leaving reconstruction inadequately resourced. This would not really solve anything and would allow grievances to worsen, ungoverned spaces to grow and the conflict to spread, possibly to Lebanon and Jordan.
There is a glimmer of hope for Iraq, but even that is limited. Splits in both the Sunni and Shia communities are opening the possibility of cross-sectarian mobilization in Baghdad. The Popular Mobilization Forces (PMF) are often viewed as under Tehran’s control, but some of them are not and might join with Sunnis who have also fought against Daesh. The Kurdish issue would still be unresolved, however, which will create problems for the liberation of Mosul. Kurdistan Regional Government President Barzani is entirely dedicated to consolidating his own power, both vis-a-vis other Kurdish political forces and vis-a-vis Baghdad. Without clearer definition of the political end-state, defeat of Daesh could lead to a follow-on civil war pitting Kurds against Arabs.
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Continued dependence on Gulf oil
Doug Hengel, formerly at the State Department and now at the German Marshall Fund (and also teaching at SAIS), allowed me to republish his excellent notes for his talk at Woodrow Wilson last week, already posted here:
There is a great deal of uncertainty in oil markets at the moment. The big questions, beyond when the market will rebalance, include:
- Are we in the midst of another boom and bust cycle in the oil market or are there structural changes that define a new paradigm? Has U.S. tight oil changed market dynamics forever?
- Has the Saudi/Iranian rivalry evolved to the point where geopolitics now dominates Riyadh’s approach to oil? Are the Saudis using oil as a weapon?
- Is the Saudi 2030 Vision OPEC’s “obituary notice” as some have declared? Will the Saudis continue to invest in oil or are they pumping all out now due to concerns that oil demand is going away?
- Are we in a “lower for longer” scenario for oil prices? Or have the large cuts in investment by oil companies in the past couple years simply planted the seeds for the next price spike?
As we think about these questions, and more importantly what the future of oil geopolitics might look like, it is helpful to ground ourselves with a few facts. It is important to remember:
- The countries of the Persian Gulf account for almost 1/3 of global oil production and hold roughly 50% of proven oil reserves. They generally have the lowest cost oil to produce.
- About 17 million barrels a day (mbd) of crude oil and refined products move through the Strait of Hormuz, only a small fraction of which could get to market via alternative routes if the strait was blocked.
- Oil fields have a natural decline rate averaging 3-6 percent a year, much higher for U.S. tight oil. This means that every year investment in existing or new fields is needed to bring to market about 4 mbd of additional oil just to keep global production at current levels (not including any increase in demand). Those 4 mbd are equivalent to the total surge in U.S. tight oil production over the 2011-14 period. It also means we need to add the equivalent of a new Saudi Arabia to the market every 3 years.
By one estimate, global upstream project cancellations could create a 4 mbd ‘‘hole” in global oil supplies by 2020. Estimates of production in Brazil, Canada, Mexico and elsewhere in coming years have been revised downwards. There is growing concern that the large reduction in investment by the international and national oil companies will lock in the world’s reliance on OPEC, and in particular on the lower-cost supplies from the Persian Gulf, for decades. The International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) have pointed to this risk in their most recent global energy outlooks.
Are there structural issues that might mitigate against greater reliance on OPEC and the Persian Gulf? Two are often cited – the U.S. tight oil boom and climate change.
U.S. TIGHT OIL: While U.S. tight oil production jumped by an average 1 mbd per year from 2011 through 2014, over the past year U.S. tight oil production is down about 1 mbd. In the meantime U.S. gasoline consumption has increased sharply and is expected to hit a record in 2016. So U.S. oil imports are growing again. Last year U.S. net crude oil imports dropped to only a quarter of U.S. consumption, the lowest level since 1970. This year it looks like we will need to import one-third of our oil. Some believe that with prices of $50 or more per barrel there could be a renewed surge of U.S. production this year adding perhaps as much as 1 mbd to U.S. output by the end of the year. But that is a very optimistic scenario. And after that? There is no doubt U.S. production could resume an upward climb with higher prices, but almost certainly not enough to offset reduced output elsewhere in the world.
CLIMATE: All scenarios that would reduce carbon emissions enough to keep global warming to 2 degrees or less require a huge shift away from petroleum for transportation. Both Statoil and the IEA have modeled what very aggressive introduction of electric vehicles (EVs) might do to oil demand, in the case of Statoil’s “renewal” scenario new car sales would be 90 percent EVs or hybrids by 2040. Even with such an enormous change in how light duty vehicles are powered global oil demand would still be in the range of 75-80 mbd by 2040 — as much as 20 mbd below today’s consumption but still requiring very large investments to compensate for the decline of existing fields. Supply could well decline much faster than demand.
So what does this all mean for the U.S. and the world?
- We are not in a new paradigm. Oil is not going away and the world’s dependence on the Persian Gulf for global supplies is very likely to increase going forward. Therefore the U.S. will need to play an active role in the region to ensure the oil keeps flowing, including protection of sea lanes.
- U.S. “energy independence” remains a chimera even if we were self-sufficient in oil, which is very unlikely to happen in any case.
- OPEC is not dead. Notwithstanding the Saudi/Iranian rivalry, they are likely to be able to and want to work together to influence the oil market once markets are more in balance. Recent statements by the new Saudi oil minister indicate they will continue to invest heavily in maintaining their production capacity.
- We need to keep our eye on the ball regarding constraining oil demand – continued progress on more efficient vehicles, facilitating the move to EVs, to natural gas for trucking, etc.
- Innovation is essential (e.g., autonomous vehicles), ideally in cooperation with international partners.
- We should continue to encourage and assist new and non-OPEC oil producers seeking to boost their output, in particular Mexico and emerging suppliers in Africa.
- We should not be treating our Strategic Petroleum Reserve as a piggy bank – selling off oil to meet other budgetary requirements. We may need the SPR to cushion a supply disruption, U.S. tight oil is not a substitute. At the same time we should continue to promote cooperation by China and India with the IEA on a coordinated response to an oil supply disruption given their increasing importance to the market (and since they are building their own strategic reserves).
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The Gulf’s still risky future
Wednesday the Middle East Program at the Wilson Center hosted The Gulf, Iran, and Future Oil Geopolitics, featuring David Goldwyn, President of Goldwyn Global Strategies; Douglas Hengel, Senior Resident Fellow at the German Marshall Fund; Elizabeth Rosenberg, Senior Fellow and Director of the Energy, Economics, and Security Program at the Center for New American Security; and Jean-Francois Seznec, Non-Resident Senior Fellow and Director at the Atlantic Council’s Global Energy Center. Jan Kalicki, Global Fellow at the Wilson Center and Senior Fellow at the Watson Institute for International and Public Affairs at Brown University, moderated the discussion.
Rosenberg discussed how lifting most sanctions on Iran has influenced Iranian politics. While the economy has opened up considerably since January, there are still many obstacles to doing international business in Iran. The prohibition on doing business with the Iranian Revolutionary Guard Corps (IRGC) leaves much of the economy untouchable by foreign investors. Many of the remaining sanctions are secondary, which requires Iranian companies to cut ties to groups like the IRGC that control 20-60% of the Iranian economy.
Iran is currently producing 3.5-3.8 million barrels per day and exporting 2 million. Iran could get up to 4 million per day. Beyond that, Iran would have to make substantial infrastructure investments. Several international oil companies have signed exploratory contracts, but there are still a lot of unknowns. With Iran upping the ante in Syria and around the region, the future of the broader Middle East is in question.
Goldwyn said that Iraqi oil production had recently reached 1.8 million barrels per day, its highest level ever. This is Iraq’s peak. It will not even be able to maintain this level. Iraq suffers chronic problems:
- the government is weak and unable to make plans or execute them;
- failure to resolve ethnic and sectarian conflicts opened the door to the Islamic State (ISIS) and maybe worse in the future;
- the government is spending a huge portion of its budget on the war effort: $33 billion between 2009 and 2014.
The Iraqi army’s progress in retaking Fallujah is promising, but Fallujah has been liberated many times—each time escalating ethnic tensions to still higher levels.
Iraq will barely be able to maintain production in the coming months. The Iraqi government is spending all of its diminished oil revenue on its military, and low oil prices have limited the government’s ability to function on a basic level—let alone invest in infrastructure to boost oil production. Iraq’s near future looks grim.
Seznec commented on how Saudi Arabia’s deputy Crown Prince Mohammed bin Salman is transforming his country in dramatic ways. His new “Vision 2030” intends to wean Saudi Arabia off oil dependence and diversify its economy. Saudi Arabia intends to maintain its current production of 10.2 million barrels per day, while growing its private sector. To accomplish this, King Salman bin Abdulaziz Al Saud appointed Khalid al-Falih as minister of the newly revamped Ministry of Energy, Industry, and Mineral Resources.
A major component of “Vision 2030” is selling 5 percent of the government’s shares in Aramco. Aramco is currently valued at 2 trillion dollars, so this will likely be the biggest IPO (initial public offering) in history. Part of Mohammed bin Salman’s plan is to revolutionize the workforce. By 2030, the government hopes that women will fill 45 percent of public and private sector positions. There are big changes on the way for the Kingdom, and we will have to wait and see what else the young deputy crown prince has in store for us.
Hengel addressed major factors that will affect all the countries discussed. His bottom line is that dependence on the Gulf will continue. The natural decline in current production means that continued investment in existing oil fields and new discoveries are essential. Hengel predicts that the United States and the world will continue to be dependent on OPEC. There is much uncertainty about the future of consumption. Many countries have started shifting towards electric vehicles and are moving away from their dependence on oil. But the United States continues to lead in consumption with the lion’s share, 10%, of global consumption. Gulf oil supplies are likely to remain important for the foreseeable future.
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