The second global financial crisis in the course of five years is proving to be a historic turning point. Not only is it much more dangerous than the 2008 crisis, which started with the subprime mortgage crisis in the United States. It also carries with it many negative repercussions for the world economy, especially in view of the failure of the political leadership in the United States and Europe to find practical and swift solutions to the challenges faced by their financial systems, and subsequently, to help the economies of the countries concerned, nay of the whole world, to avert a financial crisis. The problem is much bigger than the European Central Bank's ability to handle the issue of the sovereign debts of some of its member states, or the ability of Republican and Democratic leaders in the United States to reach an adequate solution to the U.S. sovereign debt ceiling – especially with an emboldened Tea Party with its newfound sway over the decisions of the Republican Party in Congress, and its ideological opposition to any enlargement of the federal government. The problem then, is much bigger than that, and instead entails the emergence of certain countries (the emerging nations) as economic powerhouses that now compete with Western nations, powerhouses that must be reckoned with. The problem also lies in the ability of people in Western nations to continue affording their high and costly standard of living, in light of the cheaper competition they now face. Subsequently, the Bretton Woods regime, established in the aftermath of the Second World War, and its ability to survive, have come into question. So will this global economic order continue to exist without any major amendments? There are many doubts about this. Any economic regime, in order to continue functioning, and to succeed in averting crises, must take into account developments at the international scene. This depends on the upcoming historic and political developments, including competition or conflict among nations and states. With this in mind, will the oil-producing countries continue to be hubs of hydrocarbon and capital exportation, or will they begin to play a bigger role in the world economic order? There are questions being raised in this regard, including for example: Can the oil countries occupy a forward position in the new global economic order, where the balance of power between the Western industrialized countries and emerging countries (China, India, South Korea and Brazil) is constantly changing? Can they chart for themselves an economic and political position of influence in the new balance of power, without effecting large-scale domestic changes? Changes such as: Seeking to diversify their economic resources, benefiting from the education of their youths by creating appropriate and productive job opportunities, and fostering a more dynamic and free civil society. Such an opportunity can then be used to build modern societies, where the culture of citizenship reigns supreme without social, religious or sectarian discrimination against citizens. Otherwise, we will remain the prisoners of our cumulative past, which has devastated our societies. The role that the oil-producing countries must assume in the new order must not exclusively come through their oil wealth or revenues. Without fundamental changes in politics, the economy and social relations, these countries would continue to rely on a depleting resource and play an auxiliary role for other countries, whilst depending on the innovation of others. The oil states have benefited from the oil boom starting in the early seventies; but will they be able to attain a better position in the future? There are two areas in which oil-producing nations can increase their economic leverage and weight, with global reach. First: Through a rational domestic policy, especially in terms of emancipating their citizens from historical burdens, and subsequently, through allowing fair competition, both locally and with other peoples. It is worthy of note to mention here that despite all problems, we have indeed managed to establish a modern and competitive petroleum and petrochemicals industry. It is altogether possible then to progressively establish other industries with global competitiveness. The other area is expanding the international role of oil states. They can achieve this by taking advantage of the fact that, over the past fifty years, they have managed to maintain a strong role for OPEC, and hence by giving the latter a larger role in the global economy, one that goes beyond OPEC's focus on oil production policies. This is nothing new for such organizations, as, for instance, the International Energy Agency was the brainchild of the OECD. In truth, continuing to head in the same direction is doomed to failure, because it cannot be competitive beyond the scope of our oil reserves. Naturally, the answer lies in discerning the features of the global shifts currently taking place, and which will foist change upon the world economic order, especially with [the waning] economic power of the United States and the dominance of the dollar in financial markets. By definition, the globalization of the world economy primarily involves competition among industrialized countries, to produce goods at the same quality at lower prices, with the ability to market them globally. There is no need to cite figures here. Consumers around the world can in fact examine the results in the course of their day to day shopping runs, and see that Chinese goods are dominant in the markets. These are usually produced either by Chinese or international companies (which invest in China to benefit from its massive market in addition to using it as a base for exporting goods, to take advantage of relatively cheaper labor). The relocation of manufacturing plants into China and other emerging market countries means that the economies of Western nations have begun to emphasize the services sector more and more, especially the banking and financial sectors, which grew in the absence of stringent oversight. These banks give million-dollar annual bonuses to their executives, even when they post losses. Furthermore, speculation has created imbalances in the markets and in the supply and demand of hard currencies or commodities, hurting the world economy in the process. But change in emerging countries will not transpire without obstacles. Hence, the ability of these countries to occupy important positions in the balance of the new world economic order will not come effortlessly. Instead, they will pass through obstacles and many internal and external hurdles (for example, hurdles involving extreme poverty, internal migration towards urban centers, and the stability of political regimes in emerging countries amid economic and social woes, etc.) There is also the problem of the many military conflicts, most notably the one between North and South Korea and its repercussions for both countries and their neighbors. This is not to mention other conflicts that may take place when a super power attempts to impose its will on another, e.g. in the aftermath of economic conflicts (that have already started to happen). *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
