The era of easy oil money in the Middle East is ending. The result will be painful
don’t add up anymore. Algeria needs the price of Brent crude, an international benchmark for oil, to rise to $157 dollars a barrel. Oman needs it to hit $87. No Arab oil producer, save tiny Qatar, can balance its books at the current price, around $40 .
Pain will be felt in non-oil producers, too. They have long relied on their oily neighbours to put their citizens to work. Remittances are worth over 10% ofin some countries. Trade, tourism and investment have spread the riches around to some degree. Still, compared with other regions, the Middle East has one of the highest proportions of unemployed young people in the world. Oil has bankrolled unproductive economies, propped up unsavoury regimes and invited unwelcome foreign interference.
The kingdom had hoped an increase in religious and leisure tourism would at least partially compensate for the decline in oil revenue. That now seems a fantasy. The holy city of Mecca has been closed to foreigners since February. Last year the annualdrew 2.6m pilgrims; this year it has been capped at around 1,000. “The kingdom is stuck in the oil dependency it needs to climb out of to survive,” says Farouk Soussa of Goldman Sachs, a bank.
This will upend the social contract in states that have relied on emigration to soak up jobless citizens. About 35,000 Lebanese graduate from university each year; the Lebanese economy only employs 5,000 of them. Most look abroad for work. The exodus has speeded up the brain drain. Egypt used to supply unskilled labour to the Gulf. In the 1980s more than one-fifth of its migrants toiling in Saudi Arabia were illiterate.
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