The Future of the Dollar
U.S. Financial Power Depends on Washington, Not Beijing
Five years ago, the Gulf states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates shared a fiscal surplus of some $600 billion; by 2020, the International Monetary Fund predicts that they will have accumulated a combined deficit of $700 billion. Sustained low oil prices could make things even worse. This bad news is yet one more reminder of resource-rich Arab states’ need to build vibrant, diversified economies that can withstand the effects of oil price shocks.
Although Arab governments have long recognized the need to shift away from an excessive dependence on hydrocarbons, they have had little success in doing so. Iraq, for example, set economic diversification as a core policy objective in one of its first five-year development plans in 1965—yet the country has only become more dependent on oil over time. In Qatar, Kuwait, and Saudi Arabia, too, diversification has been a central, yet largely unrealized, development