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  • The GCC countries have benefited enormously

    from oil and gas reserves and assets that have

    generated significant financial liquidity in the six

    years between 2001 and 2007. The present

    wealth poses an interesting question for those

    interested in the future of the GCC countries, and

    one which these scenarios seek to address: How

    can this wealth be put to use to ensure that the

    GCC countries expand in affluence, while

    overcoming the internal and external pressures

    that could shift them from the path of sustainable

    prosperity?

    Key Questions for the Scenarios

    From amidst the many drivers identified by

    project participants, the scenario process

    identified two focal questions that have the

    ability to alter the fortunes of the GCC countries

    in the next two decades:

    Will leaders in the GCC countries bewilling and able to implement the

    necessary economic and political reforms

    and enforce the rule of law, both in public

    and in private governance?

    How can the GCC countries maintaininternal order and stability, in particular

    vis--vis a complex and uncertain

    regional situation?

    As important as these questions are, more

    crucial are the insights that can be gleaned

    from considering what these questions imply.

    In positing three possible futures which address

    them in different ways, two key themes

    consistently emerged as being crucial to the

    future of the GCC countries:

    Education and innovation: The GCCcountries face the challenge that their

    collective oil reserves, while vast, will not last

    forever. Nor are oil and gas always a reliable

    source of wealth; there have been many

    times where GCC budgets were in deficit

    and public debt rose as a result of falling

    energy prices. However, in attempting to

    diversify away from oil, the GCC countries

    face a major problem in that their existing

    skill base for workers is low by world

    standards and relatively little research,

    development and innovation are occurring

    in the region. This creates an impediment

    to development and exacerbates other

    problems associated with importing both

    foreign workers and technologies. As a

    result, the way in which education policies

    are handled by GCC governments will be a

    significant determinant of the regions ability

    to develop as innovation-based economies

    that do not wholly rely on natural resources.

    Leadership and governance: The GCCcountries are ruled by traditionally-organized

    family groups, with varying underlying

    executive, legislative and judicial models.

    Leadership and governance will therefore be

    instrumental in determining the path that the

    GCC countries will take over the next 20 years.

    Although much is being undertaken today in

    terms of reform to improve the efficiency and

    openness of these systems, the strategies

    chosen and the rates of change vary between

    GCC countries. In managing both internal

    stability and reforms, leadership plays a

    critical role at all levels of GCC government

    as well as in the private sector.

    6

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    Executive Summary

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    2025

  • Scenario Paths

    Three different paths for the GCC countries

    through to 2025 are represented in figure 2.1,

    displayed as movements through a matrix

    defined by the focal questions above.

    Will the GCC countries successfully insulate

    themselves from ongoing regional instability in

    order to respond to internal pressures, firmly

    establishing the rule of law and achieving

    effective governance and institutional reforms?

    Oasis is a story where a focus on technocratic

    governance and top-down institutional reforms

    pays off in the form of a well-organized, cohesive

    and prosperous regional grouping. The regions

    economic growth, however, remains partially

    constrained by over-regulation and less-inclusive

    globalization.

    Will GCC governments allow regional

    tensions to spill over and affect their internal

    security, resulting in a focus on short-term

    solutions at the expense of tough reforms?

    Sandstorm is a scenario in which dramatic

    regional events and domestic unrest contribute

    to the GCC countries failing to maintain

    their momentum of reforms, with negative

    consequences for the regions economic and

    social development.

    Will GCC governments succeed in taking

    advantage of globalization in a more stable

    regional environment through bold reforms at

    the institutional and political levels? The Fertile

    Gulf is a future where GCC governments invest

    heavily in education and innovation in order to

    create a healthy private sector while encouraging

    reforms through a bottom-up process. This results

    in a more socially integrated and economically

    diversified region that occupies an increasingly

    relevant position in the international scene. 7

    Section2:Executive

    Summ

    aryThe

    GCCCountries

    andthe

    World:Scenarios

    to2025

  • 8

    Section2:Executive

    Summ

    ary

    Oasis describes a scenario where regional stability

    continues to be a challenge for the GCC countries, which

    are nevertheless able to achieve substantial institutional

    reforms. The GCC countries develop strong identities and

    work together to coordinate diplomatic and economic policies

    through technocratic governance and a strong internal

    market. Over-regulation slows the process of globalization,

    impacting the GCC countries; nonetheless, they are an oasis

    of stability and prosperity in an otherwise troubled region.

    The story is written as a press conference by a member

    of the Kuwaiti leadership and a Saudi technocrat delivered

    in Kazakhstan in December 2025.

    Sandstorm describes a future where regional instability

    is a defining factor, affecting the ability of GCC countries to

    effectively carry out much-needed institutional reforms.

    In a depressed global environment, reforms deflate or collapse

    due to a lack of attention to the root cause of internal issues

    and a tendency for governments to focus on short-term stability

    at the expense of long-term solutions. Caught in a shifting,

    violent environment, the GCC countries are blinded, unable to

    navigate their way out of the sandstorm and identify

    opportunities for prosperity for their populations.

    This scenario is written as a transcript of a televised debate

    on Arab satellite television, discussing the progress the GCC

    countries have made from the vantage point of 2025.

    The Fertile Gulf describes the rise of the GCC countries

    as innovation hubs in a global environment characterized

    by strong demand for energy and increasing globalization.

    Regional stability gives the GCC countries the opportunity

    to focus on enhancing their human capital at all levels,

    investing heavily in education while proceeding carefully

    with political and institutional reforms to support their growing

    economies and societies. In this way, a fertile garden of

    prosperity is established along the Persian Gulf.

    Written as a business magazine interview, The Fertile Gulf

    is an account of the experiences of a successful young

    entrepreneur from the GCC region, who has taken advantage

    of the changes between 2007 and 2025 to develop a range

    of global enterprises.

    Oasis

    Sandstorm

    The Fertile GulfThe

    GCCCountries

    andthe

    World:Scenarios

    to2025

  • 2007-2012: Growing tensions and insecurity spur a seriesof multilateral conferences involving the leadership of GCCcountries; the problem of regional violence is addressed atpolitical and cultural levels, resulting in increased regional stability.At the same time, recognizing the importance of education andinnovation, a number of GCC governments decide to spend theirbuilt-up wealth on educating their people and jump-startingresearch and development in a radical and dramatic fashion.Encouraging entrepreneurship by creating more business-friendlyregulatory and institutional environments and establishing fundsfor the development of new business ideas, the GCC countrieseffectively begin to emulate the Silicon Valley model.

    2013-2020: Less volatile, but still bullish, oil markets dont distractGCC countries from private, non-energy sector development,the success of which reduces national unemployment whilecreating an array of sought-after, highly skilled jobs for thosecoming out of the newly reformed education system. A series ofinternational bilateral agreements to financially support researchprojects in exchange for IP rights results in an innovation explosionin the GCC countries. Incremental improvements in institutions tomanage the burgeoning entrepreneurship combined with a moreinfluential business community further support regional development.

    2021-2025: Political reforms, which have proceeded at differentstages across the GCC countries, find balance; Western democraticideals are not directly transplanted. Instead, governmentsgenerate their own models of participatory governance over aperiod of experimentation and increasing engagement with theirpopulations. After a sea change in both attitudes to and theprovision of tertiary education, Arab graduates are keenly soughtafter for position