Can Arab Gulf Economies Survive a Shale Gas Revolution?

Bala Balachandran, the J. L. Kellogg Distinguished Professor of accounting and information management at the Kellogg School of Management at Northwestern University, wonders how the commercial development of shale gas will forever alter Gulf economies.

“Oil reserves here are good for only 40 more years,” Balachandran tells Arabic Knowledge@Wharton. “Shale gas reserves are something like 500 years. So if that becomes economically viable, the barrel of crude oil is going to go down to $US15 dollars in three years. Then what happens to the economy here? Is there an alternative strategic plan? This is something they have to think about.”

Balachandran acknowledges that Arab Gulf countries are still flush with cash, and are investing into alternative energy technology. But technology isn’t enough by itself, he notes, nor does being wealthy help innovation.

“When you’re affluent, you are not motivated to change,” he says. “When your survival is threatened, you’ll come forward.”

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Fareed Zakaria On Afghanistan, China’s Middle East Plans, and Turkey’s Fight With Iran for Influence

A year ago, the Middle East was shaken by the Arab Spring and the subsequent fall of three of its most enduring autocrats. Then in the midst of the upheaval came news about the death of elusive terrorist mastermind Osama Bin Laden. But these endings have not yet brought about new beginnings; instead they have brought new challenges, says prominent foreign policy commentator Fareed Zakaria.

Though Afghanistan will see most of its foreign troop presence dwindle, Zakaria says there will have to be a continuation of foreign aid to the nation to keep it from falling into chaos again.

China has been aggressive in pursuing natural resources in the region, he notes, “but they seem unwilling to take on a larger, more political role, [or articulate a] political vision of what that means in terms of the politics of the Middle East.”

There is meanwhile a battle for regional political influence between Turkey and Iran, he adds, a battle that Turkey is winning. “When I was in Cairo, the people I talked to all looked to Turkey as a model, because they viewed it as democratic, powerful economic model, capitalist, a great trading country, able to deal with the west and the east, confident, assertive,” he says.

Zakaria is host of CNN’s flagship international affairs program,Fareed Zakaria GPS, is also editor-at-large of TIME magazine, a columnist for the Washington Post, and a New York Times-bestselling author.

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