Middle East: The Shifting Economic Dunes in The 21st Century

Currently the middle east is one of the most volatile and dangerous regions in the world, it is rife with tensions and disputes ranging from ideology to religion to sovereignty. There are many different ethnic and religious groups in the middle east which are currently in turmoil, they are in the middle of a conflict being fought on multiple fronts by different groups for various reasons. There are religious tensions all across the region which have been exasperated over the years due to mismanagement, instability and a lack of a strong accountable state in most countries of the region.

Middle East: The Situation Today

At present there happen to be four failed states, Afghanistan, Iraq, Syria and Yemen, and three civil wars raging in the region, in Iraq, Syria and Yemen. In all of these states there are severe religious and ethnic tensions and a complete absence of any semblance of state power and responsible governance. Various foreign political entities have continuously interfered in these countries to further their own political goals with the intent to gain political influence in these countries.

Apart from gross human rights abuses by foreign and domestic entities, the middle east remains on an average one of the worst performing in the world in terms of human quality of life as well as peace and stability. This has undoubtedly devastated the economies of many countries causing not only mass migrations from these regions but also a heavy loss of life and livelihood to the locals.

Countries like the US, Russia, Turkey, France, Israel, Saudi Arabia and Iran have been actively involved in this region and have attempted to gain influence and undermine other nations through various measures such as alliances, support – military and civilian, for governments or rebel groups, many of whom are considered to be extremists, by exploiting the socio-political divide among the people to meet geopolitical ends. Some of the belligerents involved, support, and/or are believed to support terrorist militias and organizations.

In stark contrast to many of these war ravaged, conflict ridden countries, large parts of whose populations are below the poverty line and/or are refugees, there are other countries which are amongst the richest in the world with a higher per capita GDP per annum than most European countries such as Qatar, UAE, Kuwait etc. These countries are not only rich, boasting a high standard of living but are also considered to be politically stable nations with a strong economic and political relationship with the west especially the US. Being oil rich countries and members of the OPEC not only are they economically well off but are also capable of exerting their political dominance over other countries in the region.

Political Faultlines

The Saudi-Iranian conflict

One of main reasons for the conflict, instability and the political turmoil that has defined the middle east since the 80s, is the Middle eastern cold war which is being fought between Saudi Arabia and Iran over middle eastern dominance.

Saudi Arabia is an oil rich high income autocracy with close relations to the west, being controlled by the Al Saud family. It is a Sunni majority country with a Shia minority. It is led by King Salman bin Abdulaziz and crown prince Mohammed bin Salman (MBS). But since 2017 MBS has been the de facto leader of Saudi Arabia and has assumed control of the nation almost entirely from his father.

On the other hand, the Islamic Republic of Iran, which was born out of the Iranian revolution, is also an oil rich country, but unlike the Saudis, it has not been able to benefit from the presence of oil in its country due to various reasons ranging from socialist policies to corruption and even incompetence. Its government, headed by Hassan Rouhani, is strongly anti-west and has indulged in multiple small-scale military conflicts with the west. It is largely a Shia majority with its state religion being Islam. Iran and Saudi Arabia are ideological adversaries and are currently supporting proxy wars between Shias and Sunnis in Syria, Iran and Yemen.

Also Read: The Economics of the Persian Gulf War

Iran sees the Euphrates region as its own sphere of influence and intends to establish Shia majority Islamic states in this region. Currently a large number of extremist Shia militias are freely operating in Iraq providing direct political control over that region to Iran. Similarly, such militias are also operating in Syria in an attempt to assist the government forces in crushing the US and Saudi backed rebels and helping Bashar al-Assad led pro Iran government to consolidate power.

These terrorists are armed and funded the Iranian Revolutionary Guard Corps (IRGC). The IRGC also funds the Yemeni Houthi rebels fighting against a pro-Saudi central government. It also illegally supplies arms, rockets and ammunition to Hamas in Gaza and used to do the same for the PLO in the West Bank.

Saudi Arabia being economically well off than Iran also supports rebel and pro-Saudi militias in Syria and, apart from sustaining the Yemeni government, it also actively carries out airstrikes against Houthi rebel targets. There have been credible allegations of gross human rights violations domestic and international, on both Iran and Saudi Arabia. Due to this enmity and the conflicts arising out of it, large parts of the middle east have been devastated with their economies in shambles and their people dying or fleeing for their lives.

The Israel-Palestine Conflict

The Israel-Palestine dispute has been an age old one, emerging in 1948 since the formation of a Jewish state of Israel. Israeli and Arab divisions run deep into history and are complicated by common holy sites which both sides want to gain control of. Till now there have been more than a dozen small scale and large scale conflicts between Israel and its neighbors. Many of them today either recognize Israel as a state or have decided not to peruse continued aggression towards Israel.

Today except for Iran no other country is actively hostile towards Israel. In spite of historical differences Egypt did not interfere and take sides in the recent conflict in Gaza, neither did the Saudis, on the contrary the Saudis and the Emirates who have historically opposed the Israeli state today have great economic and political co-operation and have, especially since MBS came to power, put aside their differences to face their common enemy Iran.

Despite the fact that Israel is considered to be an economic powerhouse in terms of IT, technology, electronics defence etc., most of the economic and quality of life benefits have been kept away by the Israeli state from the Palestinians in an apartheid like manner. Most Palestinians in Gaza and West Bank live in poverty with their rights severely curtailed by the IDF and have been victims of various other violations committed by Israel under international law. Due to this fact there hasn’t been significant growth for the Palestinians in terms of their economy and standard of living and it is expected to remain the same in the future.

Foreign Interventions

Countries like the US, Russia and Turkey have attempted to take a piece of the middle eastern pie. All these nations are keen at forwarding their own political agendas in the middle east and exploit it for a strategic advantage at the expense of the well being of the region and its people itself.

The Americans want to support their allies like Saudi Arabia, Iran and Israel and would prefer to maintain a pro-American government in Iraq. It is also in the process of toppling the pro-Russian Syrian government under Assad, to that extent the US is suppling and arming the rebels, many of them being Islamic extremist groups, against the Syrian government as part of the Syrian civil war which stated during the Arab Spring and continues on till date.

With the ISIS almost completely wiped out by the combined efforts of NATO as well as pro-Russian forces, only challenge for the Americans would be to maintain pro-America governments in both Iraq and Afghanistan, but with the recent announcements of massive troop withdrawals from the region by September of this year, it seems unlikely.

The Russians have continued to support Assad, having blatantly denied his usage of chemical weapons in the war, they have supplied them with armaments as well as technical expertise and intend to make sure that he stays in power and has closer ties with the Russians. Due to the civil war Syria has, at this point of time, no economic future, in fact many of the regions of the country aren’t even under direct government administration, being under the rule of militias and rebels.

While on the other hand the Turks in October of 2019 launched a military campaign to flush out Kurdish rebels, whom the Turkish government considers terrorists. This was a unique case of a NATO nation attacking its own ally, in this process not only did the Kurds suffer heavy losses but the Turkish government created a 20 Km buffer zone to reduce the cases of infiltration of Kurdish ‘terrorists’ into Turkey.


Due to such conflicts and military involvements most of the affected nations such as Syria, Iraq, Yemen and Afghanistan have very little scope of ending their troubles and ridding themselves of conflict to create any semblance of economic recovery. It remains one of the most dangerous regions on earth to make an investment. There seems to be no clear end to the middle eastern dilemma and there is no solution which has been proposed which is able to take into account the differences and the fractions in the society and be able to come up with a permanent solution to such a multi-layered conflict.

The most important prerequisite for economic growth is political stability. The reason countries like Saudi Arabia and Qatar have been successful is that they are stable and have not indulged in a conflict on their own soil. Even nations like Jordan and Egypt have been relatively successful, despite not having huge oil reserves, because they posses some degree of political stability and have been able to achieve some levels of economic growth. Therefore, for a nation it is important to end military conflicts and bring about economic viability to perform well economically, oil rich countries with good relations to the west will be the only middle eastern nations to be able to generate considerable economic growth.

Default image
Shashank Sekuri
Articles: 17

Leave a Reply