Gone are the days in which the rulers of Gulf states could derive their wealth from crude production and buy consent for their rule through a mix of subsidies, alliances with rival families and accord with religious authorities.
The old tribal bargain is becoming obsolete in the face of population growth and urbanisation. A concentrated mass of city dwellers presents a very different challenge to the region’s rulers than a dispersed rural populace.
Just like Europe in the 19th century, GCC governments need to provide employment opportunities for a young, restive workforce. Rapid industrialisation made this possible in the case of the former. In the latter, things are not that simple.
Industry does not spring from the ground as effortlessly as it has done elsewhere in the past; rather it is fostered by governments with the help of oil money, cheap energy and readily available hydrocarbon feedstock.
The obvious choice has been to develop the petrochemicals sector, the only industry which can easily be provided with an abundance of raw materials. Giant complexes in Saudi Arabia and the UAE are testimony to such efforts, and the region has established itself as one of the prime producers of basic petrochemicals.
As a next step, attention has shifted further downstream to the conversion industry. This produces plastics, which can be moulded into consumer goods. It is also far more labour intensive than the basic petrochemicals industry, thereby creating more employment.
Time is running out. The 2011 Arab uprisings have shown what can happen to governments that are unable to provide jobs for their young restive urban population. The Gulf has largely escaped political upheaval. But the example of neighbouring regimes should provide sufficient incentive to keep up the pace of development.