In a year of two halves, record oil prices and strong oil demand were the consistent Middle East themes of 2005 and should continue to be so in 2006. What made the difference between the beginning and the end was mid-year political change in Iran and Saudi Arabia, the region’s big two.

King Fahd’s battle with ill health finally reached a climax in the summer and King Abdullah’s succession in August was no surprise, in contrast to the election of Mahmoud Ahmadinejad as Iran’s president in June. The consequences of both developments are, as yet, uncertain.

It was a bad year for Lebanon. Its people’s legendary optimism and resilience were tested to the limits by the brutal murder of former prime minister Rafiq Hariri by people at least associated with the Syrian regime. The failure to catch the culprits and further political killings have dealt a huge blow to hopes of new capital inflows, continuing recovery and political consensus.

It was also a bad year for the Egyptian regime led by 77-year-old President Mubarak. The goodwill created by the announcement that presidential elections would be contested was wasted by manipulation of the voting process and blatant harassment of opponents in December’s parliamentary poll. It ended up looking like a desperate attempt by the ruling National Democratic Party (NDP) to hang on to power. Syria got a bad press, but that’s nothing new. By the end of the year, Damascus had seen off the worst the international community was prepared to do, which was not a lot.

Insurrection

It could have been worse for Iraq. Tens of thousands were killed or injured during the Sunni insurrection, but millions turned out three times to vote in national elections. Their enthusiasm was striking. But their expectations cannot be met in a ruined country where differences among the three principal Iraqi communities have been made irreconcilable by US and coalition actions since the fall of Saddam Hussein.

It was, however, a good year for Iran. It dominates Iraq and has been enriched by the new oil boom. The religious establishment has failed to halt Ahmadinejad’s rhetoric. This suggests they privately approve or recognise the new president says what the majority think. The good news for the West is that they have a new Middle East bogeyman to blame for everything.

After 30 years waiting for Israeli voters to see the light, I cannot get excited about the partnership between Shimon Peres, co-author of the Suez invasion of 1956, and Ariel Sharon, mastermind of the massacre of Palestinian civilians in Beirut in 1982. The only encouraging prospect is the world’s most perverse electorate voting heavily for the Labour Party under the unknown Emir Peretz.

The big winners of 2005 were the countries of the GCC, which have enjoyed on average a growth rate of 25 per cent in conjunction with stock market and property booms. This has more than offset the impact on confidence of domestic political concerns in Bahrain, Kuwait, Oman and Saudi Arabia. The star performer was the UAE, which is enjoying an extended golden moment. Its leaders are now planning to make the federation a regional power in every sense of that overused phrase (see Cover Story).

Sir Bob’s boob

Sir Bob Geldof is such a force for good that he should be forgiven for erroneously saying in a speech in Dubai on 16 December that the UAE had given practically nothing to Africa.

In fact, the opposite is the case. The Gulf states in the past three decades have on a per capita basis been the world’s most generous donors to developing countries generally and to Africa in particular. A report published by the OPEC Fund for International Development in December 2003 showed that more than $70,000 million had been disbursed in the previous 30 years by Arab (mainly Gulf) states.

The Gulf continues to give more than anyone else in the Middle East. But Sir Bob was right to say more shoul