View of part of the Fujairah Corniche and the Hajar Mountains in the Background

Tuesday, November 4, 2008

Gulf States Asked for Petrodollars but Better if they also Give a Green Energy Example

British Prime Minister, Gordon Brown and his Climate Change Secretary, Ed Miliband are in the UAE as part of a fundraising tour of the Gulf States.

They are seeking an injection of funds into the IMF whose reserves have been greatly depleted.

What approach will best loosen the Gulf purse strings, especially when western powers are being viewed by some Gulf representatives as guilty of mismanagement and hypocrisy?

Will their best angle be to say that the $150 per oil barrel price tag this year has left Gulf States awash with cash while the rest of us are struggling with the credit crunch, a recession, banks going bust, bailouts and a couple of wars that have left us broke?

The Gulf region has also been affected by the downturn so some regional investors will want to correct any image of being perceived as a ‘cash cow’ that is ready for milking.

If Gordon is canny he might press the theological argument which states that as God has made us caretakers of the earth (and we are not doing a good job of it), with divine help and your cash we can do it together.

A variation of this approach seems to have raised substantial finance with Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani pledging money and saying “We are sharing the same world. Qatar is not excluded so we have to work together.”

Perhaps the big motivators will be to acknowledge that the economic tables have turned, that the Gulf States are a formidable force and that in return for Arab wealth the Gulf States will receive greater investment opportunities and more power at the negotiating tables.

The British visitors are highlighting the issue of climate change in asking for Gulf money to enable British industry to go low carbon and provide green energy.

What probably won’t be said pointedly is that the Arab investment in green energy projects will ultimately reduce British dependence upon Gulf crude oil. But Brown and Miliband are smooth talkers who are not as insensitive as American Presidential nominee, John McCain. With the Arab world listening in, McCain’s speeches have shown him hell-bent on stating that if elected president he will begin with a surge of domestic drilling and green energy projects “to stop sending $700 billion a year to countries that don’t like us very much.” This promise might win him some votes but it loses him great respect in the sphere of international diplomacy. McCain and Obama’s promises and sometimes venomous statements about the oil-rich nations, have ensured that the victorious presidential candidate has ruined his chances of going on a fund-raising tour of the Gulf.

The Middle Eastern states that come to the party for the British fund raisers will receive much international kudos and appreciation at a time of global financial hardship. Their investments will not be made without strings attached and it will be fascinating to see what they demand in return for their contribution.

The easy way is for the Gulf States to respond with a healthy investment. But how much better it would be, if with their wealth, they would invest heavily in numerous green energy projects in their own backyard?

Projects like the proposed city of Masdar in the UAE are extravagant, high costing and will not serve as feasible models to most nations.

The Masdar project will cost $22 billion to create a green city for only 50,000 future residents who will live on six square kilometres of the Emirates. How much more effective it would be if the UAE use the $22 billion to invest in scores of small alternative energy projects, provide basic recycling services in every neighbourhood, affordable solar panels for every household and effective measures to cut exhaust emissions that would benefit the almost 5 million current UAE residents living on 83,000 square kilometers? Then other countries of the world might take notice and follow the lead.

In the meantime, the rich oil reserves and flush bank accounts have resulted in the UAE winning countless world records for high towers and large aquariums while it continues year by year to retain the unenviable reputation of having the largest ecological footprint in the world.

Dr Geoff Pound

Image: Prime Minister Gordon Brown.