Oil is Simply Not Enough! [Archives:2001/29/Viewpoint]

July 16 2001

Recently, the Yemeni government okayed several new deals with oil exploring and producing companies to work in Yemen. At another level, companies currently operating in the country have raised revenues from oil. It is also undeniable that oil is the main source of revenue for the government. However, officials and decision-makers seem to forget that oil revenues are not stable. They are extremely volatile and could drop sharply at any time as in 1998. They need to realize, therefore, that complete dependence on oil revenues can be dangerous.
In view of this, the Gulf states are continuously trying to find alternative energy sources to oil in the long run. Although it is highly probable that oil reserves could last for tens of years to come, it is also probable that total dependence on oil may be catastrophic for those nations who have adopted this strategy. Unfortunately, Yemen itself is progressively becoming a nation over dependent on oil revenues.
If the government is not able to render services and provide sufficient funds for projects, salaries, and other necessary expenses from available revenues, how will it possibly cope when the country’s oil reserves actually dry up? Today, countries throughout the world are seeking alternative fuels, while Yemen still hasn’t even considered finding alternatives to oil as a national source of income.
The extensive efforts of the United Arab Emirates in the fields of both commerce and tourism should provide us with an invaluable insight into the importance of finding new energy resources, implementing ideas, and initiating new projects to provide additional income for Yemen. Yemen has great potential for development in both tourism and commerce. It is strategically well placed, has a generally comfortable climate, has important ancient sites, and much more.
The country is currently experiencing an economic crisis, reflected in an explosive population growth, water and electricity shortages, security problems, and many other issues. We need to look at new ways to improve the nation’s standard of living by seeking financial resources other than oil. Even revenues from oil are unequally distributed. The government spends disproportionately more money on the armed forces than any other state sector; so, not only is the state’s budget very small, but it is also not well spent. There are other vital state sectors which badly need a much larger share of the budget. These include education and health. Yet, due to an over-dependence on oil revenues, these two very important sectors are insufficiently provided for.
It is in the hands of Yemen’s leaders to become far less dependent on oil revenues as well as to redistribute the country’s current revenues in a way which meets the pertinent needs of the country. It is no longer appropriate or necessary to finance such a large military establishment to defend the country’s borders . We now live in an age of widespread education, science and technology, and not one of rebels and armed forces.
Will the leadership ever get this message before it is too late?
Let’s hope so!