The Strategic Importance of the Middle East and North Africa: The Strengths and Limits of MENA Oil and Gas Wealth and the Challenge of Climate Change
This publication has been updated as of January 30, 2023.
The Emeritus Chair in Strategy has issued an updated, book length report on the changing strategic importance of the Middle East and North Africa (MENA) region entitled The Strengths and Limits of MENA Oil and Gas Wealth and the Challenge of Climate Change. It focuses on the energy and other economic aspects of the strategic importance of the region—which is dominated by its current and future oil and gas exports.
A downloadable copy is attached to this webpage, and the report can be downloaded from the CSIS website at https://csis-website-prod.s3.amazonaws.com/s3fs-public/2023-01/230124_Cordesman_Strategic_Importance_MENA.pdf?VersionId=N1L1PnMv4vxVrWJUaGceelmBlTMeGT6K.
Addressing the Impact of Oil and Gas Exports by MENA Country: The Current Key to the Region’s Strategic Importance
The analysis begins with an overview of the key factors shaping the region’s changing strategic importance. It then focuses on the oil and gas exports, which are the key factor shaping the region’s strategic importance, its role as a group of major trading partners, its role as a key line of global communication between regions, and its role in global migration.
The analysis then provides a country-by-country overview of the key quantitative and trend data on oil and gas exports. It shows that there is only a limited consensus between various sources and just how different the resources and exports of given countries are. It also shows that the level of energy exports dominates the strategic importance of most states in the region. Israel is currently the only state with an advanced enough economy to export advanced goods and services, and that ranks as a highly developed state for at least its Jewish population, although Saudi Arabia, Qatar, and the UAE are making important advances.
Examples of National Petroleum Wealth versus Regional Petroleum Poverty
At the same time, the report shows that few MENA states have significant enough oil and gas resources to provide the export revenues to meet their internal needs for overall economic development, and to provide real jobs for most of their population, and that earn per capita revenues that provide a real-world form of oil and gas wealth. Some of the major exporting states have been chronically mismanaged for decades and are still the scene of serious internal instability and violence.
Some exporting states also have relatively limited reserves, raising questions about their future in the period between 2023 and 2050. At the same time, other MENA states have not yet exploited all of the areas which could add to their oil reserves, and the data on their gas reserves and production indicates that a number may be able to make major increases in their production and exports of the fossil fuel that has the least impact on global warming and whose use is safer than oil and much safer than coal.
Looking at the Future Strategic Importance of Oil and Gas Wealth Under “Business as Usual Conditions”
The report then examines estimates of future demand for MENA oil and gas and shows that the current trends in the global economy call for increased use of MENA oil and gas exports through at least 2050, particularly in Asia and in the less developed non-OECD states— if major reductions in the demand for fossil fuels do not take place to deal with climate change and global warming .
Projections of future oil and gas use and imports that do not include cuts in fossil fuel use to deal with global warming show major shift in the flow of Middle Eastern and North African oil and gas exports to meet the rising demand for energy in developing countries like India, and to similar rises in oil and gas exports to allow major developed countries like China, Japan, and South Korea to reduce their dependence on coal. They also show a shift to increased use of natural gas imports to limit the use of oil. Estimates of such shifts indicate that this could greatly increase the total Asian demand for oil and gas exports through 2050.
The Critical Potential Impact of Global Warming on the MENA’s Strategic Importance
At the same time, the following section of this analysis highlights a key issue shaping the future of the MENA region between 2023 and 2050. It shows that current projections of global warming and climate change raise critical questions about the future use of fossil fuels — the one major source of the region’s trade income and wealth . There are major uncertainties in virtually every aspect of estimates of the impact of global warming and its impact on MENA oil and gas exports.
Some estimates of the future demand for oil and gas use a “business as usual” approach to global economic development that assume that the efforts to reduce global warming will remain relatively limited. They assume that importing states will not even reduce their oil and gas imports to reach the limited STEP level of cuts in the demand for fossil fuels that is called for by existing national and regional policies.
The Uncertain Nature of How Cuts in Oil and Gas Demand Would Affect Given Regions
It is clear from projections by bodies like the International Energy Agency (IEA) that a truly major effort to reduce global warming to zero through 2050 would require massive cuts in the demand for oil and gas. This could have an equally massive impact on the demand for MENA oil and gas exports and the economies of major exporting states and effectively force them to radically change and diversify their economies and to invest enough of their export revenues before such cuts take place to serve as a lasting major source of income.
Such an impact on MENA exports is, however, equally uncertain. The IEA projects that highly developed states like the United States and members of the European Union would make major cuts in fossil fuel use because of their superior ability to invest in renewables and other alternative fuels and make more efficient use of energy in developing their economies. Accordingly, it shows that the cut in MENA oil and gas exports could be limited by the continuing demand from less advanced Asian and other developing states.
How the Different Perceptions, Goals, and Confrontations between Major Powers Could Affect the Region’s Strategic Importance: The Impact of the Ukraine War
Another set of major changes in the role and strategic importance of the MENA region may be driven by the growing strategic confrontations between the major powers. One example is the war in Ukraine, which has had a major impact on Russian oil and gas exports and could lead to radical long-term shifts in the nature of both European imports and Russian exports of oil and gas that affect MENA exports. It could lead to lasting European cuts in dependence on Russian exports and to a Russian shift in gas exports to China or to new outlets in countries like Turkey.
At the same time, the current political and economic realities in the United States, European Union, and other European states—and in nations like Japan, South Korea, and China—all have competing needs for government spending that could place major limits on such investments in new energy supplies and facilities.
How the Different Perceptions, Goals, and Confrontations between Major Powers Could Affect the Region’s Strategic Importance: The Impact of China
The strategic competition (or confrontation) between China and the U.S. and its major strategic partners is another key area that may lead to competition for strategic influence to control MENA oil and gas exports, and that might trigger a serious between China and other states that would affect the flow of energy exports throughout the MENA region, and the flow of exports through the Indian Ocean, and the Pacific. It could also lead to greater Chinese demand for Russian oil and gas exports as a substitute for dependence on vulnerable shipping routes through the Indian Ocean, Strait of Malacca, and the Pacific, as well as to far more active competition between China and competing powers’ influence over MENA exporting states, for MENA arms sales, and security ties and basing facilities.
At the same time, other estimates ignore the impact of climate change or show that China’s current national policies fall far short of those needed to halt global warming. Still other projections largely ignore the impact of climate change and focus on economic development in ways that estimate there will be sharp rises in oil and gas exports to key parts of the developing world. These projections are also further affected by the major uncertainties in the pace and impact of climate change.
How the Different Perceptions, Goals, and Confrontations between Major Powers Could Affect the Region’s Strategic Importance: The Myth of U.S. Energy Independence
One area that may have less impact than many in the United States believe is the supposed end to U.S. dependence on the secure and stable flow of MENA oil and gas exports. This has led some U.S. planners and analysts to discount the importance of the reliable flow of MENA oil and gas exports to the United States. In practice, however, the analysis shows the reality is very different.
The U.S. economy is critically dependent on affordable global oil and gas prices, and the U.S. prices its own fuels at global levels in an energy crisis of emergency. More importantly, the U.S. economy is highly dependent on the import of manufactured goods from oil and gas importing countries in Europe and Asia. Current data on the overall balance of U.S. trade show that U.S. overall dependence on all types of oil and imports now makes it as indirectly dependent on the flow of MENA exports to U.S. trading partners as it once was on direct oil and gas imports to the U.S.
As noted earlier, however, this situation could change radically if the U.S. made a massive investment in alternative fuels, other sources of energy, and energy efficiency/conservation to reduce its emissions and impact on global warming. Once again, the IEA makes such assumptions in its 2022 World Energy Outlook, but such assumptions are highly uncertain.
Once again, however, the United States faces political realities, problems with inflation and other economic problems, and competing needs for government spending, that could place major limits on such investments.
Other Aspects of the MENA Region’s Strategic Importance
The final sections of the analysis focus on its overall importance as a global trading partner, its role as a key line of maritime trade and air traffic, and its current and future impact on migration out of, and into, the region.