Opec urged to boost role in world economy

Opec needs to take advantage of the resurging global economic turbulence to play a bigger role in the world’s economy instead of focusing on production and price policies, a prominent Arab oil expert has said.

While a new global economic system will take many years to shape, developments over the past few years have highlighted the significant role emerging economies can plan in the new system, said Walid Khadduri, a former a former adviser at the Organisation of Arab Petroleum Exporting Countries.

In an article published by the Abu Dhabi-based Emirates Centre for Strategic Studies and Research, Khadduri said one of the most dangerous aspects of the current global economic turmoil was that governments did not put necessary controls on currency and commodity speculations, which led to a sharp rise in prices of oil and other raw materials as well as the appreciation and depreciation of currencies without valid supply and demand causes as should be the case in capitalist and free market systems.

He noted that the oil ministers of the 12-nation Organisation of Petroleum Exporting Countries (Opec) have frequently warned against such speculations but did not elicit considerable response from major industrial countries.

“It is evident that a shift from an existing global economic system into a new one does not happen overnight. It requires several years and is usually accompanied by significant political, military and economic developments. In fact, such changes appeared over the last few years through the emerging countries’ sustainable growth and their being unaffected by these crises,” he said.

Khadduri, an Iraqi, said such changes can also be noticed in the increase of energy consumption rates in emerging countries. His figures showed the annual oil and gas consumption rates in these countries are as high as 10 percent compared to just 1-3 per cent in the West.

He said all these are indications of the important role that emerging countries have tended to play in the international economy, necessitating that any new economic system should take into account the role and influence of these emerging countries.

“It is beyond doubt that oil-producing countries are able to play a greater role in the international economy considering changes taking place on the global stage. On the one hand, oil-producing countries are still living in the 1970’s when Opec used to take decisions setting the price levels and set production levels,” said Khadduri, ex-editor of the Nicosia-based Middle East Economic Survey (MEES).

“In other words, Opec member-states continued to focus on producing and export of hydrocarbons maximizing their incurred capital without establishing other industries that can compete internationally.”

Khadduri said the current changes in the international economy make it possible for altering this reality by developing legal and constitutional systems that suit modern standards of transparency, accountability, stimulation of national competencies and utilisation of immigrant ones.

“Moreover, there is a need to develop the Opec organisation, which managed to defend the interests of oil-producing countries over the last 50 years, by granting it a wider role in the international economy, not to be confined to oil production policies, but extend to other larger economic roles….consequently, the probability that the world economic system would change in favor of the emerging markets allows the oil-producing states to play a greater economic role on the international stage.”

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