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FIKRET ERTAN |
Petrodollars and Pakistan
Petrodollar is a term that was coined in the 1970s as a result of the skyrocketing prices in oil.
The term which became commonplace in the 1980s due to oil price hikes, is once again being frequently used after a 20-year hiatus.
Undoubtedly, the reason for this is the sharp spikes in oil prices. Crude oil prices, which for years remained at the $20 a barrel level, have continuously risen to stabilize at $60, and they seem likely to remain at this level for long.
These high prices have brought petrodollars (huge oil profits) once again to the fore, and petrodollars have gotten much higher value than during the 1970s and 1980s.
According to experts, 19 oil exporting countries will earn $781 billion from crude oil sales this year. This amount was $549 billion in 2004 and $324 billion in 2002. In short, if crude oil prices remain at the current $60 a barrel level, the earnings of these 19 countries could easily reach $1 trillion.
Among these 19 exporting nations are countries such as Mexico, Russia, Venezuela, Nigeria, which are not located in the Middle Eastern geography. These countries also earn huge revenues from the skyrocketing oil prices. However, the greatest part of the earnings, without any doubt, goes to oil exporting countries in the Middle East.
According to International Monetary Fund’s (IMF’s) estimates, the revenues of oil exporting countries in the Middle East will reach $400 billion. Saudi Arabia, Kuwait, United Arab Emirates are likely to generate $305 billion from oil exports this year. That is 30 percent higher than last year’s.
The greatest part of the earning will go to Saudi Arabia. According to a report by the Samba Finance Group, which is the second largest bank in that country, Saudi Arabia will generate $163 billion from oil this year. The same report indicates that in 2005 the average transaction price of Saudi oil will be $51, and this amounts to a 45-percent increase when compared to $35.17 in 2004.
These huge profits further increase the current account surpluses of these countries. For instance Saudi Arabia’s surplus was $26.1 billion in 2004, and this year it estimated that it will reach $55 billion.
In short, petrodollars boost assets prices of Muslim countries in the Gulf, gives them unprecedented means to invest and to give loans to others. Setting aside Venezuela, Russia and other similar countries, Gulf states with these huge profits should provide the best assistance possible to those stricken by the earthquake in Pakistan, because today these countries are earning plenty of petrodollars, which should mean plenty of assistance. They have no excuse. Furthermore, in my opinion, apart from assistance, they should also provide long-term loans to Pakistan with favorable terms, because Pakistan is in dire need of such loans.
The petrodollars in the 1970s and 1980s were to a large extent wasted, squandered on prestigious investments or given as loans to Western banks. This time there is a horrific catastrophe in Pakistan. I hope part of the petrodollars of the 2000s will be spent to alleviate the suffering of the people of Pakistan, and that’s the way it ought to be.
October 27, 2005
28.10.2005
FIKRET ERTAN
http://www.zaman.com/?bl=columnists&alt=&hn=25815 | 
