Amin Mohseni-Cheraghlou

The Middle East and North Africa (MENA) region is grappling with many challenges on several fronts. Air pollution, water scarcity, and climate change in general are some of the serious challenges facing the MENA economies and residents that have been overshadowed by energy, security, and political debates surrounding the region. Nonetheless, considering their significant negative impact on the economic development of the MENA countries, inclusive, sustainable, and stable economic growth will require timely and effective solutions for the region’s environmental challenges.

Writing in 1993, Lillian Craig Harris observed that “for China, economic power, not armed conflict, had become the most important factor in the struggle to gain independence, power, and status.” Fast-forwarding more than a quarter-century, this statement is now more true than ever, especially in the MENA region, where economic ties between MENA and China have grown stronger by the year.

The Middle East and North Africa (MENA) region plays a central role in the global oil and natural gas markets. The region is home to more than 52 and 42 percent of global crude oil and natural gas proven reserves, respectively. In the past decade, the region generated 36 and 22 percent of global crude oil and natural gas, respectively. The abundance of hydrocarbons has sometimes been a mixed blessing for the economies of MENA countries, which have been reluctant to promote energy efficiency or sector diversification. Around the globe, energy intensity —energy use (kg of oil equivalent) per $1,000 GDP— became 15% more efficient between 2001 and 2018. In contrast, MENA became 8% less energy efficient according to the same measure during that period.

The news coming out of Iran does not paint a pretty picture of its economy. Economic mismanagement, widespread corruption, weak legal and institutional capacity, and unfavorable business regulations, alongside the unprecedented U.S. financial and economic sanctions and the coronavirus pandemic, have been choking the Iranian economy. However, with a population of 85 million, half under the age of 30 and highly educated, as well as a strategic location on the Persian Gulf and vast reserves of energy and other natural resources, including wind and solar energy, Iran’s economy has incredible potential waiting to be unlocked.

What does a Biden presidency mean for the economy of Iran? The short answer is: not much. While the Iranian public considers his election good news for the country, these sentiments are fleeting and will soon fade. The reason is simple: Even if Joe Biden decides to reengage with Iran or reenter the 2015 nuclear deal on his first day in office, a Biden presidency will not change many crippling realities for the Iranian economy.

Oman’s new ruler, Sultan Haitham, only has a short timeframe in which to aggressively diversify the country’s economy and reduce its dependency on hydrocarbon exports. This already difficult task is further complicated by the twin challenges of the global coronavirus pandemic and low oil prices, both of which limit the government’s fiscal room for maneuver. One obvious sector that Oman should consider expanding rapidly is its tourism industry.

COVID-19 presents a major threat to the global economy and the health of millions of people around the world, but its impact on Iran, one of the early epicenters of the outbreak, has been particularly severe.

In the immediate aftermath of the assassination of Gen. Qassem Soleimani, head of the Islamic Revolutionary Guard Corps – Quds Force, on Jan. 3, Ayatollah Ali Khamenei warned the U.S. of Iran’s “harsh revenge.” There has been much speculation around the timing, location, and the type (or form) of Iran’s promised revenge. Amin Mohseni-Cheraghlou takes a closer look at the impact of the widely discussed strategy of blocking the Strait of Hormuz.

Faced with rapidly deteriorating public finances, Iranian policymakers had no choice but to reduce gasoline subsidies through a combination of rationing and price hikes. However, the way in which they did so was problematic, especially when they had other, better policy options that would have ensured a more equitable, effective, and efficient outcome.

Adding to the backdrop of economic mismanagement, corruption, and increasing rates of poverty and inequality, the recent gasoline rationing and price hikes have ignited widespread and violent protests inside Iran. Despite recent changes, the country’s energy subsidy regime remains highly inequitable, ineffective, and inefficient.