Social programs rise in the Middle East.
Written By: William Channel, Staff Writer
The Organization of Petroleum Exporting Countries (OPEC) managed to earn $1 trillion this year as oil continued to sell for $100 a barrel for the longest period yet. As a result to this increased cash flow, the member countries of OPEC are promising to use some of the money to help their citizens. They plan on doing so by injecting the money into various social programs.
These programs include spending billions of dollars in creating jobs, supporting religious funding, increasing salary, giving free food, and more. The idea is to increase public opinion or at the very least help to make the public more complacent. After the pro-democracy movements that overthrew the governments of Egypt, Tunisia, and Libya, the member countries of OPEC are trying to find ways of avoiding similar situations.
According to Gabriel Sterne, associate director in London at Exotix, said, ”they probably feel like they’ve got to do a lot more spending this time and they are focusing on social spending, whereas previous investments were business or private-sector driven.”
OPEC was formed on Sept. 14, 1960 in Baghdad, Iraq. It was founded by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. The main purpose of OPEC is to ensure a sort of balance among the countries in oil production and sales. Nowadays, OPEC consists of member countries mostly in Africa and the Middle East with two in South America.
In combination with the social programs that the countries are creating, some are also spending to create an overwhelming police force. However, the social programs should help create peace among the citizens, having the adverse effect of keeping the country in a state of stasis. According to Jean- Michel Saliba, a London-based economist at Bank of America, “Without the social spending, Gulf protests would possibly move the nations toward constitutional monarchy.”
Without this social spending the various countries would probably have rebellions to look forward to. Rebellions that could in theory change the structure of the governing in the Middle East. However, due to this increase in government spending and the poverty rate increasing, the need for electricity is finally being addressed.
But how does this really affect the United States? Last year the United States imported 1,790,811 barrels of oil from OPEC member countries. With sales still at an all time high in those countries, the price of oil is not going to be going down anytime soon. OPEC will need to keep prices of oil at above $80 a barrel to keep up with the increase spending.
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