V. ASSETS AND CONSTRAINTS
A. BOUNTIFUL ENERGY RESOURCES BUT NOT ENOUGH WATER
1. Energy resources
In 2006 the Middle East had the most fossil fuel reserves on the planet by far. The five Persian Gulf OPEC countries possessed two-thirds of the oil reserves and supplied 30% of all the raw crude consumed, playing a fundamental role in meeting the world's energy needs.
The Middle East pumps out 25 million barrels of oil every day. Nearly 20 million are exported, almost half from Saudi Arabia, the world's leading crude producer. Most find their way to the OECD countries. The United States and United Kingdom imported 2.5 million barrels a day in 2005: 70% from Saudi Arabia, 10% from Iraq, 10% from Kuwait and the rest from Qatar and the United Arab Emirates. In Europe, 25% of imports came from Iran.
The Middle East also has extensive natural gas reserves estimated in 2006 at 73 billion cubic meters. The region is bound to play a key part on the gas market because it possesses 41% of the planet's reserves. Iran and Qatar rank second and third in the world, respectively, and together account for 30% of global reserves. With growing electricity needs in countries such as China, and the natural gas industry's brisk growth, the region is likely to find many outlets for this resource in the coming years.
Asia is becoming the Middle East's main customer. In a few years, that will change the West's relative political clout in that part of the world.
2. The water shortage
As a vital, and exhaustible, natural resource, water is at the heart of the Middle East's problems. The amount of available water is expected to fall by 80%, from 3,400m 3 per inhabitant per year in 1960 to 600m 3 in 2025, whereas the minimum necessary for survival is estimated at 2,000m 3 . Inefficient water management and rundown facilities contribute to waste, estimated at 40% to 50% in cities. The sometimes reckless use of water, especially in the Gulf States, which consumes as much as the United States does, as well as the appropriation of the resource by some States at the expense of others also account for the Middle East's water shortage.
Water has become a coveted resource and a source of conflicts. Israel controls the resources in the Litani River region, which provides Lebanon with 25% of its supplies, as well as the Jordan. Israel also controls most of the ground water in the Palestinian territories and all of it in the Gaza Strip, allowing it to shut the tap on and off at will. Water is an integral part of Israeli policy in the Palestinian territories. The biggest settlements are on the region's main aquifers, whose dwindling supplies also pose a critical problem in Jordan. Lastly, dams on the Tigris, Euphrates and their tributaries built by Iran, Syria and especially Turkey have dried up the Shatt al-Arab, which is a crucial problem for Iraq.
The lack and poor management of fresh water have led Israel and the Gulf States to turn to desalinization. The Middle East accounts for half the world's output of fresh water from desalinization, or 11 million cubic meters a day. Desalinization helps countries become self-sufficient and meet steadily rising demand but has harmful effects on water conservation and the environment.
Desalinization plants require tremendous amounts of energy, most of which is supplied by fossil fuels. That waste of energy makes it necessary to develop nuclear power in the region. What is more, desalinization produces brine, which is discharged into the sea or rivers, increasing their salt content. That raises the water temperature, accelerating its evaporation, and disrupts aquatic ecosystems. To make matters worse, the intensive use of chlorine necessary to maintain the facilities (22 metric tons a day in the Gulf) and discharges of copper due to pipe wear have dramatic consequences on the environment of a region affected by global warming. In the 20 th century conflicts in the Middle East may have been over oil. In the 21 st they will be about water.
B. THE DIFFERENTIATED IMPACT OF THE ECONOMIC CRISIS
The aim here is not to draw an overall picture of the region's economic situation, but two observations must be made.
First, the impact of the economic crisis depends on each country's starting situation. Those that had built up substantial financial reserves, such as Saudi Arabia or the Gulf States, have seen their assets' value melt but their overall outlook is still good, although some, such as Dubai, will find it hard to pay the bill for excessive real estate speculation.
Three countries may suffer more than others, threatening their domestic stability.
The first is Iran, whose economy has suffered for several years from United Nations Security Council sanctions and entered the crisis in a position of structural weakness. Falling oil prices have certainly increased tensions, which may have helped to foster the discontent expressed during last June's demonstrations.
The second country that has been particularly hard hit by the crisis is Egypt, whose economy is based on three sources of livelihood: oil, Suez Canal revenues and tourism. The downturn has affected all three at the same time and may spark social unrest. According to information supplied to the mission, exports and tourism revenues are expected to fall by 40%, canal revenues by 25%. The growth rate is likely to drop from 7% in 2008 to 4% or even 2% in 2009.
The third country that will probably suffer from the economic crisis is Yemen, because gas is one of its only resources.
The second observation has to do with the economic integration promoted by the Gulf Cooperation Council, which is flawed and spotty because it leaves out Yemen and Iraq and does not yet include a common currency. Nevertheless, it remains one of the best hopes for the region's economic development and peaceful unification.