The world’s excessive reliance on oil to fuel its economy and the power politics behind securing that oil is bringing more harm than benefit to West Asia, a region now convulsed with economic and political turmoil. In fact, although resource-poor nations throughout the world participated in the high-tech boom of the 1990s and brought prosperity to their countries, most of West Asia remains largely stuck in a low-tech, commodity-priced petro-economy. Two exceptions are Turkey and Pakistan, which both lack the vast oil reserves of nations such as Saudi Arabia and Iran and have been forced to grow a manufacturing base.

The West Asian economy also is characterized by huge disparities in personal incomes between the wealthy and the poor, inconsistent educational systems and the marginalization of women in the workforce. This economic situation, when combined with unstable politics and demographics that include an explosion of young people, has the potential to produce a population that is highly “aggrieved.” Fifty-two percent of West Asia’s 300 million people are under the age of 18. Two nations in the region, Jordan and Yemen, have some of the highest birth rates in the world.

That was the sobering message from Shahid Javed Burki, a former high official with the World Bank and Pakistani government, author and now chief executive officer of EMP Financial Advisors. Burki, who acknowledged that his view of oil as an albatross around the neck of the West Asian economy was an unconventional one, was a featured speaker Dec. 1 in the Wharton 2001 Global Business Forum in a conference on West Asia. It was the first time Wharton has singled out that region for intensive discussion and the topic appeared particularly pertinent in the context of the news of the day.

The U.S. has based its military campaign against Afghanistan in Pakistan, one of the largest nations in West Asia. The Middle East, a part of West Asia, is again in the grips of terrorist bombings. Other speakers in the West Asia forum included Prince Firas bin Raad of Jordan. Panels discussed capital markets, the future of technology and energy resources.

In the energy panel, Fareed Mohamedi, chief economist with the Petroleum Finance Co., said it appeared that Russia, through its warming relations with Washington, was attempting to position itself as the stabilizer of world oil prices, pushing aside Saudi Arabia which has played that role for years. This introduces a new element into the world’s oil politics and “is the big stick that Russia can bring to the West” in its dealings with Saudi Arabia, Mohamedi said.

He believes the decline in world oil prices after the Sept. 11 terror attacks in Washington and New York was a signal that Saudi Arabia would make its contribution to the global war on terrorism through lower oil prices. Saudi Arabia, the world’s most oil-rich nation, can heavily influence the price of oil by increasing or decreasing oil production. Saudi Arabia has been reluctant to join in the war on terrorism against Osama bin Laden because of its large conservative Muslim population.

A brutal price war in the oil market will likely be avoided in the next year and oil prices will average $20 a barrel, Mohamedi said. “OPEC has not done a good job in the past 20 years when it comes to managing prices,” he said in response to a question after his presentation. “I have never seen the cohesion in OPEC that I have seen since 1998.”

Another speaker in the energy panel was Bill Garner, managing director of Petrie Parkman & Co., an investment banking firm in the gas and oil industry. He said the petroleum business is low-margin and relatively simple in concept, but “the screw-up factors are very high.” In detail, he reviewed the three major oil- or gas-field projects underway in the Middle East that he believed will draw the talents and expertise of ambitious professionals over the next decade. These are Project Kuwait; the Dolphin Project, and the Saudi Arabia Natural Gas Initiative, which will “provide tens of thousands of jobs in Saudi Arabia,” Garner said.

This discussion of oil geo-politics and oil-field development seemed to make Burki, the former World Bank economist, anxious. “The dependence on oil has kept the region economically under-developed,” Burki said. “I do not treat oil as a great asset but a liability of sorts,” he said.

He made a strong point that the region’s reluctance to fully bring women into economic and political affairs would hurt West Asia in the long run. Some 28% of the women in West Asia participate in the region’s workforce. In Saudi Arabia, the number is closer to 6%. “Unless the region brings its women into the workforce and society, the region will not reach its considerable potential,” Burki said. “Men cannot do it alone.” To this statement, there was hesitant applause from the mostly male audience. With such a reaction, “We should worry and worry a great deal,” he commented.

Despite its problems, Burki said West Asia is a region brimming with potential. For one, it has a rapidly growing population which will fuel economic development – if not per capita incomes – in the decades ahead.

Among his suggestions for helping West Asia was the establishment of a regional trade block, similar to the European Union. Although there is no political or economic leader proposing or driving such a union in West Asia, Burki said such a movement can come quickly in the proper circumstances. Turkey, Pakistan and Iran are three of the most economically advanced nations in the region, he said.

Millions of West Asians who fled the region for Europe or the United States over the past several decades – the West Asian diaspora – should return home with their hard currency and experience, and push for needed political and economic reforms. He said they could be influential and also be heard. West Asia “stands at the threshold of major change,” he said.