Gulf Arabs Race to Release Youth Potential in Age of Cheap Oil

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Emirati Ph.D student Talib alHinai poses with the drone prototype he and his classmates at Imperial College London built, which won a prize at state-sponsored "Drones for Good" competition, in Dubai February 10, 2016. The museum aims to inspire innovation among Emirati youth as low oil prices are forcing Gulf Arab states to make their workforces more competitive in the global market. Like the prototype drone of Emirati student Talib Alhinai, the ambitions of young people across the Gulf Arab states need to soar if they - and their economies - are to prosper in the age of cheap oil. REUTERS/Noah Browning

By Noah Browning

DUBAI, Feb 18 – Like the prototype drone of Emirati student Talib Alhinai, the ambitions of young people across the Gulf Arab states need to soar if they – and their economies – are to prosper in the age of cheap oil.

The 23-year-old now researching for his Ph.D is just the kind of innovator that the region requires, along with youngsters who want the risky life of an entrepreneur rather than a safe but unproductive job working for the state.

Wearing a crisp white Arabian robe and headdress, Alhinai cranes his glasses upward as his drone climbs above an outdoor amphitheatre in downtown Dubai, and explains how it can swoop down and squirt 3D printed sealant onto damaged oil pipelines.

Petrodollars won Gulf Arab states decades of prosperity, when loyalty and stability could be bought by giving graduates with subpar education cushy government posts.

No more. The collapse in oil prices is forcing governments to make good on old promises to turn their growing youth populations into a workforce that can compete globally.

Showing off the prototype he built with classmates at Imperial College London, winning a state-sponsored “Drones for Good” competition at the amphitheatre, Alhinai said Gulf Arab youngsters were eager to make livelihoods from their ideas, not handouts.

“There’s a realisation, an awakening, among my generation that the age of oil can’t last forever and that we need to pick up the pace to give back to our societies, especially through innovation and technology, to shred this stereotype about us being idle,” said Alhinai.

Over half of Gulf Arab nationals are employed in public sector jobs; in Kuwait the figure is nearly 80 percent.

But now the International Monetary Fund predicts economic growth in six oil-exporting states of the Gulf Cooperation Council will slip to 2.8 percent in 2016 from 3.25 in 2014, and private sector growth has likewise fallen.

The United Arab Emirates (UAE) and Saudi Arabia have both launched initiatives this year to outsource services from the state to the private sector, rein in spending and invest in education and vocational training.

RECKONING

Nowhere is the problem so acute as in top oil exporter Saudi Arabia, which is running a $100 billion budget deficit and has used up $90 billion of its foreign assets in the past 18 months. At that rate they would be gone in just a few years.

Underlining the problem, the Standard & Poor’s agency downgraded the credit ratings of Saudi Arabia, Bahrain and Oman this week in its second mass cut of large oil producers in almost a year.

Vast energy reserves and tiny populations in Qatar and Kuwait mean they have more time to get their nationals into more productive work, but Saudi Arabia can no longer buy off its 20 million citizens with public sector welfare.

State-owned oil giant Aramco, the largest Saudi company and a paragon of efficiency in the kingdom’s often hidebound economy, is trying to encourage innovation by giving entrepreneurs training and loans.

One such beneficiary is 28-year-old Loai Labani, who owns tech company Innosoft based in Dhahran Techno Valley in the country’s east. He said risk-taking was still foreign to Saudi job culture and few of his peers understood why he would strive for his own success rather than take a plum official post.

“My family and my friends were trying to tell me you shouldn’t focus on this, just get a government job and the security that comes with it,” Labani said.

“Of my 20 employees, half are Saudi and I need 10 more, but it’s a struggle to get the quality developers, web-designers and programmers. We have to do 2-300 interviews to hire just one Saudi, because not just the knowledge but the personality for private enterprise is so hard to find.”

According to a study by the Center for Strategic and International Studies, promoting those skills will be one of the greatest challenges for Gulf countries and will entail a rethinking of the “social contract” under which state generosity won stability in a turbulent region.

“There is a clear tension between countries’ wish to encourage economic creativity and risk-taking on the one hand and their desire to maintain relative social and political quiescence on the other,” wrote author Carolyn Barnett.

IGNITING THE IMAGINATION

The UAE leads its neighbours in trying to diversify away from oil. In June last year, the IMF said the country could keep spending at current rates for 30-40 years – but then the oil price promptly halved.

This month the UAE staged its largest ever government restructuring, merging ministries to reduce costs and creating state bodies to advance science, human capital and youth.

“Education is the essential prerequisite to creating a generation that’s productive,” said Sheikh Sultan bin Zayed Al Nahyan, a senior member of the ruling family in Abu Dhabi, the largest of the emirates.

“We want it so that when a student graduates – whether in engineering, humanities or anything else – they can open doors,” he told reporters at his desert palace before dog and camel races that he sponsors. “We want the education standards to be strong, not weak like they are now, which can’t be denied.”

At the reception, tables groaned under lobster and gazelle meat for his guests, and costumed desert knights on horseback held aloft banners of the ruling sheikhs’ faces – trappings of largesse and reverence familiar to the Gulf.

But at Dubai’s Museum of the Future, a glimpse of what may await Gulf Arabs was on show. Emirati boys in robes and groups of young women dressed from head to toe in black roamed the exhibition’s purple-lit chambers, gazing at concept inventions: goggles that detect others’ moods, earpieces that translate and brain implants that can transmit thoughts.

The Museum, set to open fully in 2018, aims to work with research companies and universities to turn such gizmos into “Made in the UAE” reality, and also to inspire.

“Some of the technology highlighted here is not set to be realised until 2030,” said museum director Saif Al Aleeli. “We present it here to ignite the imagination of our young people, so they can get an idea of the world that they will live in and hopefully create themselves.”

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