It used to be, roughly speaking, that cheap labour + energy = industrial output = military power.
This made Iran the natural power in the Middle East. Iran had far more energy than countries like Turkey, Egypt, Israel or Pakistan, and far more labour than the Gulf Arab countries or Libya.
The Gulf Arab monarchies have tried to overcome their relative deficit in labour by importing workers from Asia. However there are limits to such immigration, not only because of the fear that the immigrants could cause political instability (they are mostly men, and tend to be poorly treated), but also because it is not cheap to provide food and water in the desert.
The US has often worked to influence or contain this Iranian potential. It pressured the Soviets and British to withdraw from Iran following World War Two, helped to overthrow Iran’s Prime Minister in the 1950s, helped to unleash the Arabs on Iran in the Iran-Iraq War of the 1980s, and in recent years has opposed the Iranian-allied regime in Syria and played Good Cop-Bad Cop along with the Israelis in threatening to carry out airstrikes on Iran’s nuclear and military infrastructure.
Going forward, however, the traditional relationships between labour, industry, and military power may be breaking down.
Labour may no longer be so important to industry, as industrial labour will in many cases be replaced by machines or, in the case of skilled labourers like engineers and computer programmers, may sometimes be outsourced using high-quality digital communications. Having a large labour force may perhaps even limit the ability to industrialize, since countries with large populations could have to deal with robot-caused unemployment, competition for energy between the residential, commercial, and industrial sectors of the economy, and protests against local industrial pollution. This could put the Gulf Arab states at less of an industrial disadvantage when compared to countries with larger labour forces, like Iran.
Meanwhile, industrial output and labour are both less likely to translate into military power than they once were. In past wars, like the Iran-Iraq War or the Israeli-Arab Wars, wars were fought by giving lots of soldiers lots of weapons. This is, for example, one reason why the Israeli-Arab wars never lasted long. Israel did not have a large enough population to run its military and factories at full capacity simultaneously, so it had to end wars quickly in order to avoid running short on supplies. Otherwise it would risk becoming too dependent on US supply lines, as occured when it was attacked by Egypt and Syria during the 1973 Yom Kippur War.
In the future, though, human soldiers may be replaced by machines in some cases, rendering population size less important in war. In addition, the quantity of weapons produced could continue to become less significant than their quality, given that weapons can now be destroyed by precise satellite-guided missiles. As a result, if the Gulf Arab states and Iran were to use their oil and natural gas reserves to become industrial powers, it would not have to translate into their becoming military powers. This could make existing Middle Eastern military powers like the US, Turkey, or Israel more likely to tolerate the industrialization of the Gulf.
The machine-driven industrialization of the Gulf Arab states and Iran could make sense for a number of other reasons as well:
— The Gulf region is even less populous than it may seem at first glance. This is because the vast majority of the populations of Iran, Saudi Arabia, and to a lesser extent Iraq live hundreds of kilometers away from the Gulf, and separated from the Gulf by mountains and desert. If you count only the provinces of Iran, Saudi Arabia, and Iraq that border the Gulf, the entire population of the Gulf region (including the smaller Gulf Arab states) is only around 30-35 million. It is also very hot there during the day, making physical labour difficult.
(Population Density of Saudi Arabia and Iran)
— The Gulf region is rich not only in oil, but also in natural gas. Iran in particular is the world’s third largest producer of natural gas, and is thought to have the second largest reserves (the largest by far if you do not count Siberia). Iran also directly borders landlocked Turkmenistan, which is thought by some to have the world’s fourth largest gas reserves.
Natural gas, however, is very difficult to transport long distances or to store up in large quantities. Qatar has managed to become rich from exporting its gas in liquified (LNG) form, but this only works because Qatar has a tiny population (2.3 million people) and as LNG prices in Asia and Europe have been high. For the rest of the Gulf’s gas, it would be difficult to replicate Qatar’s success. It might make more sense, then, for the gas to be kept within the Gulf, used there to produce energy for industrialization.
Gas-fired power plants tend to be the cheapest types of power plants to build, and have efficiencies considerably higher than coal plants. Gas is also a feedstock in petrochemical industries like plastics. The Middle East already accounts for an estimated seven percent of global petrochemicals production.
— The Gulf region is located at the centre of Eurasian and African trade routes, both by land and by sea. While all of the Gulf’s trade routes are politically fragile, this may actually make industrialization sensible, because it is easier to stockpile large amounts of manufactured goods or industrial raw materials for use during a crisis than it is to stockpile oil or especially gas. Industrialization would also give the region more economic autarky, which would be useful if its trade routes to the outside world were ever imperilled or cut. And the Gulf already possesses large industrial port areas as a result of its energy exports.
— Industrial areas which use machines can be clustered in ways that traditional, labour-based industrial areas cannot. Machines, after all, do not need lodgings, and are not bothered by pollution. Moreover, the Gulf itself could be a mega-industrial cluster, given that it has the world’s largest concentration of cheap-to-produce oil and gas by far. In other words, you might be able to have a bunch of local industrial clusters forming a huge, region-wide industrial cluster.
Industrial clustering could have a number of advantages. First, it could be easier to defend militarily, which, given the enormous expense and difficulty of missile defence systems,
could be significant. In the Gulf, the energy fields, power plants, factories, and ports could all be concentrated in a fairly small, defended area. If you ignore coal, there is nowhere else in the world that comes even close to being able to have this. (Texas is probably the closest…).
Second, clustering could perhaps help to allow for carbon capture and storage. Carbon capture and storage has thus far proven to be far from economical in most cases, and yet it is also necessary if the world wants to limit carbon emissions without ending consumption of fossil fuels. It could be that the way to make it economical is to cluster many power plants together in order to allow for economies of scale to form. Moreover, the only type of carbon capture and storage that has proven economical thus far is when carbon is used in Enhanced Oil Recovery (EOR), being sent down oil and gas wells in order to increase oil and gas productivity. The Gulf already uses EOR in some cases, and has huge EOR potential as a result of the size of its oil and gas fields.
US Oil Demand
One factor that could help spur the industrialization of the Gulf would be if people in the rich world, particularly in North America, would stop driving alone in their cars so much. By switching to alternative forms of transport — whether carpooling, taking public transport, UberPool-ing, e-commuting, shopping online, taking a self-driving bus or self-driving electric car, etc. etc. — it may leave Gulf oil available for industrial use within the Gulf.
Regional Political Triangle
This article has been a bit of a theoretical ramble, I know. But if we assume for a moment that the Gulf does manage to use its energy resources and robots to become a industrial powerhouse, what would happen to the politics of the wider region? India and Pakistan, after all, are located very close to the Gulf, putting a billion and a half people within its reach.
I think you might see something like a US-Gulf-South Asia political triangle emerge. The US has already been allies with the Gulf Arab states and Pakistan for many decades now (though of course, it is often a tortured alliance), so this would require only bringing Iran and India into the fold as well. India is already well on its way in this regard; Iran may perhaps be following behind it, given the recent warming of relations between the US and Iran during Obama’s second term.
In such a scenario, the Gulf would provide goods and oil to South Asia, South Asia would provide skilled outsourced labour to the Gulf, the US would provide food and military protection to both the Gulf and South Asia, and the Gulf and South Asia would help the US to put a lid on regional chaos and contain any European, East Asian, or Eurasian powers that may emerge over time.
Then again, maybe none of this will end up happening. The Gulf may be ludicrously rich in easy-flowing oil and gas, but translating that energy wealth into industrial success will be no easy feat, with or without robots.