The Middle East’s economic success has traditionally been heavily dependent on energy, but its unpredictability has forced the region to explore other avenues of generating revenue.
The determination to diversify has seen nations in the region focus their attention on sectors such as sports, gaming and technology, but recent moves have shown that the task is far from a cakewalk.
Most of these sectors are heavily capital-intensive, but Gulf states have shown that they are not afraid of splashing the cash as long as they get what they want.
The Middle East’s Heavy Dependence on Oil
It is a paradoxical truth that nations highly dependent on natural resources tend to be poor economic performers, and many Middle East nations fall under that category.
Economists call it the ‘resource curse’, which is what happens when a nation’s over-reliance on its primary source of revenue weakens other sectors of the economy, exposing them to price fluctuations and other issues.
The COVID-19 pandemic was a wake-up call for nations that relied almost entirely on fossil fuels. Their vast oil wealth didn’t do them much good when the world went into lockdown, and they were forced to watch oil prices plummet as demand waned.
Several Middle Eastern nations have subsequently been throwing mud at the wall to see what sticks, but it’s a move that they have been forced into.
There has recently been a planned energy transition, so fossil fuel exporters face increased urgency to diversify their economies and mitigate the risks.
If they don’t, they could have all the oil in the world and still be stranded, given the declining global demand for their asset. The pressure is particularly worse on nations in the Gulf Cooperation Council (GCC).
The Global Economic Diversification Index (EDI), which measures how well a country’s economy is spread across different sectors, repeatedly places oil-rich nations at the lower end of the spectrum.
While Saudi Arabia and the United Arab Emirates (UAE) have put in the work and made plenty of progress in their diversification plans, others, such as Kuwait, are still lagging behind.
Gambling Continues to Divide Opinion in the Middle East
Since the diversification craze kicked off, gambling has been one of the most controversial options on the table, with only a handful of nations daring to dip their toes into the sector.
Gambling is a popular mainstream practice, but it is still forbidden in the Middle East, although that has not prevented the UAE from exploring the vast opportunities the sector has to offer.
The UAE has already legalised gambling and established an official gaming body to regulate and oversee all commercial gambling activities.
They have also given Wynn Resorts the first commercial gaming operator’s license in the country, paving the way for a casino to become a reality.
The UAE’s moves shook the very foundation the Middle East was built upon, but they will reap the benefits with Wynn’s resort in Ras Al Khaimah, which is expected to be bigger than their Las Vegas venue.
The resort will attract high-spending tourists from around the world, which will be a massive boost to the UAE’s economy and diversification effort.
Despite the bold move, other Middle East nations such as Kuwait are still dragging their feet. Kuwait is keen to uphold the religious and cultural laws that have governed the land for decades.
It doesn’t seem like a smart move on paper, considering there are already some real money online casinos in Kuwait which are regulated by authorities in overseas jurisdictions.
Kuwait may need to take a page from other nations or risk getting left behind, especially as competition for tourism continues to heat up in the Middle East.
Green Investment Presents a Safer Bet for Middle East Nations
With some nations dragging their feet on conversations regarding gambling, they may feel much safer investing in digital transformation and green investments.
Most governments in the Middle East have prioritised investments in technology, artificial intelligence (AI) and renewable energy in a bid to establish a tech-driven economy.
For example, Saudi Arabia’s Vision 2030 project is based primarily on digital innovation that includes developments such as NEOM – a $500 billion futuristic city that could be a hub for tech advancements.
In terms of renewable energy, the UAE and Saudi Arabia have poured significant funds into solar and wind power, while hydrogen has also emerged as a potential game-changer.
With abundant sunlight and access to water resources, Gulf nations have the potential to become major exporters of clean hydrogen – a fuel that could replace oil in global markets.
