Word: oiling
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...economic boom in the gulf countries over the past few years - fueled by the continuous rise of oil prices between 2003 and 2008 - helped put the region on the global economic map. In some ways, the boom became captive to a "mine is bigger than yours" syndrome. Competing states embarked on advertising campaigns and hired in public-relations firms to tout their wares. Developers and rulers alike pushed artificial islands (Dubai, Abu Dhabi, Qatar, Bahrain, Kuwait), and in many places real estate became the main economic activity. Officials promoted their cities as financial hubs as a way to diversify away...
...While oil revenues were flowing, sovereign wealth funds acquired foreign assets with the flair of peacocks. The humility that typified the past was supplanted by conspicuous consumption. Yes, all that infrastructure and new property that was built still exists - but its quality and engineering is, in many cases, dubious. (See pictures of migrant workers in the Gulf...
...contrast, Saudi Arabia's institutional memory of the boom and bust cycle served it well during what was the kingdom's third great oil boom of the past four decades. After the high prices of the 1970s, Saudi Arabia's economy went through a long-drawn-out slowdown as oil revenues plummeted for most of the 1980s. After a spike when Iraq invaded Kuwait, prices weakened again in the 1990s, even as Saudi struggled to pay off its (large) chunk of the bill for the first Gulf War. At the height of the Asian financial crisis in 1998, oil prices...
...when oil prices started to rise in 2003, Saudi Arabia was ready. For one thing, the Saudi Arabian Monetary Agency, the country's central bank, had greatly expanded the number of well-trained national staffers. Second, it had at its helm officials who remembered the bad days of low oil revenues. That meant that when the oil gushers were turned up again, money was saved and not aggressively spent as elsewhere in the region. The nation's wealth was also placed in very liquid investments, predominantly U.S. government paper assets, rather than real estate. While other regional investment funds were...
Fifth, during the boom years, Saudi Arabia invested more than $70 billion in expanding its oil production capacity to 12.5 million barrels per day, not only to secure its future but also to address global supply imbalances...