Event Summary
from Belfer Center for Science and International Affairs

Oil, Sovereign Wealth Funds, and Crises: The Political Economy of the Middle East

In fall 2024, the Middle East Initiative hosted Senior Fellow Dr. Ziad Daoud, who led a study group for the Harvard community (students, fellows, and staff) to examine the economic and political forces affecting the Middle East and its relations with the rest of the world.

Dr. Ziad Daoud delivering a lecture.
Dr. Ziad Daoud delivering a lecture.

In the fall semester 2024, Dr. Ziad Daoud, Senior Fellow at the Middle East Initiative and Chief Emerging Markets Economist at Bloomberg, led a study group of fifty members of the Harvard community (students, fellows, and staff) examining the economic and political forces affecting the Middle East and its relations with the rest of the world. 

Oil Revenues and Rents 

A recurring theme in the series was the role that oil revenues have played in shaping the economies and social contract in the region. The group learned how the Middle East countries have become “rentier” economies, heavily influenced by the management of oil revenues and other sources of income such as international aid and land sales, which are received and distributed by the government.  

Oil also shapes the Gulf countries’ relations with the rest of the world. The group learned how the Gulf countries are rechanneling their oil revenues into Sovereign Wealth Funds to create long term investments at home and abroad. SWFs have provided a vital source of funding for the rest of the world, helping to reduce borrowing costs and increase capital for infrastructure projects, and are being used for domestic investment to diversify the Middle East’s economies into new areas such as tourism, finance, and technology. 

Nour Beshir, MBA 2025 said: “I came into the study group thinking I knew a lot about the role Sovereign Wealth Funds in the economies of different countries in the region but learned that their mere creation does not guarantee an economy’s diversification if oil remains the main source of SWFs’ capital. Diversification ultimately depends on the SWF’s strategy and the other reforms that countries undergo to unleash economic activity in other sectors.” 

A select group of participants debated opposing views on whether decarbonization, global economic growth, and declining demand for oil would result in a drastically lower oil price in the future. 

The study group discussed some of the benefits and challenges of using a universal basic income as an alternative way of fulfilling the social contract to distribute government revenues. The group discussed some of the challenges that could arise from some people losing government jobs and their associated salaries, but also how smaller government sectors could enable more economic dynamism.

Polina Kempinsky, MPP 2025, said: I joined the study group because I was interested in the intersection of the Middle East and economics. “Our discussion on the potential transition to a universal basic income to reduce the region's dependence on oil was thought-provoking and encouraged me to look at these challenges from a fresh perspective.” 

Saudi Arabia’s Minister of Economy and Planning, HE Faisal bin Fadhil Alibrahim
Saudi Arabia’s Minister of Economy and Planning, HE Faisal bin Fadhil Alibrahim

A visit from Saudi Arabia’s Minister of Economy and Planning, HE Faisal bin Fadhil Alibrahim

The study group was fortunate to receive a presentation from Saudia Arabia’s Minister of Economy and Planning about their ambitious plan to diversify the economy and revitalize private sector activity through their “Vision 2030”. 

Vision 2030 is an ambitious plan to transform Saudi Arabia by diversifying the economy beyond oil, stimulating private sector activity, and increasing economic participation to include more women. 

Faisal Mbutu, MPA/ID-MPA 2025, said: “Hearing firsthand from the Minister on the progress, challenges, and aspirations of the Kingdom's Vision 2030 on issues such as women’s economic participation and economic diversification made the learning a lot more concrete.” 

The study group considered to what extent the economic model in the Middle East is changing. As the world decarbonizes and oil prices may fall, the loss of government revenues may encourage or challenge reform. 

Study Group Participant Photo with Dr. Ziad Daoud
Recommended citation

Reid, Peter. “Oil, Sovereign Wealth Funds, and Crises: The Political Economy of the Middle East.” Belfer Center for Science and International Affairs, January 24, 2025

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