Islamic Countries in Global Energy Politics

By:

TASNIM ILMIARDHI

Energy Legal Practitioner

Jakarta, Indonesia

tasnim.ilmiardhi@yahoo.com

 I. Introduction

Geographically, Islamic countries are at various peninsula and stretches from Indonesia to Morocco. It has been since along time ago, Islamic countries active in economy  of the world, especially on the ’Silk Road’, as well as a potential market. After the collapse of the Turkish Ottoman Emporium, practical Islamic countries become unconsolidated well in politics and the global economy. In energy sector, Islamic countries in the Middle East (Persian Gulf and the Caspian Sea) have 49% of world oil reserves. For the countries of Saudi Arabia has 60% of world oil reserves. With an average rate of exploitation as it is today, then Saudi Arabia's reserves can be exploited up to 125 years, Kuwait 144 years, Iraq 98 years, United Arab Emirates 120 years. Countries that own and control the source of energy, will have a strategic role in the political map.

World Energy Reserves

No	Country	Oil (billion barrels)	Gas (trillion cubic feet)	Coal (million ton)	Nuclear
1	Venuzuela	297,6	196,4	479
2	Saudi Arabia	265,9	290,8		NPP
3	Canada	173,9	70	6.582
4	Iran	157	1.187,3		NPP, R&D
5	Iraq	150	126,7
6	UAE	97,8	215,1		NPP
7	Rusia	87	1.163	157	NPP, ICBM
8	Amerika	35	300	237,3	NPP, ICBM
9	Qatar	23,9	885,1
10	China	17,3	109,3	11.450	NPP

British Petroleum Statistik 2013 & IAEA

Sources of energy, particularly oil and natural gas, a commodity that is contested by many countries. Not a few conflicts between states are triggered by the problems in the energy resource needs.

Islamic countries in the Middle East to source energy as an issue to keep the country's bargaining position. Russia uses energy issues to maintain influence over Eastern European countries former Soviet Union, as well as a supplier of 50% of the EU's oil and gas.

II. Allied with Iran

Achieving agreement on nuclear technology and the lifting of economic sanctions Iran, will have an impact on the political map of the strength of Islam, the price of energy and the global economy.

Iran negotiating process with the six-nation nuclear authorities led by the United States, has successfully completed the relevant treaties of nuclear technology in the city of Vienna, Austria, on Tuesday (07/14/2015). Iran as a country with a Shiite majority, agreed to have nuclear technology for peaceful purposes. Accordingly, economic sanctions since 2012, addressed to Iran has ended.

With the lifting of economic sanctions that have been imposed upon Iran, enabling Iran to return to the player of the world economy and export of goods, including oil and gas. Iran has signaled his intention to return to the global oil market, by trying to maximize the capacity of crude oil exports to Europe, if Iran's official entry into the world oil market, it is likely the price of oil and natural gas will be much lower than now. For 2015 alone, already abundant supply of crude oil and the demand continues to fall which made the prices continue to fall.

Iran's nuclear mastery is not just a prestigious project, but based on the needs and abilities. Iran has a stable position in politics and economics. As an oil-producing countries, Iran does not have a dependency exploration by western countries. This is very different from Saudi Arabia and Kuwait.

Iran is a superpower in terms of energy. Iran has oil reserves that have been proven by 10% of world oil reserves, and gas as much as 15% of the world gas reserves. As an oil producer, Iran's oil production is in the second position in OPEC and is in fourth position in world oil production. In addition, Iran has the independence politically, either among the Middle Eastern countries, as well as Western countries.

III. Oil Prices Continue to Go Down

In 1992, the state Saudi Arabia is the world's largest oil producer, and the United States as the world's biggest oil consumer. Between both countries, there has been a cooperative relationship that has existed for a long time.

The return of Iran as the world energy actors, could endanger oil producers, because there will be more oil in the market. In addition, when the oversupply of oil, OPEC (Organization of the Petroleum Exporting countries) will find a market. Market imbalances will depress oil prices, for the period until the medium term.

10 Largest Oil-Producing Countries

No	Country	Production	Percentage
1	Rusia	544 Mt	13%
2	Saudi Arabia	520 Mt	13%
3	United States of America	387 Mt	9%
4	China	206 Mt	5%
5	Iran	186 Mt	4%
6	Canada	182 Mt	4%
7	UEA	163 Mt	4%
8	Venezuela	162 Mt	4%
9	Kuwait	152 Mt	4%
10	Iraq	148 Mt	4%

International Energy Agency (IEA) 2012

World energy prices, especially oil and gas, will continue to decline. After the United States discovered shale gas (natural gas trapped in formations crack rocks) a few years ago, could reduce the dependence of the United States to the countries of the Middle East for its oil and gas needs. This of course makes the production and supply of oil and gas the Middle East countries become redundant.

The discovery of new energy sources, and supplemented if Iran release its oil and gas production to the global market, in accordance with the laws of market economy between the demand and supply of oil and gas reserves, will make the price of oil and natural gas is getting down.

IV. Rejecting Saudi Arabia and Pressing to Russia

§  Economic deficits of Saudi Arabia

World oil prices continue to decline, will depress the economy of Saudi Arabia. 80% of Saudi Arabia's state revenue comes from oil sales, and international oil prices continue to decline, while state funding remains high. Even to cover the budget deficit, Saudi Arabia has to borrow money or incur debt of $ 4 billion through the issuance of bonds in 2014 ago.

Arab government bond is the first in the last eight years, the Government of Saudi Arabia has never issued bonds since 2007, and was an attempt to maintain the level of public spending as oil prices continued to decline.

As previously stated Governor Saudi Arabian Monetary Agency, Fahad al-Mubarak, that the Saudi government will use a combination of bond and foreign exchange reserves to maintain spending and cover the financial deficit will be greater than expected. The country continues to hope that there is an increase in lending for 2015 to $ 5 billion. Until the end of 2015, the state of Saudi Arabia would have a budget deficit of 20%.

State expenditures for special projects, payment of bonuses for civil servants and military Arabia recognized funding will increase the weight of Saudi Arabia's economy and continuing to reduce the financial capacity of the state treasury that eventually eroded international reserves. War against Yemen and Syria trigger an increase in the military budget from 10% to 17% of the Gross Domestic Product (GDP).

To meet the needs of the planned expenditure, Saudi Arabia requires oil prices at a price of USD 105 per barrel. While the average world oil price is currently only USD 44 per barrel. If the economic government of Saudi Arabia continues like this it will deplete reserves faster than expected.

US Energy Information Administration-2013

The discovery of new energy sources that are cheaper and the inclusion of Iran as an oil supplier countries in the global market, making the dependence of the world oil consumer countries to be reduced. Energy consumers who dominated countries of the west, of course, there is the possibility of critically will see Saudi Arabia as the world democratization major obstacle, the system of absolute monarchy is not democratic, social systems that greatly inhibit the role of women, and has a network with radical groups. A signal to be conveyed that the western countries would dispose of Saudi Arabia in the global political stage.

§  Economy Depressed of Russia  

On the other hand, as the country as a stabilizing force in the economic, political and military. Russian state has one of the super power, including in terms of supply and energy production capacity, either oil, gas, coal and uranium.

The lifting of economic sanctions Iran adversely affect the Russian economy, particularly the oil and gas industry. Exports of Russian oil and natural gas to Europe which has been the backbone of the Russian economy will experience a serious threat. Decline in world oil prices and the lifting of economic sanctions Iran will press the Russian economy.

International Energy Agency (IEA) 2012

European oil companies, especially in the Mediterranean market are eager to conduct exploration and production in the country of Iran, and are eager to continue the business relationship there. In the short term Europe will buy crude oil from Iran who have better access to the global energy market and beat the Russian energy companies and Iraq. For western countries who are consumers of energy, pressing Russia will benefit with reduced Russian dominance over Eastern Europe. Emergence of Iran in global oil producers will reduce Europe's dependence on Russia for energy supply of oil, and obtain cheaper oil prices.

V. Competition of Islamic Regime

Middle East region is dominated Islamic countries is an area that is considered as the center of world conflict. The high level of conflict in the Middle East countries, under certain conditions to be very helpful (in spite of the conflict must been created intentionally or not) for hegemony in the region in order to gain economic, social, political, military and ideological.

Iran as a country with a Shiite majority, agreed to have nuclear technology for peaceful purposes. The emergence of Iran as a country with a majority Shiite country's nuclear authorities and returned as global economic players in the field of energy, will increase the competition among Islamic countries, which affects the power escalation of Islamic countries.

During this state supporters of Saudi Arabia following the majority Sunni and Wahabi, more dominant to give color to the economic and political escalation in the Middle East. As the superpower United States with a capacity of oil and gas consumption in the world, America has a high dependence to Saudi Arabia to meet the energy needs of the country.

Not a bit of competition that led to the conflict between the Middle East countries, which are triggered by several factors, including:

1. Boundary and occupation of territories: caused by (i) natural factors with desert conditions susceptible and become a classic problem (ii) policy factors that triggered the demographic conditions.
2. The religious and political ideology: the Middle East is the center of religious development and has a complex repertoire in religious thought. Iraq-Iran conflict is a form of religious ideology and political competition.
3. Natural resources: the seizure of oil and natural gas resources is fairly dominant trigger for conflict between Islamic countries Middle East. Oil potential in the region reached 49% of the world's oil needs. Conflicts caused by competition over oil resources, will usually trigger a global conflict. Iraqi military aggression to Kuwait and US military aggression on Iraq, is the embodiment of the control of oil resources and infrastructure as well as access to global distribution.

VI. ISIS and the failure of Arab Spring

At the end of 2010, the Middle East region to experience the 'Arab Spring', where the political situation of the Islamic countries which have a majority of authoritarian rulers hit by a wave of revolution to demand leadership succession.

Protests, civil disobedience, revolution and rebellion and civil war are actions that characterize a wave of Arab Spring in the Middle East. The phenomenon is caused by several factors, either partially or accumulation, which are increasingly worse economic conditions, authoritarian leadership, government corruption, human rights abuses, poverty and unemployment, as well as sectarian.

Egypt, Yemen, Tunisia, Libya is an Islamic countries in the Middle East were hit by the Arab Spring that led to the change of leadership, either constitutional or unconstitutional, even of them ended tragically with the death is tragic.

Syria and Bahrain is a country that experienced the revolt. Jordan, Kuwait, Lebanon, Oman and Morocco to reform in the government and the country to adjust the wave of political change in the Middle East region.

Algeria and Iraq does not escape from the rallies with almost the same purpose. Especially for the Syrian state, the condition turns into a never-ending chaos, and even escalation of conflicts turn into increasingly widespread.

Middle Eastern countries hit by the Arab Spring

No	Country	Incident	Impact
1	Egypt	•Demonstration, • Civil Disobedience	•President Hoesni Mubarak on trial • Government changed
2	Yemen	•Demonstration, • Civil Disobedience	President Ali Abdullah Saleh handed over power to Vice President
3	Tunisia	•Demonstration, • Civil Disobedience	•President Ben Ali was overthrown • Government changed
4	Libya	•Demonstration •Rebellion • Civil War	•Libyan leader Muammar Gaddafi was shot dead •Governments changed
5	Bahrain	•Demonstration •Rebellion	•Governments changed
6	Jordan	Demonstration	Government remodel
7	Kuwait	Demonstration	Government remodel
8	Lebanon	Demonstration	Government remodel
9	Oman	Demonstration	Changed Constitution
10	Morocco	Demonstration	Changed Constitution
11	Syria	•Demonstration •Rebellion • Civil War	•The President does not change • Government remodel • ISIS
12	Iraq	Demonstration	• Government remodel • ISIS

various sources

 Action in Syria triggered by protests against the government of As'ad, but on the other hand also appeared to support government action. The action led to armed conflict of interest groups and the state to interfere in the armed conflict, both politically, economically and militarily. Syrian civil war as a result of wave action.

The emergence of ISIS (Islamic State of Iraq and Syria) in the Syrian conflict, escalation of widespread conflict, a conflict that is increasingly a period of time, an accumulation of factors that cause conflicts and interests of the parties involved in the conflict. Iran and Russia provide support to the Syrian government, while the United States and Saudi Arabia are more aligned to the opponents of the Syrian government.

No doubt some countries are drawn into the conflict, should be assumed to have a desire for control of energy resources of oil and natural gas, including in this case, access to infrastructure and the economy, as well as other interests such as, political, military and sectarian.

VII. Islamic Countries and Control of Nuclear

Nuclear energy is an alternative energy source that allows the realization of world energy consumption efficiency. Nuclear energy is the primary means to reduce global warming, the use of nuclear energy should be avoided only if it poses a threat to the life expectancy of beating the benefits that would be given to humans. In politics, as the nuclear balance of power over the country economically inferior to the state economically superior.

Islamic Countries which have nuclear facilities

COUNTRY	UTILIZATION		REMARK
PAKISTAN	military	3 NPP 1000 MW	since 1972
IRAN	R&D nuclear enrichment facility	NPP	·  since 2007 ·  believed to be able to develop a nuclear weapon in a short time
ARAB SAUDI		NPP	suspected to have nuclear facilities and nuclear weapons in secret
INDONESIA	R&D	4 NPP 4000 MW	·   since 1950 ·   Infrastructure ready  ·   2014 operated
KUWAIT		4 NPP 4000 MW	·    will operated 2022 ·   Cooperation with France
TURKEY		4 NPP 10000 MW	Cooperation with Korea
UEA		4 NPP 5600 MW	·   Will be operated in 2017 ·   Investment US$ 40 billion ·   Reactor PR1400
JORDAN		2 NPP 1000 MW	·   since 2015 ·   Cooperation with : Russia, France Japan, and Canada

various sources

Pakistan, in current de facto an Islamic state has recognized and capable of producing nuclear weapons. Mastery recognized nuclear state Pakistan has been able to produce nuclear weapons.

In the Middle East after Iran agreed country to have nuclear technology for peaceful purposes, the state of Saudi Arabia and Israel is suspected to have nuclear facilities and nuclear weapons in secret. Saudi Arabia and Israel refused to be called has had a nuclear weapons facility, and Pakistan denies helping build a nuclear facility of Saudi Arabia.

Iran even at the stage of research and development as well as a nuclear enrichment facility, however, if it is not due to embargo that afflict this country, Iran is believed to be able to develop a nuclear weapon in a short time.

Although it was not until the development of nuclear weapons facility, Islamic countries already planned and has built nuclear facilities for peaceful purposes. Some of these Islamic countries in the Middle East is oil-rich region. They have anticipated when oil resources run out and not be a source of state revenue.

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