Changing Financial Structures in the Arab World: Some Implications for Oil and Gas
This paper examines the interactions between recent changes in domestic and external finance in Arab countries and developments in their hydrocarbon (oil and gas) sectors. In the last two decades, countries have witnessed three major transformations in their financial and energy sectors, and in the role and size of the state. First, in line with global trends to deregulate and reform financial sectors, the regiona l financial scene has seen a double switch: from official to private sources of finance, and from external to domestic funding. In the last few years, this has taken place against a background of heightened political turmoil, which in turn has affected the mix and availability of finance. Second, to varying extents, their oil and gas sectors are being transformed by reform and restructuring, including through corporatisation or privatisation. This is in line with the third transformation, whereby pressures of economic adjustment and globalisation have redefined and resized the role of the state in the region. The involvement of Arab governments in running their economies was historically prominent, including in energy. Therefore, sectoral re-organisation falls within this broader transformation of the Arab state, but represents a more fundamental departure from the previously dominant pattern of state intervention.