Theres more on that story and Everything Else right here al jazeera dot com for the latest comment analysis and video on demand you can watch us live right there as well inside story is coming up next the news hour is after that so all see you in about twenty five minutes time. What happens when the oil runs out rich gulf countries are being warned the future is bleak and they say diversify and become this reliance on oil so what are the alternatives and how is the current blockade on cattle making things worse this is inside story. I welcome to the program. The International Monetary fund has some advice for countries in the gulf diversify and diversify fast the oil thats made many gulf countries extremely wealthy is not going to last forever and the i. M. F. Stu thousand and seventeen report is predicting the worst growth rate for the region since the Global Financial collapse several years ago economies in the region have been suffering since Oil Prices Fell dramatically in two thousand and fourteen attempts to curb Oil Production of only slightly raised revenue and the Gulf Cooperation Council diplomatic crisis that began in june has only made the situation worse the i. M. F. Says cattle and its blockading neighbors could have trouble finding investors if the crisis continues but its not a hopeless situation the i. M. F. Director for the middle east says gulf economies are starting to make necessary changes to counter the effects of low oil prices. Preparing their economies to the postwar iraq is something that is becoming the priority of authorities all over the g. C. C. And we are seeing government developing those fusion strategies and introducing certain number of forms to allow the economy to be prepared for the postwar years and those are important reforms so what are some of those important reforms well many all of the g. C. C. Countries have cut water and Energy Subsidies for their residents a g. C. C. Wide value added tax or v. A. T. Is meant to be implemented next year it will be a five percent tax in most countries since the gulf crisis began cats are has been building up its farms to make the country less reliant on costly food imports and saudi arabia has introduced an official plan called the saudi vision twenty thirty to reduce the countrys dependence on oil diversify its economy and develop Public Civil Service sectors lets talk to our guests now joining us in london jane ken month deputy head and Senior Research fellow at the middle east and north Africa Program at Chatham House in cambridge a specialist in Monetary Policy and political economy in london cornelia mair specialist on oil and gas she is c. E. O. Of mayer resource good to have all three of you on the show thank you very much for joining us Khaled Alharbi let me start off with you what was your response to this report by the i. M. F. As a cattery an economist did it make you sit up and listen and go goodness me this is telling me something i dont know. First of all the i. M. F. s doesnt support of the d. C. C. Counted or other country in the real reform in diversifying the economy the i. M. F. Focuses on short term policy and it comes to continue when they are in need or are they out of a recession like and i want to kiss and ask them to implement i started to measure to left a social aid and aid as you mentioned and impose taxes opened the Financial Model good for a speculative speculator and. A solo the Public Sector but doesnt does that really issue here the real reform the economic reform goes hand in hand with political reform when you ask when you send the pride of the Public Sector to bunch of caught up to pollute the politician you create a monopoly on one side and you can get unemployment on the other side this is happened this happened in egypt this happened in russia and continues the i am of policy actually that has been destructive in many region and in the world in the eightys in the latin america and in Subsaharan Africa and in the asian in crises in one to in the at the end of the ninetys and continuing on in egypt and tunisia before the the revolution and now after the revolution look whats happening in egypt even in any greece so the real reform is you have to address the fundamental issue of the long term issue of david as i find the production of structure you need to focus first of all political reform goes hand in hand with with with economic reform you have to build Human Capital you have to reform the private the Public Sector you have to reform the Public Sector the private sector you have to build then in that cell based in the g. C. C. Countries had been focusing on this applies side of the building of Human Capital which means that they are importing universities or from. Non university from overseas yes thats thats not enough you have to. That is that the man side the development of Human Capital of the human issue of Human Capital is a block to from the demand side meaning when these a good idea where they graduate there is no shortage of university there is no shortage of graduates in the third world country by the way the problem is where do they go after they graduate they go to. Over such a rated Public Sector the suffer from many kind of in this is that associated with an entire economy disguised unemployment probably corruption probably. Productivity is just a number just to have an employment to secure an employment to secure the oil for the citizen or goes to. A private sector thats a clause in the face blocked in the face of national and in national and National Employment this is that really arent using the militia is that if you many issues then raise many points are you hold on just so i can keep a tab on those but let me just say one of the points you raised to jane kininmonth i mean do you think the i. M. F. Policy is destructive when it comes to this region and the latest report and is there anything that made you sit up. Definitely there are criticisms of the i. M. F. Over estimate saying the degree to which liberalization could really bring about any kind of economic clee fear Playing Field in context of corruption so there definitely has been problems but they would lay shouldnt between the i. M. F. And gulf country it is really different from countries like egypt or tunisia because that those countries dont need i. M. F. Money so the i. M. F. Value is more Technical Advice trying to persuade them and also i guess something that seems like a good review of the i. M. F. Is kind of baggage that brings coincidence Storm International investors when theyre trying to by date i go nick lee in the case of saudi arabia if anything the i. M. F. Seems to have suggested that the recent rains of austerity went a little too far and that Fiscal Consolidation i. E. Cuts Public Sector pay which were later with arest dampened Growth Prospects korea may you dont believe that this is a destructive i mean what is it that it has raised at the moment weve seen the sort of report before but im just wondering why its so alarmist now. Well i dont actually think its alarmist it just states a few facts and i totally agree with jane its a different relationship with the gulf countries and the i. M. F. Can give some level some degree of confidence and i think it comes this this report comes actually at a very good and crucial time you may recall that last week there was the future investment in the ship if a big conference in them in riyadh in the kingdom of saudi arabia talking about the future of the saudi economy elaborating on vision twenty thirty m. Madame lagarde to show that the head of the i. M. F. Was there and the whole thing of the vision and also the new super city they want to construct is is about diversifying its diversification i think the saudis have really realize some of the current leadership that they have many many young people seventy percent of the of the of the population are under thirty and they need to find jobs for them this is why they have to grand wish and twenty thirty admittedly very ambitious but if you dont shake the country up a bit instead to stretch goal it wont move so this is all about diversifying diversification kuwait has a vision twenty thirty five each emirates has their own wish and oman has its own vision so these countries are realizing they need to do something theyre dressing it and a little bit of a push here from the i. M. F. Is not bad in reaffirming to lead us yes theyre on the right track here is i think youre right about the push because jane it seems that these countries have been pretty reluctant to do something about a do you think theyve been overly reliant on oil or are they waiting for a rebound when it comes to the the cost of oil. We see with all commodity dependent countries that they know that they need to diversify whether thats away from oil or other minerals that some african countries export but when things are easy in the short term again and again governments over in the world whether they democratic or authoritarian put off reforms that are needed in the long term but nonetheless have some costs and one of the issues for the gulf has been absolutely they can say aaron on the part of leader is that austerity measures ruling by the state will have political implications and will lead the citizens to demand and its quite a bit of a as easily as we are now seeing im sorry its quite a bit of work as well. It is well it requires more work from from everybody because the era of a guaranteed and usually quite cushy job in the Public Sector is coming to an end and if youre a gulf leader you know you need to be asking your citizens to prepare themselves for a very different world of work where increasingly they will be expected to find jobs in the private sector and all of this is a difficult task we are seeing though in qatar in saudi arabia and in the u. A. E. Young leaders who are saying to their populace that things are going to change but in some of the other gulf countries particularly kuwait and oman it does seem that an older generation of leaders is hoping that this will be temporary the oil revenues will go back up and that they dont have to worry about it khaled had difficulty in asking is this when you look at these countries and you see how salaries have been used to keep many of the citizens happy and cater them and this could possibly change in the way you work could possibly change and your expectations need to be changed as well i mean that is asking a lot its a real change of a mindset isnt it. Yes it is a religion in your own mind but i want just to. Talk comment on. The i. M. F. Has nothing to do with the i. M. F. Involvement in the g. C. C. Countries not similar its a similar or different to clothe the. Meccans eater saudi arabia is exactly that is a piece of this stand that the recipient of the i. M. F. Everywhere. That they may have to come and to ask for along or from the i. M. F. The saudi qana me is in not in good shape you would see crime rate increasing you would see the poverty rate increasing you would see the divorce rate is increasing the same same problem they dont address the real issue with regard to the i. M. F. Also recommended the u. C. C. Country to impose taxes god himself says the people have to do was to live and she did not say that the people also have to live and to do about the transparency and to norway out of this money go on the tax money go on people have. Public expenditure this is our right as well and we all and we remember the old saying that the north taxation without representation of doesnt talk about corruption doesnt talk about democracy to reform the i am of doesnt talk about political reform. There is a fundamental reason there is a technical reason and theres a fundamental reason for the failure of the evidence because in for over half a century now looks what ingo it there in an article that they couldnt get a state its not. Against the nature of an autocratic couldnt get us to a diver survive because diversification is to rip the state from its most essential element of existence thats the diddley distribution mechanism ok and what im saying is im let me just jump in here and bring in. The what about the difficulties when it comes to two diversification in the sense that when you look at this region i mean. Other than oil what do you have what do you have to offer its not that easy to come by is it is that one of the key problems behind this its access its precisely that its not that easy to come by and lets lets be clear or oil and gas this is not a labor intensive industry neither is the downstream Chemical Industry so one does need for millions and millions of young people one does need to create the jobs so one needs to go to manufacturing into agriculture into tourism into all the things that really create jobs and there its really important to to change also to mindset a bit to ask change said you know its no longer the nice cushy Public Sector jobs people need to actually work in the private sector while when i look at Division Twenty thirty which i think is is im fully supportive of but too much emphasis throughout the chief c. C. Is put on academic education you dont need ten million new Brain Surgeons you also need people work carpenters and so on so i would actually advise them to look at Vocational Training look at the switzerland the germanys and what theyve done with Vocational Training to get more people into the world force fast because we need to do that unemployed young men roaming the streets too long as it is an essentially diplomas here isnt it i mean obviously you dont get a job without having a diploma of any sort just let me just put this to jail when we look at diversification i mean you have a country like saudi arabia for example who diversified into agriculture at great cost it was a failure was a disaster it cost them billions how do you balance the research into diversification and what makes it viable. Diversification is good to have different purposes so sometimes youre looking to maximize the comparative advantage that you country has in a globally competitive marketplace and if youre trying to do that you dont go into agriculture or at least not into water intensive crocs or dairy farms but those kinds of developments have to go other drivers for saudi arabia for qatar for other gulf countries the driver has been Food Security and were going to see that probably become more important in the light of whats happened recently with the qatar crisis you may also be looking to prioritize sectors that create jobs for nationals even though you might be able to make more money by having sectors that are largely with lion on my current workers so theres a lot of things that gulf countries have to juggle here but i would say one of the areas where they have historically been really competitive is all the range of sectors that are linked to the amazing look haitians between Europe Africa and asia so youve seen historically before the discovery of oil these countries were of vital importance as Trading Centers and as ports and today too we see some of the Major Investments in the region coming into ports we see the airports the Airlines Tourism just things all these traditional areas of science being things that the gulf can rely on after all to ok you mentioned Food Security and thats an important point isnt it and catalyze now addressing it by pumping a lot of money into its farms we know that because of the crisis the government has had to subsidize much of the food imports the the food that we getting in front of us i mean how sustainable is that and how are they able to do that rather than tapping into the sovereign wealth fund. The thats a system that will as long as we take this situation are they said many times a bit before. The golden rule here is to deal with the crisis as if its an ongoing ality so we dont relax we dont set down song has been trying now to diversify its sources and means of import and also this is their short run policy response and the medium term policy or longer term policy of us wants is to try to david as if either economy tried to boost the production with with whatever we can in in such as five. I mean. In ten or more. Products manufacturing. Building materials as much as we can we like it such as fi these locally and then we can go for an import from overseas one more thing i want just to elaborate on the diversification issue i was talking about the interior and i want a car that can do or say it will not support a diversification and this unless by in a city like we have the experience of asian miracle because the country is this country they were when they started to run out of oil like a three decades ago that leadership the dangerous of the situation and then that was a source of force to push them to diversify the economy so the g. C. C. Country in my opening when i we are sitting on the largest reserves of oil reserve and the world saw in the back of our mind this is an oil cycle is it we can sometimes we have warm sometimes we have bust and we have recession so very ality is different now with the shale. Oil this is going to be an ongoing and long term issue with Lower Oil Prices so i list we are that is the real issue here political and economic reform we have to reform the private sector to make a competitive or private sector. Build an industrial base. Private sector that can generate. Employment for the four for the national and yours one hundred one hand you have two of the form of the Public Sector. In hands. Of productivity in the product a let me hope that maybe i can call in here in here a leadership in their lives on the Public Sector or car and have a very hawk and have a vision and can and. Design and implement successful policy and rocked the national Human Capital into the private into the Public Sector the private. Let me just suggest to cornelia because we wouldnt have much time but i mean the impact of this standoff the gulf diplomatic crisis its not just on the countries that are affected right i mean it has a Global Impact and the longer it lasts the more it will be corrupted and rotten. Absolutely and i think you know the Short Term Impact is not that back if you look at the monetary flows if you look at it it its all been managed by the in the in the longer term the world needs a stable t c c in the midst of you know all the scenes going on in the middle east its very important and fluidity c c its important to to to show that stability and also to show reason you know when you look at the new unknown project in this mega city in saudi arabia you want Foreign Direct Investment in order to attract Foreign Direct Investment you need to show that leadership is reasonable that you have long term you know you look at long term prospects so really forty economic welfare of the chief sisi as a whole and for the stability of the middle east and therefore the world we do need a stable functioning t. C. C. Right stable functioning g. C. C. Diversification obviously that is key jane how big a factor does donald trump play in all of this considering his America First policy hasnt really played out yet is that built into the Business Plan here. Many in the gulf see a long terram train where the u. S. Seems to be in there if you disengaging from the region gradually and actually thats been corman to both the obama and the trump presidencies obama talked about pivoting to asia but didnt cite increased defense sales to the gulf trump meanwhile was talked about more defensive always engaging more he speaks the ghost language or in iran but theres not much sense that he wants to change the ports and America First does with present quite a big constituency in the us that is not really sure why they have these deployments in the middle east i dont think the us is pulling back from the region a toll but the perception is there and that is partly why we see leaders courting russia as well as the asian states that they are increasingly doing business with and corneas pose in a briefly if you will because this is a unique region with its unique problems there could be unique solutions that could be exciting right where there could be unique solutions and i think theyre all on to something with all these missions and all of diversified care of it diversification this new mega city which says ok we will have between Africa Europe and the middle and asia thats thats very exciting but you know like with everything its the grand design is great its the implementation that we need to look out for and that is maybe that may not be so easy but creating the momentum creates a sense of obligation on of all or part of the leaders to really push ahead with these agendas and lets leave it there big thanks to my guests cornelia may with those final words colored our heart there and jane can unmount and thank you too for what you can see the program again any time by visiting our website aljazeera dot com for further discussion go to our Facebook Page thats facebook. 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