The Middle East War Is Adversely Impacting Ethiopia’s Faustian Bargain: The Fraying Lifeline – OpEd |
In his Pulitzer Prize-winning work “The Prize,” and subsequent analysis, Daniel Yergin defines oil as the central driver of the 20th and 21st centuries. He argues that it is not merely a commodity, but a strategic asset that dictates the wealth of nations and the outcomes of global conflicts. In the context of the current Middle East conflict, Yergin has reaffirmed oil’s critical role, warning that the world is facing the “biggest disruption in oil production history”, which serves as a resounding shock to global markets. But other than just the oil story, the UAE is also facing a similar disruption in the other main income earner, the non-oil sector led by high-growth industries (wholesale and retail trade), manufacturing, financial services and construction, which together contribute approximately 75% of the GDP with oil income contributing the remaining 25%.
The current war in the region is not only measured in the loss of assets and lives but also in the loss of revenues and disruption of economic activities. This loss of revenue and wartime economic paralysis are forcing the UAE to transition from “aspirational expansion” to “defensive preservation.” As the Middle East conflict drains Abu Dhabi’s liquidity and threatens its own infrastructure, the “limitless” financial support once used to buying regional influences, such as the financial support for Ethiopia, is being replaced by a much more restrictive, transactional approach.
The deepening conflict in the Middle East is fundamentally altering the “Faustian Bargain” that defined the........