Even though some countries are trying to reduce their dependency on resource imports oil and gas remain the most important energy sources, providing “close to 50 percent of global energy consumption” (Ayoob, 2006, p. 148). Given that 61 percent of the world’s proven reserves are located in the Middle East region (BP Statistical Review of World Energy, June 2008, p. 7), the significance of this area for the global energy security situation becomes obvious. Within the Middle East “the Persian Gulf region remains central to the global oil market and will become even more vital in the future” (Shibley & Hill, 2002) since some of the world’s largest oil producers are located in the Persian Gulf. It is estimated that Saudi Arabia’s reserves alone account for 21 percent of the world’s oil reserves. Iran and Iraq are each believed to hold 10 percent; the other Persian Gulf nations are estimated to hold from 6 to 8 percent. (BP Statistical Review of World Energy, June 2008, p. 6). Moreover, the same region holds the largest reserves of natural gas with a total share of more than 40 percent (BP Statistical Review of World Energy, June 2008, p. 22). Therefore, the Persian Gulf region is “indispensable to the health of industrial economies” (Ayoob, 2006, p. 148). Aside from the world’s largest reserves, the Persian Gulf region is a guarantor for cheap and affordable oil since the exploration costs are significantly less than in other oil producing regions. It is assumed that the “average Persian Gulf production cost is $5 per barrel and North Sea (and Alaskan) production cost is $15 per barrel” (Chapman & Khanna Neha, 2001, p. 372). Moreover, the growing demand for oil, especially in emerging nations such as China or India discloses another significance of the Persian Gulf oil fields. Since “globalization and commoditization of the oil market have forced the oil producing countries to minimize their excess capacity in order to compete with each other. Hence, most oil-exporting countries have no significant spare production capacity, with the only exception of Saudi Arabia. No other country can produce an additional 1 - 1.5 Mb/d to offset lost oil supplies on a global scale” (Umbach, 2004, p. 144).

Yet, as already outlined, the global demand for oil will increase in the near future and even if countries such as Saudi Arabia are planning to increase their oil output, “that may be far from enough to meet the rising demand” (Mouwad, 06.08.2005). Therefore, oil will become even more valuable than it is today and the strategic importance of Persian Gulf as the region with the largest proven reserves and the largest oil producers will increase. Hence, “instability in Saudi Arabia, Iran and Iraq will have much greater impact on the global economy in the future than has been the case so far” (Ayoob, 2006, p. 149). Yet, if one considers the near past, it becomes evident that “major oil disruptions in the last decade originated from OPEC members outside the Middle East and elsewhere in the world” (Fattouh, 2007, p. 2). Furthermore, the region “did not witness any civil unrests or strikes such as those in Venezuela, successful militant attacks on oil installations as in Nigeria or tensed relations with importing countries as in the case of Russia [or…] any major disruption due to technical

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failures, hurricanes or weather related events” (Fattouh, 2007, p. 2). However, there are security issues that give causes for concerns for the international community.

Even though “a notable, and perhaps fragile, recent trend can be observed in the Gulf (excluding Saddam Hussein’s Iraq) toward countries’ attempting to resolve their disputes through negotiation, arbitration, and judicial settlement rather than force or threats” (Ekovich, 2004, p. 73) the risk of inter-state conflicts remains one of the central concerns for the region’s security situation. The long-time dominance of the Arab-Israel conflict ended “after a long process of negotiations and political dialogue led to the implementation of a series of peace agreements between Israel and its neighbours, Egypt and Jordan. Mauritania became the third Arab country to have full

Diplomatic relations with Israel in October 1999. Israel and Syria practically crossed the most sensitive issues between them, including settlements, security arrangements and water in their negotiations of December 1999” (Said, 2004, pp. 67-68). Nonetheless, “the risk that the region may witness some sort of disturbance […] remains high” (Fattouh, 2007, p. 10) since the constant confrontation with the largest geographic power in the region, the Islamic Republic of Iran perpetuates the risk of a state to state conflict. Even though the country still recovers from the long lasting war with Saddam Hussein’s Iraq, the Gulf Cooperation Countries (GCC) states are “concerned about Iran’s conventional military acquisitions and exercises in the gulf, its insistence on occupying the strategic islands of Abu Musa and Tunbs, which lies along the critical shipping lanes of the Gulf; its past efforts to subvert GCC regimes; and rumours that Iran has increased its contacts with the Shia populations in GCC states” (Mattair, 2007, p. 133). Moreover, Iran’s “conventional military capacity is fairly extensive, but for now it is a serious problem only to Iran’s immediate neighbours in the Gulf” (Ekovich, 2004, p. 74). However, it is unlikely that these neighbours would wage a war against Iran since they increased their efforts for peaceful negotiations with the country (Mattair, 2007). Yet, even more worrying are the persistent efforts of Iran to acquire nuclear weapons and ballistic missiles. Since the tensions concerning this armament between Iran on the one side and Israel and the United States on the other one remain very high, the danger of a conflict between these parties cannot be ruled out. Aside from Iran, the Persian Gulf region may witness other possible inter-state conflict scenarios. As already mentioned, Israel and many Arab countries have settled their hostilities in the last decade. Nevertheless, the interior diremptions within the Palestinian and the violent coming into power of Hamas in the Gaza strip may cause Israel to revert to a military solution and therefore disrupt the promise of a peaceful settlement of the Israel - Palestinian conflict. As a consequence, other Arab nations may take a stand with the Palestinian and cause an expansion of the conflict across national borders.

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Given the unstable situation in post gulf war Iraq, it comes with no surprise that the country is considered to be another source of conflict in the Persian Gulf region. On the one hand, there is the danger of a powerful Iraq that regained its former strength as a regional power and as a counterweight to Iran. The concern in the face of this development is obvious since “any Iraq that is strong enough to balance and contain Iran will inevitable be capable of overrunning Kuwait and Saudi Arabia” (Pollack, 2003). However, even in the current state, the Iraq poses a possible source for state to state conflicts. The near civil war between Sunni and Shia Arabs could spread to other parts of the region causing serious confrontations between Sunni and Shia-dominated countries. Furthermore, the Kurdish minority in Iraq and their “insistence on a maximum autonomy for Iraqi Kurdistan” (Ayoob, 2006, p. 149) could have “serious implementations within Turkey and its future role in the region” (Fattouh, 2007, p. 10). In addition, the Israeli support for an independent Kurdish entity in the Northern Iraq may cause strong frictions between Turkey and Iran on the one side and the Unites States and Israel on the other one. Therefore, even though the Persian Gulf region has been relatively stable in the last decade (except the case of Iraq), the danger of a state to state conflict remains high in the coming years.

Given that “the ruling family in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) have held power, largely unchallenged for decades, if not centuries” (Byman & Green, 1999, p. 20), it may come as a surprise that political instability, internal turmoil and religious radicalization are considered to constitute a serious security issue in the next decade. Indeed, “a range of problems is undermining the political arrangements that has governed social relations in the Gulf” (Byman & Wise, 2002, p. 47). In the face of the recent price increase of oil, one may argue that the Gulf nations are in a stable condition yet, “despite their country’s oil wealth citizens in Oman, Bahrain and Saudi Arabia face a declining standard of living and rising unemployment rates” (Byman & Wise, 2002, p. 47). Thy skyrocketing oil prizes in the 1970’s transformed most Persian Gulf economies into rentier states that “depend on external generated rents instead of producing wealth themselves” (Bensahel & Byman, 2004, p. 20). Quiescence in these states is guaranteed through the distribution of material wealth in form of free education, free health care, and guarantees of employment to the citizens. Due to the huge revenues generated from the oil export many Gulf States dismantled their regulatory and taxation structures, a development that intensified the dependence on external generated rents (Chaudhry, 1997, pp. 270-301). Hence, “a rapid population growth with some Gulf states averaged almost 4 % annual growth in the last two decades has created a large and restive youth population” (Byman & Green, 1999, p. 23). This population growth generated tremendous economic pressures on several sides. First there are the high expectations from the citizens, used to a certain standard of

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