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CHAPTER – IV

PROFILE OF OPEC

4.1 WHAT IS OPEC?

The oil companies who had economic interest in Venezuela’s oil reduced

the price of oil paid to this country in 1959.This was the decision that led to the

decrease of oil price and revenue for oil export countries. After that, giant oil

companies followed price reduction policy for Middle Eastern countries that were

the biggest oil exporters in the world. At that time, the first "Congress of Arabian

Oil Organizations” at Egypt took place with two guest members, IRAN and

Venezuela. At the end of the congress, they announced in their manifesto that

the price of oil could be changed by discussion and conversation among all the

beneficiary countries.

After one year, in 1960 the Minister of Petroleum of Venezuela and

Director General of Petroleum of Saudi Arabia together announced in a

manifesto that they had a joint policy to protect the beneficiaries of all the oil-

producing countries. In 1960, the price of crude oil decreased by 10 cents per

barrel once again and the future was not clear for the oil companies.

The reason was imposition of quota system for oil by US Government.

This policy reduced export of oil by oil-producing countries substantially. USA

enforced the rule that 90 per cent of oil consumption had to be produced inside

the country for two years, from 1957 to 1959, and only 10 per cent could be

bought from outside.

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Because of this policy, the oil producing countries lost one of their biggest

markets and customers in the world. After this, the price of oil decreased once

again.

The first conference of OPEC (Organization of the Petroleum Exporting

Countries) was organized on September 14, 1960 in Baghdad, Iraq by five

countries: Iran, Iraq, Venezuela, Saudi Arabia and Kuwait. These countries are

the Founder Members of OPEC. (OPEC was registered by United Nations

Secretariat on November 6, 1962.)

These countries announced to all the oil companies that they would not

decrease the petroleum price until the price returned to the level of stable price

two years ago. The members were keen and eager to protect and stabilize oil

prices. They decided to decrease their oil production in order to create a stable

price.

The OPEC manifesto of 1962 approved that OPEC should decide the

price of oil, processing interest and cost of selling expenses.

In fact, there were other reasons, which made OPEC stronger than before.

They are as follows:

1. Libya corrected its oil rule.

2. Saudi Arabia and Venezuela decided on elimination of discount on oil

prices (this strengthened OPEC).

3. OPEC tried to find a good measure of production quota.

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4. OPEC tried to separate processing interest from oil tax.

5. At the OPEC Conference at Beirut which was called the Beirut

conference”, it was decided that there should be a mutual agreement

about the elimination of discount on oil prices.

The above led to an increase in the membership of OPEC from five to 12

members in 1972.

The countries that joined OPEC after the first “Baghdad Conference "

were the United Arab Emirates, Algeria, Indonesia, Libya, Nigeria, Qatar

Emirates and Gabon. However, Gabon left OPEC in 1992 and Ecuador quit it in

1993 and joined it again in 2007. Angola is another country that joined OPEC

along with Ecuador in 2007. The OPEC conference generally meets twice a year

and each member has one vote at the conference. The principle on which the

conference works is unanimity. At the first OPEC conference, representative of

OPEC member countries met together at Baghdad.

Some information about OPEC members is given below:

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Table 4.1 : OPEC Member Countries by year of Joining and Location

Country Joined OPEC Location

Algeria 1969 Africa

Angola 2007 Africa

Ecuador(**) rejoined 2007 South America

IR Iran* 1960 Middle East

Iraq* 1960 Middle East

Kuwait* 1960 Middle East

Libya 1962 Africa

Nigeria 1971 Africa

Qatar 1961 Middle East

Saudi Arabia* 1960 Middle East

United Arab Emirates 1967 Middle East

Venezuela* 1960 South America

*founder Members ** Ecuador joined OPEC in 1973, suspended its membership from Dec. 1992-Oct. 2007 Reference,WWW.OPEC.ORG

The aim of this conference was very important because they wanted to co-

ordinate and unify their petroleum policies. This would mean that they could

achieve and promote stability and harmony in the oil market. At this conference

of OPEC, the member-countries considered and estimated the prevailing

situation and the trend of the market fundamentals. This included economic

growth rate and petroleum demand and supply scenarios. Later OPEC

conferences were important because they dwelt upon the changes they might

make in the petroleum policies.

Thus at different points of time, the member countries were able to raise

or lower their collective oil production. This was a significant decision because

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they could maintain stable prices and steady supplies to consumers in the short,

medium and longer term.

The structure of OPEC consisted of the following: The OPEC Secretariat,

the Board of directors and the Secretary General. The Economic Commission

and the Ministerial Monitoring committee supported them. The OPEC approves

the appointment of Governors from each country and elects the Chairman of the

Board.

The Economic commission is a body within the framework of the

Secretariat.

The function of the Economic commission is to promote stability in the

international oil market. The OPEC statute framed in order to have harmony and

stability in the petroleum market. OPEC member countries must co-ordinate their

petroleum prices through consensus on decision making, but each member

country retains absolute sovereignty over its oil production.

OPEC does not control the oil market because OPEC countries produce

only about 41 per cent of the world crude oil and 15 per cent of its natural gas.

However OPEC can have a strong influence on the oil market because OPEC’s

oil exports constitute 55 per cent of the oil traded internationally. Even though,

the aim of OPEC is to have stability in the oil market by steady supply at fair

prices, any decision to increase or reduce production would lower or raise the

price of crude oil.

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4.2 THE ARAB WAR WITH ISRAEL 1967

War was declared between the Arab countries and Israel on 1st June

1967.

The price of oil increased immediately because Egypt closed the Suez

Canal.

The effect of this closure on oil price was immediate. The ships carrying oil

to the Atlantic Ocean, i.e. to Europe had to deviate from their original route. The

ships now had to make their way round the African continent. Thus the cost of

the transport of oil increased.

Some Arab countries of OPEC decided that they would support the Arab

war with Israel and so they would not export oil to the supporters of Israel. This

led to increase in oil prices. However, the crisis of the closure of the Suez Canal

and the Arab war did not have a big impact on the oil market because Iran and

Venezuela, both non-Arab OPEC members, increased their production and

supply of oil. Thus, the shortage of oil supply was covered.

Another reason was that the United States of America used its stored oil

for domestic consumption and increased the domestic production of oil as well. In

addition, the US exported 238000 extra barrels of oil daily to Europe.

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4.3 THE FIRST OIL SHOCK (1973)

On January 1972, the OPEC members decided to increase the price of oil

by 8.5 per cent. Their decision reduced value of dollar and gold around the world.

This was repeated again in 1973. Thus, the OPEC member increase of the price

of oil by 12 per cent and the value of dollar declined further.

What were the causes of 1973 rise in the price of oil? The causes are

given below:

1. The Arabian countries boycott continued. The reason was the war

between Israel and two Arab countries, Egypt and Syria. This boycott

continued until March 1974.

2. The Arab oil exporting countries decreased their oil export to USA and

European countries.

3. Just two days after next war in 1973, OPEC members decided to

increase 100 per cent oil production but they could not agree with oil

companies.

After that, OPEC members in session at Kuwait increased unilaterally the

price of oil by 70 percent. In the second session in Tehran, the oil exporting

countries increased the price of oil by 130 per cent.

To summarize, the price of Arab Light oil and Saudi Arabia’s crude oil

increased from $ 1.9 per barrel in 1972 to $ 10.41 per barrel in 1974. In other

words, the price of oil increased 4 times between 1973 and 1974.

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4.4 THE SECOND OIL SHOCK (1979)

Iran’s Revolution was the main reason for second oil shock. As Iran is one

of the main oil exporting countries of OPEC. When the Revolution started in Iran,

all the employees of Petroleum Ministry went on strike. Thus, Iran’s oil exports

were interrupted and it did not supply any oil to British Petroleum Company

(BPC) and Shell company which were the best costumers for Iran’s oil. This led

to oil crisis. The crisis of oil supply shortage and the Lack of confidence in

Persian Gulf countries were the reason that the prices of oil increased fast.

IRAN, after Revolution started to export oil, the price of oil was increasing

more because the new government in Iran decided to decrease quantity of oil

exports. Thus the price of oil went up more because the demand for oil was

much more than its supply and there was no equilibrium in oil market.

In spite of OPEC announcement that the price of oil had to be fixed at $ 20

per barrel, price of Iranian oil went up to $ 40 per barrel, because Iran did not

have any long-term contract and supplied oil was much less than the demand.

However, OPEC countries decided to increase the official price of oil to$ 28 per

barrel on June, 1979.To this decision, US government and European countries

severely reacted. US announced that to pay $ 5 per barrel subsidy for imported

oil. The price of crude oil of Saudi Arabia in 1978, 1979 and 1980 was

respectively $13.03, $ 29.75 and $35.69 per barrel. In short, the price of oil

increased by 13 times more from 1973 to 1980.

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4.5 THE OPEC SITUATION AFTER TWO SHOCKS

Some of the oil economists believe that the oil is an important energy

resource of the world and it should not be used as a political tool because

increase in oil prices by increasing cost of production will affect the Industrial

World.

About the OPEC situation after the shocks, Fransis Piron (1987) seven

years after the highest peak of the oil price believed that when the member

countries at OPEC decided to join the WTO (World Trade Organization) then

they were made to be sensitive about the Economic Health of the whole world.

On the other hand, the member countries of OPEC after a strong increase in oil

price, started to invest in all types of projects at the same time, developed budget

deficits, and took foreign loans. Then they had to increase the quantity of oil

exports. Thus for this reason, the price of oil was decreasing after some years.

On the other hand, from a microeconomic point of view increasing prices

of oil have other effect in the long run. In the long period, increasing price of oil

induced some countries to start to producing oil.

These countries had oil but the production of oil was not economic and

with this new price of oil, these countries decided to produce oil. So production of

oil became economic for them. When the price of oil declined later, these

countries did not stop their activity. In short, they could not close their refinery

without any problem because they had invested and recruited some employees.

So they continued production as long as they could. (More and more)

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It is natural behavior that after each price increase, the supply of oil will be

increase too so the equilibrium price falls.

4.6 OPEC IN THE 1980S

By the beginning of 1980s, Saudi Arabia suggested that the price of oil

should be increased by $2 per barrel and be fixed at $34 per barrel. The British

Petroleum Company demand for oil decreased and after that Nigeria reduced its

oil price by $5.5 per barrel without consultation with OPEC. Later other members

of OPEC, one by one, were decreasing their prices.

On March 1982, OPEC decided to reduce the price of oil and fixed its

production at $17.5 million barrels daily but some of the members did not follow

the others. Iran, Iraq, Libya, Venezuela and Nigeria were countries that reduced

and price of oil stayed around $30 per barrel in 1983.

On March 1983, the OPEC countries decided to fix price of oil at 29$ per

barrel and production level of 17.5 million barrel daily. However, the price

reduced by 1985 and OPEC announced that the problem was from non-

membership countries but it was really an inside problem. Then, on September

1985 the price of oil decreased from $28 to $11 per barrel. The most important

reason was the behavior of the Saudi Arabia that increased its oil production

from 2 million barrel to around 4.7 million barrel. Saudi Arabia’s supply of too

much oil as a political favor to USA was the cause for price decline in 1986.

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In 1988, OPEC decided to fix the price of oil at $18 per barrel but the price

of oil started to increase from 1989 onwards.

4.7 OPEC IN THE 1990S

At the beginning of 1990s, the OPEC was in crisis again. On July 1990,

Iraq occupied Kuwait and set 900 oil wells of Kuwait on fire. This was the reason

for decline in supply of oil and uncertainty in the markets. After that, American

forces and its western supporters declared war on Iraq so the price of oil

increased more.

During that war, the price of OPEC reference basket not only did not

increase but decreased. The price of oil was $12.28 per barrel in 1998. This price

was the lowest price in recent years.

And the important reason for it was supply surplus in the market but this

crisis lasted only for one year and from 1999 the OPEC reference Basket price

went up to $17.48 pb and the upward trend started.

4.8 CRUDE OIL PRICE IN NOMINAL AND REAL TERMS

All over the world, the traded oil is priced in US dollars. This has two

problems.

The first one is the inflation rate in USA. This is the reason that the

revenue of the oil exporting countries and their real value of money declines with

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decline in the value of dollar. The second problem is the exchange rate. These

have been a decline in dollar exchange rate since a long time.

Some countries that have incurred a loss from instability of oil price,

decided that to make oil market. Then OPEC reference Basket price decreased

to $21 per barrel in 1989. OPEC fixed the oil prices respectively at $18.8 per

barrel and $15 per barrel in 1992 and 1994. In 1996, the price of oil fell to $14.23

per barrel. In fact, OPEC could get better higher prices just with production

control. Then in 1997 this price was 19.54$ per barrel but later declined again

and was 12.41$ per barrel in 1998 as we can see OPEC reference basket and

other spot crude oil prices during 1999-2008($/b) in figure 4.1.

Fig. 4.1: OPEC Reference Basket and Other Spot Crude Oil Prices 1999-08($/b)

Source: Annual Statistical Bulletin 2008

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4.9 BRIEF INTRODUCTION OF OPEC COUNTRIES10

4.9.1 Algeria

Algeria, officially People's Democratic Republic of Algeria, has 32,532,000

population (in 2005) and 2,381,741 sq km, North-West Africa, bordering on

Mauritania, Western Sahara, and Morocco in the west, on the Mediterranean Sea

in the north, on Tunisia and Libya in the east, and on Niger and Mali in the south.

Algiers is the capital and largest city. Algeria falls into two main geographical

areas, the northern region and the much larger Saharan or southern region. The

northern region, which is part of the Maghreb, is made up of four parallel east-

west zones: a narrow lowland strip (interspersed with mountains) along the

country's 970-km, Mediterranean coastline; the Tell Atlas Mountains, Which have

a Mediterranean climate and abundant fertile soil; the sparsely populated,

semiarid Plateau of the Chotts (average elevation 1,070 meters), containing a

number of shallow salt lakes and supporting mainly sheep and goat herders; and

the Saharan Atlas Mountain, a broken series of mountain ranges and massifs

(highest point: 2,330 meters), also a semiarid area and used chiefly for pasturing

1- For all the countries, we used The Columbia Electronic Encyclopedia, 6th edition. Copyright © 2007, Columbia University Press.

10

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livestock. The Cheliff River, which flows into the Mediterranean, is the largest of

the country's few permanent streams. Algeria is subject to earthquakes, which,

as in 1954, 1980, and 2003, may be devastating, killing and injuring thousands.

The arid and very sparsely populated Saharan region has an average elevation

of 460 meters, but reaches greater heights in the Ahaggar Mountains. in the

south, where Algeria's loftiest point, mountain Tahat ,3002 meters, is located.

Most of the region is covered with gravel or rocks, with little vegetation; there are

also large areas of sand dunes in the north and east. Important oases include

Touggourt, Biskra and Chenachane.

In addition to the capital, major cities include Annaba, Blida, Constantine,

Mostaganem, Oran, etc. Berbers once constituted the chief ethnic group in

Algeria, but have been largely assimilated into Arab culture. The Berbers,

beginning in the late seventh century Adopted the Arabic language and Islam

from the small number of Arabs who settled in the country, Today those of Arab-

Berber descent make up some 99 per cent of the population. Arabic is the main

language, although about 15 per cent of the population still speaks a Berber

language. These inhabitants live mostly in the mountainous regions of the north,

but also include the nomadic Tuareg of the Sahara. Relations between Arabic-

speaking and Berber-speaking Algerians have long been marked by tension.

Arabic was made the sole national language in 1980, but that policy was

reversed in 2002, when Tamazight, a Berber tongue, was also recognized as a

national language. French is widely spoken, and about 1 per cent of the Algerian

population is of European descent (before Independence Europeans accounted

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for some 10 per cent). Almost all Algerians are adherents of the Sunni Muslim

faith, the state religion.

About 15 per cent of Algeria's workers are engaged in farming; agriculture

contributes less to the country's GDP than either mining or manufacturing. The

state plays a leading role in planning the economy and owns many important

industrial concerns, including the mining and financial sectors. Since the late

1990s, there has been some privatization and openness to foreign investment.

Farming is concentrated in the fertile valleys and basins of the north and in the

oases of the Sahara. The principal crops are wheat, barley, oats, wine grapes,

olives, citrus, figs, and dates. Algeria is also an important producer of cork. Large

numbers of sheep, poultry, goats, and cattle are raised, and there is a small

fishing industry. Petroleum and natural gas, found principally in the East Sahara,

are Algeria's most important mineral resources and its leading exports.

Production was decreased in the 1980s in order to delay the depletion of

resources but raise again in the late 1990s. There are oil pipelines to the

seaports of Arzew and Bejaïa in Algeria and As Sukhayrah in Tunisia. In 1993, a

gas pipeline was laid between Hassi R'Mel (Algeria's main gas producing field)

and Seville, Spain. Other minerals extracted in significant quantities include iron,

phosphates, uranium, lead, and zinc. The country's leading industries include

food and beverage processing, (notably olive oil and wine), petrochemicals, and

light manufacturing. Algeria's limited rail and road networks serve mainly the

northern region. In recent years, the annual earnings from Algeria's exports have

been substantially higher than the cost of its imports. The chief imports are

machinery, food and beverages, and consumer goods. The principal exports

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besides petroleum and natural gas are wine and agricultural goods (especially

fruit). Algeria's main trade partners are France, the United States, Italy, Spain,

and Germany. Since Independence, there has been large-scale emigration to

France by Algerian job seekers, who contribute substantial cash remittances to

the country's economy.

Algeria is governed under the constitution of 1976 as amended. The

executive branch is headed by the president, who is popularly elected for a five-

year term and is eligible for a second term. The prime minister, who is the head

of government, is appointed by the president. The bicameral parliament consists

of the 389-seat National People's Assembly, whose members are elected by

popular vote to five-year terms, and the 144-seat Council of Nations, whose

members are appointed by the president (one third) or elected by indirect vote

and serve six-year terms. Administratively, the country is divided into 48

provinces.

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4.9.2 Angola

Angola, officially Republic of Angola, has 11,191,000 population (in 2005)

and 1,246,700 sq km, South West Africa. Angola is bounded by the Atlantic

Ocean on the west, by Congo (Kinshasa) on the north and northeast, by Zambia

on the east, and by Namibia on the south. Luanda is the capital, largest city and

chief port. The Bie Plateau, which forms the central region of the territory, has an

average altitude of 1,830 meter. Rising abruptly from the coastal lowland, the

plateau slopes gently eastward toward the Congo and Zambezi (It is a river in

southern Africa, flowing through Zambia, Angola, Botswana, Zimbabwe, and

Mozambique, and into the Indian Ocean) basins and forms one of Africa's major

watersheds. The uneven topography of the plateau has resulted in the formation

of numerous rapids and waterfalls, which are used for the production of

hydroelectric power. The territory's principal rivers are the Cuanza and the

Cunene. Rainfall in the south and along the coast north to Luanda is generally

low. In northern Angola, it is usually dry, cool from May to October, wet, and hot

from November to April. The characteristic landscape is savanna woodlands and

grasslands. The northeast, however, has densely forested valleys that yield

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hardwoods and palm trees are cultivated along a narrow coastal strip. In addition

to Luanda, other important cities are Huambo, Lobito, Benguela, and Namibe.

The overwhelming majority of Angola's population is of African descent, and most

of the people speak Bantu and other African languages; the official language,

however, is Portuguese. The Ovimbundu, Kimbundu, and Bakongo are the

largest ethnic groups. After Angola secured its Independence from Portugal,

many Europeans left the country. Traditional indigenous religions prevail but

there is a large Roman Catholic minority and a smaller Protestant minority.

Angola's rich agricultural sector was formerly the mainstay of the economy

and currently provides employment for the majority of the people. Food must be

imported in large quantities. However, because of the disruption caused by the

country's protracted civil war, all areas of production suffered during the fighting

that began in 1975. Coffee and sugarcane are the most important cash crops.

Sisal, corn, cotton, manioc, tobacco, and bananas are raised and fishing is

important. Livestock- notably cattle, sheep, goats, and pigs- is raised in much of

the savanna region.

Angola has substantial mineral resources and hydroelectric power. Most

large-scale industries are nationalized. Oil, chiefly from reserves offshore, is the

most lucrative product, providing about 50 per cent of the country's GDP and 90

per cent of its exports. Oil revenues have not done much to improve the

economy at large or the everyday lives of Angolans, especially in the interior,

because huge sums have been spent on the armed forces and lost due to

government corruption. Diamond mining is also a principal industry, For many

years in the late 20th century. Revenue from the mines supported UNITA rebels,

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Natural gas is produced, and Angola has deposits of iron, phosphates, copper,

feldspar, gold, bauxite, and uranium. Industries include metal-processing, meat

and fish-processing, brewing, and the manufacture of cement, tobacco products,

and textiles. The Benguela railroad, which carries metals from the mines of

Congo (Kinshasa) and the Zambian Copper belt, was an important source of

revenue, but much of the line fell into disrepair during the civil war. Angola's road

network and communications system have also been affected by civil strife. In

2005, the government began using a $2 billion line of credit from China to help

rebuild the country's infrastructure. Luanda and Lobito are Angola's main

shipping ports. The country's main trading partners are the United States, China,

South Korea, Portugal, and France. Angola is a member of the Southern African

Development Community. Angola is governed under the constitution of 1975 as

amended. After many years of one-party Marxist rule, Angola is now a struggling

multiparty democracy. The President, popularly elected for a five-year term,

which serves as both chief of state and head of government, heads its executive

branch. The president appoints the prime minister and council of ministers.

Angola has a unicameral 220-seat National Assembly, whose members are

elected by proportional vote for four-year terms, and a judicial branch with a

supreme court. Administratively, the country is divided into 18 provinces.

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4.9.3 Ecuador

Ecuador, officially Republic of Ecuador, has 13,364,000 population (in

1995) 283,561 sq km, West South America. Ecuador is bounded on the north by

Colombia, on the south and east by Peru, and on the west by the Pacific Ocean.

The capital is Quito. The largest city and chief port is Guayaquil.

The Andes, dominating the country, cut across Ecuador in two ranges and

reach their greatest altitude in the snowcapped volcanic peaks of Chimborazo

(6,272 meters) and Cotopaxi (5,897 meters). Within the mountains are high,

often fertile valleys, where grains are cultivated, and the major urban centers,

such as Quito, Cuenca, and Riobamba, are located. Earthquakes are frequent

and often disastrous. In 1949, the city of Ambato was leveled. East of the Andes

is a region of tropical jungle, through which run the tributaries of the Amazon

River. The Pacific coast region, with hot, humid valleys north of the Gulf of

Guayaquil, is the source of Ecuador's chief exports, including oil and coffee.

Large deposits of oil are also located in the northeast. Most of the populations

live in the highlands. About 65 per cent of the people are mestizo, and quarters

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are indigenous. Spanish is the official language, but many natives speak

Quechua or Jarvo. European-descended residents, who account for about 7 per

cent of the population, are mostly landholders and historically have played a

dominant role in Equador's unstable political life. Some 3 per cent of the

country's inhabitants are of African descent. Roman Catholicism is the main

religion.

Ecuador is governed under the constitution of 1998. The executive branch

is headed by the president, who is elected for a four-year term; the president may

not serve consecutive terms. The president is both the head of state and head of

government. The legislature consists of the unicameral National Congress,

whose 100 members are elected for four-year terms. Administratively, the

country is divided into 22 provinces.

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4.9.4 Indonesia

Indonesia, has 225,550,000 population(in 2007), 1904000 sq km. The

population falls roughly into two groups, the Malayan and the Papuan, with many

of the inhabitants East of Bali representing a transition between the two types.

Within each group are numerous subdivisions and cultural development ranges

from the modern Javanese and Balinese to traditional tribes in Borneo, Sumatra,

and New Guinea. The complex ethnic structure is the result of several great

migrations many centuries ago, largely from Asia. The Chinese constitute by far

the greatest majority of the no indigenous population; they number about 2 to 3

million and play an important role in the country's economic life. There are

smaller minorities of Arabs and South Asians.

More than 300 languages are spoken in Indonesia, but an official

language, Bahasa Indonesia (a form of Malay), were adopted after independence

and are now understood in all but the most remote villages. English is considered

to be the country's second language, and Dutch is also spoken. Almost 90 per

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cent of the population is Muslim, making Indonesia the largest Islamic nation in

the world. Slightly less than 10 per cent of the population is Christian, and about

2 per cent is Hindu and 1per cent Buddhist. Hindus are concentrated principally

in Bali which is known for its unique culture. Animism, sometimes combined with

Islam, is common among some groups.

Crude oil and natural gas are Indonesia's most valuable natural resources

and have long been its major source of export revenue but production has

declined since 1990s. Agriculture accounts for about 13 per cent of the GDP and

employs over 40 per cent of the labor force. Indonesia is one of the world's major

rubber producers. Other plantation crops include cocoa, coffee, palm oil,

coconuts, sugarcane, tea, tobacco, cinchona, cloves, sisal, and spices. Despite

plantation cultivation, Indonesia has a wide landholding base. The majority of the

people are largely self-sufficient in food. Rice is the major crop. Cassava, corn,

soybeans, peanuts and fruit are also grown. Horses and cattle are raised on

some of the Lesser Sunda Islands. Fish are abundant, both in the ocean and in

inland ponds.

In natural-resource potential, Indonesia is one of the wealthiest countries

in the world. It has great timberlands. Vast rain forests of giant trees (among the

world's tallest) cover the mountain slopes and teak, sandalwood, ironwood,

camphor, and ebony are cut. Palm, rattan, and bamboo abound, and a great

variety of forest products is produced. Indonesia is a major exporter of timber,

accounting for nearly half of the world's tropical hardwood trade but the rapid

deforestation of Indonesia's hardwoods, mainly due to its expanding population

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and growing timber-related industries, has caused concern among international

environmental groups and sparked ethnic conflict (particularly between

immigrants and native Dyaks on Borneo). In addition, enormous out-of-control

brush fires, started illegally during the dry season to clear land, have caused

significant health, navigation and economic hazards in some years.

Tin, nickel, bauxite, copper, coal, manganese, gold and silver are mined and salt

is available in large quantities from shallow enclosed seashore lagoons. Iron and

uranium are believed to exist in large quantities but have not yet been exploited.

Primarily a supplier of raw materials, the country began to industrialize and

developed itself rapidly in the 1990s. The industrial sector includes the

manufacture of textiles and clothing, building materials, chemical fertilizers and

electrical and electronic goods. There is also food, mineral and wood processing.

The government also promotes tourism and Bali is a popular tourist destination.

Indonesia has attracted increased foreign investment in recent years but

corruption is widespread. Labor unrest has been a persistent problem due to the

tensions between the predominantly ethnic Chinese business owners and a work

force made up almost entirely of ethnic Malays. The country's economy was

severely impacted by the 1997–98 Asian financial crises and it continues to

experience high unemployment and inflation, although the nation began to

rebound in 2000. The main exports are oil and gas, electrical appliances, textiles,

wood and wood products and rubber. Imports include machinery and equipment,

chemicals, fuels and foodstuffs. Indonesia's main trading partners are Japan,

Singapore, United States, China, and South Korea. Indonesia is governed under

the constitution of 1945 (which was restored in 1959) as amended. The

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president, who is both head of state and head of government, is popularly

elected for a five-year term and is eligible for a second term. The vice president

is similarly elected. The unicameral legislature consists of the 550-seat House of

Representatives (Dewan Perwakilan Rakyat; DPR), whose members are

popularly elected (by proportional representation) from multi-member

constituencies. This body plus 195 indirectly selected members make up the

People's Consultative Assembly (Majelis Permusyawaratan Rakyat; MPR), which

meets every five years to determine national policy and annually to consider

constitutional amendments and other changes. Prior to 2004 the president and

vice president were chosen by the MPR. For over 30 years, until 1999, the

government was essentially controlled by the quasi-official Golkar party.

Administratively, the country is divided into 30 provinces, 2 special regions, and

the special capital city district of Jakarta. These are subdivided into 440

regencies (districts).

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4.9.5 Iran

Iran, officially Islamic Republic of Iran, has 68,018,000 population (in

1995) 1,648,000 sq km, South West Asia. The country's name was changed from

Persia to Iran in 1935. Iran is bordered on the north by Armenia, Azerbaijan,

Turkmenistan, and the Caspian Sea, on the east by Afghanistan and Pakistan,

on the south by the Persian Gulf and the Gulf of Oman, and on the west by

Turkey and Iraq. The Shatt al Arab forms part of the Iran-Iraq border. Tehran is

the capital, largest city and the political, cultural, commercial, and industrial

center of the nation.

Physiographically, Iran lies within the Alpine-Himalayan mountain system

and is composed of a vast central plateau rimmed by mountain ranges and

limited lowland regions. Iran is subject to numerous and often severe

earthquakes and volcanic eruptions. The Iranian Plateau which extends beyond

the low ranges of East of the Iran into Afghanistan, is a region of interior

drainage. It consists of a number of arid basins of salt and sand, such as those of

Dasht-e Kavir and Dasht-e Lut, and some marshlands, such as the area around

Hamun-i-Helmand along the Afghanistan border. The plateau is surrounded by

high folded and volcanic mountain chains including the Kopet Mountains. in the

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northwest, the Elburz Mountains. (rising to 5,771 meters at Mountain Damavand,

Iran's highest point) in the north, and the complex Zagros Mountains in the west.

Lake Urmia, the country's largest inland body of water, is in the Zagros of North

West of Iran. Narrow coastal plains are found along the shores of the Persian

Gulf, Gulf of Oman, and the Caspian Sea. at the head of the Persian Gulf is the

Iranian section of the Mesopotamian lowlands. Of the few perennial rivers in Iran,

only the Karun in the west is navigable for large craft. Other major rivers are the

Karkheh and the Sefid Rud.

The climate of Iran is continental, with hot summers and cold, rainy

winters; the mountain regions of the north and west have a subtropical climate.

Temperature and precipitation vary with elevation, as winds bring heavy moisture

from the Persian Gulf. The Caspian region receives over 102 centimeter of rain

annually. Precipitation occurs mainly in the winter and decreases from northwest

to southeast. Much of the precipitation in the mountains is in the form of snow,

and melt water is vital for Iran's water supply. The central portion of the plateau

and the southern coastal plain receive less than 12.7 centimeter of rain annually.

Iran's central position has made it a crossroads of migration. The

population is not homogeneous although it has a Persian core that includes over

half of the people. Azerbaijanis constitute almost a quarter of the population. The

migrant ethnic groups of the mountains and highlands including the Kurds, Lurs,

Qashqai and Bakhtiari, are of the least mixed descent of the ancient inhabitants.

In the Northern provinces, Turkic and Tatar influences are evident; Arab strains

predominate in the southeast. Iran has a large rural population found mainly in

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agrarian villages, although there are nomadic and semi-nomadic pastoralists

throughout the country. Islam entered the country in the seventh century and is

now the official religion. About 90 per cent of Iranians are Muslims. The principal

language of the country is Persian (Farsi), which is written with the Arabic

alphabet and spoken by about 60 per cent of the people. Other groups speak

Turkic dialects (25 per cent), Kurdish, (10 per cent), and Turkish, Armenian, and

Arabic. Among the educated classes, English and French are spoken.

About 10 per cent of the land in Iran is arable. Agriculture contributes just

over 11 per cent to the GDP and employs a third of the labor force. The main

food-producing areas are in the Caspian region and in the valleys of the

northwest. Wheat, the most important crop is grown mainly in the west and

northwest. Rice is the major crop in the Caspian region. Barley, corn, sugar

beets, fruits (including citrus), nuts, cotton, dates, tea, hemp and tobacco are

also grown, and livestock is raised. Illegal cultivation of the opium poppy is

common.

The principal obstacles to agricultural production are primitive farming

methods, overworked and under fertilized soil, poor seed, and scarcity of water.

About one third of the cultivated land is irrigated. The construction of

multipurpose dams and reservoirs along the rivers in the Zagros and Elburz

mountains has increased the amount of water available for irrigation. Agricultural

programs of modernization, mechanization, crop and livestock improvement and

programs for the redistribution of land are increasing agricultural production.

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The northern slopes of the Elburz Mountains are heavily wooded and

forestry products are economically important. The cutting of trees is rigidly

controlled by the government which also has a reforestation program. In the

rivers entering the Caspian Sea are salmon, carp, trout, and pike. The prized

sturgeon (and caviar) of the Caspian Sea have been hurt by pollution and

overfishing.

Of the variety of natural resources found in Iran, petroleum (discovered in

1908 in Khuzestan province) and natural gas are by far the most important; oil

accounts for 80 per cent of export revenues. The chief oil fields are found in the

central and southwestern parts of the Zagros Mountains in West of Iran. Oil is

also found in North of Iran and in the offshore waters of the Persian Gulf. Major

refineries are located at Abadan (site of the country's first refinery built 1913),

Kermanshah, and Tehran. Pipelines move oil from the fields to the refineries and

to such exporting ports as Abadan, Bandar-e Mashur and Khark Island. Domestic

oil and gas along with hydroelectric power facilities provide the country with

power.

Textiles are the second most important industrial product. Tehran and

Esfahan are the chief textile-producing centers. Other major industries are sugar

refining, food processing, and the production of petrochemicals, cement and

other building materials, and machinery. Iron, steel, and fertilizer are also

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produced. Traditional handicrafts such as carpet weaving and the manufacture of

ceramics, silk, and jewelry are important to the economy as well.

Besides crude and refined petroleum, Iran's chief exports are chemical

and petrochemical products, fruits, nuts, carpets, hides, iron, and steel. Its chief

imports are industrial raw materials, capital goods, foodstuffs, consumer goods,

technical services, and military supplies. Iran's chief trading partners are China,

Japan, Germany, Italy and South Korea. Khorramshahr on the Shatt al Arab is

the country's chief general cargo port. Bandar-e Anzali is the chief Caspian port.

Iran is a theocratic Islamic republic governed under the constitution of 1979 as

amended. Appointed, rather than elected, offices and bodies hold the real power

in the government. The supreme leader, who effectively serves as the head of

state is appointed for life by an Islamic religious advisory board (the Assembly of

Experts). The supreme leader oversees the military and judiciary and appoints

members of the Guardian Council and the Expediency Discernment Council. The

former, some of whose members are appointed by the judiciary and approved by

parliament work in close conjunction with the government and must approve both

candidates for political office and legislation passed by parliament. The latter is a

body responsible for resolving disputes between parliament and the Guardian

Council over legislation. The president, who is popularly elected for a four-year

term, serves as the head of government. The unicameral legislature consists of

the 290-seat Islamic Consultative Assembly, whose members are elected by

popular vote for four-year terms. Administratively, Iran is divided into 30

provinces.

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4.9.6 Iraq

Iraq, officially Republic of Iraq, has 26,075,000 populations (in1995),

434,924 sq km, South West of Asia. Iraq is bordered on the south by Kuwait, the

Persian Gulf, and Saudi Arabia, on the west by Jordan and Syria, on the north by

Turkey and on the east by Iran. Iraq formerly shared a neutral zone with Saudi

Arabia that is now divided between the two countries. Baghdad is the capital and

largest city. Iraq's only outlet to the sea is a short stretch of coast on the

northwestern end of the Persian Gulf, including the Shatt al Arab waterway.

Basra and Ummol-Qasr are the main ports. Iraq is approximately coextensive

with ancient Mesopotamia. The southwest, part of the Syrian Desert, supports a

small population of nomadic shepherds. In the rest of the country, life centers on

the great southeast-flowing rivers, the Tigris and the Euphrates, which come

together in the Shatt-al-Arab at the head of the Persian Gulf. The marshy delta

was largely drained in the early 1990s as part of a government program to

control the Marsh Arabs, who had participated in the Shiite uprising against

Saddam Hussein. Marsh restoration efforts began in 2003 and by 2006; roughly

half the area had been restored. Between the two rivers are numerous wadis and

water basins.

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Very little rainfall occurs in Iraq except in the northeast, and agriculture

mainly depends upon river water. The sandy soil and steady heat of the

southeast enable a large date crop and much cotton to be produced. The rivers

cause destructive floods, though they occur less often as a result of flood-control

projects undertaken since the 1950s. Farther upstream, as the elevation

increases, rainfall becomes sufficient to grow diversified crops including grains

and vegetables. In the mountainous North, the economy shifts from agriculture to

oil production, notably in the great fields near Mosul and Kirkuk.

Nearly 80 per cent of the population of Iraq is Arabic speaking, while over

95% is Muslim (Sunni and Shiite) in religion. There are about twice as many

Shiites as Sunnis, the latter sect being more numerous throughout the majority of

Arab countries. The hilly uplands of North East of Iraq are primarily inhabited by

Kurds who are largely Sunni Muslims, other large minorities include Turkomans

(Turks), Armenians, and Assyrians (Nestorian Christians). Most of the country's

once large Jewish population emigrated to Israel in the early 1950s. As a result

of the insurgent and sectarian fighting that occurred following the U.S. occupation

of Iraq in 2003, an estimated 1.6 to 2 million Iraqis had left Iraq by the end of

2006, mainly to neighboring Jordan or Syria; a similar number had relocated

within Iraq. Among those who have left are an estimated two thirds of Iraq's

Christians.

The oil industry dominates Iraq's economy traditionally accounting for

nearly 95 per cent of the country's revenues. Oil is produced mainly by the Iraq

Petroleum Company which was owned by an international group of investors

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until it was nationalized in 1972. The oil is piped to Turkey, Tripoli (city in

northwestern Lebanon), Baniyas (Syria) and the Persian Gulf. Oil exports, which

had suffered during the Iran-Iraq War, improved during the late 1980s, only to be

severely decreased by embargoes related to the Persian Gulf War. In 1996, a

United Nation’s agreement allowed Iraq to export oil for the first time since 1990.

By 2002, oil production was about 70 per cent of what it was in the 1970s.

Following the U.S. invasion in 2003, oil production slowly returned to about 80per

cent to 95per cent of what it had been in 2002.

Besides petroleum production and refining, Iraq has a small, diversified

industrial sector, including food processing and the production of chemicals,

textiles, leather goods, construction materials and metals. New industries have

been started in electronic products, fertilizers, and refined sugar. Agricultural

production, which employs about a third of the workforce, is not sufficient to meet

the country's food requirements. Iraq's chief crops include wheat, barley, rice,

vegetables, dates (Iraq is one of the world's largest producers) and cotton. Cattle

and sheep are also raised. Oil is the main export and food, medicine, and

manufactures are the main imports. United States, Turkey and Syria are the chief

trading partners.

Iraq has been highly dependent on foreign economic aid in recent years

both from Western and Arab countries. The country also has a severe labor

shortage. The Baghdad Railway, long an important means of communication, is

declining in importance in favor of travel by road and air. There are international

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airports at Baghdad and Basra, and a state-owned airline operates within Iraq

and abroad.

Iraq is a parliamentary democracy governed under a constitution that was

ratified in 2005. The president, who is head of state, is elected by the Council of

Representatives. The government is headed by the prime minister. The

bicameral legislature consists of the 275-seat Council of Representatives, whose

members are elected by proportional representation, and a Federation Council,

whose membership had not been defined as of late 2007. Administratively, the

country is divided into 18 governorates.

4.9.7 Kuwait

State of Kuwait, in 1995 , constitutional emirate has 2,336,000 population

and 16,000 sq km, North East Arabian peninsula, at the head of the Persian Gulf.

Kuwait is situated northeast of Saudi Arabia at the northern end of the Persian

Gulf, south of Iraq. It is slightly larger than Hawaii.

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The country is a low, sandy region that is generally barren and sparsely

settled. It has a warm climate, dry inland and humid along the coast. The

population is about 80 per cent Arab; however, somewhat more than half the

population is non-Kuwaitis. Native Kuwaitis have an extremely high per capita

income, pay no taxes and enjoy numerous social services. Since the

development of the oil industry, large numbers of foreigners have found

employment in Kuwait. Non-Kuwaitis represent about 80 per cent of the labor

force. Foreign ethnic groups include South Asians, Iranians and others. Arabic is

the official language but English is widely spoken. Some 85 per cent of the

population is Muslim with about twice as many Sunnis as Shiites. There are

Christian, Hindu and Parsi minorities.

Kuwait's traditional exports were pearls and hides but since 1946 it has

become a major petroleum producer and oil, now dominates the economy. The

country is mostly desert with some fertile areas near the Persian Gulf coast.

There is virtually no agricultural industry aside from fishing.

Kuwait has the third largest oil reserves in the world after Saudi Arabia

and Iraq. The main concession for oil exploitation was held by joint a British-

American firm until 1974 when Kuwait took control of most of the operations. It

had previously retained a large part of the oil profits. Much of the profits have

been devoted to the modernization of living conditions and education in the

country. The petroleum industry, which accounts for about 95 per cent of

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Kuwait's export revenues, was severely damaged in the Kuwait-Iraq War.

However, by the end of 1992, the country had repaired nearly all the damage to

its war-ravaged oil fields and its oil output was at about prewar levels. Huge

amounts of natural gas complement Kuwait's oil and petrochemical production.

To provide against the possible future exhaustion of the oil reserves, in the

1960s the government launched a program of industrial diversification and

overseas investment. Present industries include shipbuilding and repair, water

desalination, food processing, construction and fertilizer production. Food,

construction materials, vehicles and clothing are the principal imports. Kuwait's

major trading partners are Japan, United States, South Korea, Taiwan, and

Germany.

Kuwait is a monarchy governed under the constitution promulgated in

1962. The emir, the hereditary monarch of the Mubarak line of the ruling al-

Sabah family, serves as head of state. The prime minister, who is appointed by

the monarch, heads the government traditionally was the crown prince until 2003.

The unicameral legislature consists of the 50-seat National Assembly, whose

members are elected by popular vote to serve four-year terms. There are no

official political parties, although several political groups act as de facto parties.

Administratively, the country is divided into six governorates.

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4.9.8 Libya

Libya, officially Great Socialist People's Libyan Arab Jamahirya , has

5,766,000 population (in 2005) and 1,759,540 sq km, North Africa. It borders on

Algeria in the west, on Tunisia in the northwest, on the Mediterranean Sea in the

north, on Egypt in the east, on Sudan in the southeast, and on Chad and Niger in

the south. Tripoli is the capital of Libya and its largest city. Other cities include

Ajdabiyah, Al-Bayda, Al-Marj, Benghazi, Darnah, Misratah, and Tobruk. Libya

falls into three main geographical regions—Tripolitania in the west, Fazzan in the

southwest, and Cyrenaica in the east. Tripolitania in turn can be divided into

three zones. In the north is a low-lying coastal plain called the Jifarah, which

although mainly arid has several irrigated areas. It also includes the city of

Tripoli. South of the Jifarah is a mountainous zone (highest altitude: 760 meters)

known as the Jabal. It is mostly arid and barren but has scattered areas of

cultivation. South of the Jabal is an upland plateau, largely desert, but crossed by

a string of oases in the south. South of Tripolitania is the Fazzan region, which is

largely made up of sandy desert but has a number of scattered oases. Cyrenaica

is Libya's largest region. In the North along the Mediterranean is a narrow upland

plateau (highest altitude: 610 meters) called the Jabal-al-Akhdar, which includes

the cities of Benghazi and Darnah. In the west the Jabal-al-Akhdar drops abruptly

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to the shore of the Gulf of Sidra which deeply indents Libya's Mediterranean

coastline and in the east it falls gradually toward the Egyptian border where there

is another upland region. South of the Jabal-al-Akhdar is a vast region of sandy

desert which in the east includes part of the Libyan Desert. Cyrenaica is fringed

in the southwest by the Tibesti Massif (located mostly in Chad), which includes

Libya's loftiest point, Bikku Bitti or Bette Peak (2,290 meters).

Berbers once constituted the chief ethnic group in Libya but have been

largely assimilated into Arab culture, with those of Arab-Berber descent making

up over 95 per cent of the population. There are scattered traditional Berber

communities, and in Fazzan many persons are of mixed Berber and black

African descent. There are also smaller groups of Greeks, Maltese, Italians,

Egyptians, South Asians and others. Labor shortages in the agriculture and

petroleum industries have attracted many foreign workers mostly from Egypt,

Tunisia and Turkey. Some 5 per cent of the people live as pastoral nomads

mostly in Cyrenaica. Arabic is the official language. Italian and English are also

widely understood. The great majority of the population is Sunni Muslim.

Libya was a very poor agricultural country with bleak economic prospects

until 1958, when petroleum was discovered 320–480 km South and South East

of the Gulf of Sidra. Crude petroleum was exported on an increasingly significant

scale between 1961 and 1981. Oil income increased markedly in 1972–73, when

the government nationalized (with compensation) 51 per cent ownership in

subsidiaries of foreign petroleum firms operating in the country. The remaining

subsidiaries were completely nationalized. At the same time, the price of

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petroleum rose dramatically, further increasing Libya's receipts. Since then, the

economy has been almost inextricably linked to world oil prices. Much of the

income from petroleum was used to improve the cities, to modernize

transportation and to build up the military. The resulting migration of Libyans to

urban areas created a growth in unemployment, spurring the government to

invest in agricultural development in order to make farming more attractive.

Although petroleum production has dropped since the 1970s, oil exports continue

to generate about 95 per cent of export earnings and 25per cent of the country's

GDP. Also gypsum, salt, and limestone are produced in significant quantities.

Libya has increased industrial production in recent years. The principal

manufactures are refined petroleum, liquefied natural gas, petrochemicals, iron

and steel, aluminum, textiles, handicrafts and construction materials. Food

processing is also important. Farming is severely limited by the small amount of

fertile soil and the lack of rainfall and Libya must import about 75 per cent of its

food. The chief agricultural products are wheat, barley, olives, dates, citrus fruit,

vegetables, peanuts and soybeans. Large numbers of cattle, sheep, and goats

are raised. Most of the arable land is located in Tripolitania. To increase the

amount of cultivatable land, a massive water development project called “The

Great Manmade River,” was begun in 1984. It is designed to carry water from

underground aquifers in the Sahara through a 3,862 km pipeline system to

irrigate 811 sq km in the coastal region. The project is expected to take 25 years

to complete. By 1997, the system was connected to the cities of Tripoli, Surt, and

Benghazi and also provided thousands of acres of farmland with irrigation water;

the final phase of the project was still under construction in 2006. Libya's annual

earnings from exports are usually much higher than the cost of its imports, and in

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the 1990s it had the highest per capita GDP in Africa. Crude petroleum and

natural gas are by far the leading exports; the main imports are machinery,

transportation equipment, foodstuffs, and manufactured consumer goods. The

principal trading partners are Italy, Germany, Turkey, France, and Spain.

Libya, professes to have a government in which the people rule directly,

has no formal constitution. The highest official organ is the General People's

Congress, consisting of some 2,700 representatives from local peoples'

committees. In practice, Libya is a military regime, with power vested in the

revolutionary leader, Muammar al-Qaddafi, who holds no official title but is the de

facto head of state. The head of government is the secretary of the General

People's Committee (the cabinet). Administratively, the country is divided into 25

municipalities.

4.9.9 Nigeria

Nigeria, officially Federal Republic of Nigeria, has 140,003,542 population

(in 2006), and 923,768 sq km, West Africa. It borders on the Gulf of Guinea (an

arm of the Atlantic Ocean) in the south, on Benin in the west, on Niger in the

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northwest and north, on Chad in the northeast, and on Cameroon in the east.

Abuja is the capital and Lagos is the largest city.

The Niger River and its tributaries (including the Benue, Kaduna, and

Kebbi rivers) drain most of the country. Nigeria has a 800-km coastline, for the

most part made up of sandy beaches, behind which lies a belt of mangrove

swamps and lagoons that averages 16 km in width but increases to 100 km wide

in the great Niger delta in the east. North of the coastal lowlands is a broad hilly

region, with rain forest in the south and savanna in the north. Behind the hills is

the great plateau of Nigeria (average elevation 610 meters), a region of plains

covered largely with savanna but merging into scrubland in the north. Greater

altitudes are attained on the center of the country and in the Adamawa Massif

(which continues into Cameroon) in the east, where Nigeria's highest point (2,040

meters) is located.

In addition to Abuja and Lagos, other major cities include Aba, Abeokuta,

Ado, Benin, Enugu, Ibadan, Ife, Ilesha, Ilorin, Iwo, Kaduna, Kano, Maiduguri,

Mushin, Ogbomosho, Onitsha, Oshogbo, Port Harcourt, and Zaria.

Nigeria is easily the most populous nation in Africa and one of the fastest

growing on earth. The inhabitants are divided into about 250 ethnic groups. The

largest of these groups are the Hausa and Fulani in the north, the Yoruba in the

southwest and the Igbo in the southeast. English is the official language, and

each ethnic group speaks its own language. About half of the population, living

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mostly in the north, are Muslim, another 40 per cent living almost exclusively in

the south are Christian, the rest follow traditional beliefs.

The economy of Nigeria historically was based on agriculture, and about

70 per cent of the workforce is still engaged in farming (largely of a subsistence

type). The chief crops are cocoa, peanuts, palm oil, corn, rice, sorghum, millet,

soybeans, cassava, yams, and rubber. In addition, cattle, sheep, goats, and pigs

are raised. Petroleum is the leading mineral produced in Nigeria and provides

about 95 per cent of foreign exchange earnings and the majority of government

revenues. Petroleum production on an appreciable scale began in the late 1950s,

and by the early 1970s, it was by far the leading earner of foreign exchange. The

growing oil industry attracted many to urban centers, to the detriment of the

agricultural sector. In the 1980s, a decline in world oil prices prompted the

government to bolster the agricultural sector. Nonetheless, both refinery capacity

and agriculture have not kept pace with population growth, forcing the nation to

import refined petroleum products and food. Other minerals extracted include tin,

iron ore, coal, limestone, columbite, lead, zinc and gold. Industry in Nigeria

includes the processing of agricultural products and minerals, and the

manufacture of textiles, construction materials, chemicals, fertilizer, and steel.

Fishing and forestry are also important to the economy, and there is small

commercial shipbuilding and repair sector. In addition, traditional woven goods,

pottery, metal objects, and carved wood and ivory are produced. Nigeria's road

and rail systems are constructed along north-south lines. The country's chief

seaports are Lagos, Port Harcourt, and Calabar. Except when oil prices are low,

Nigeria generally earns more from exports than it spends on imports. Other

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important exports include cocoa, rubber, and palm products. The main imports

are machinery, chemicals, transportation equipment, manufactured goods, food,

and live animals. The United States is by far the largest trading partner followed

by China, Brazil, Spain, and Great Britain.

Nigeria is governed under the constitution of 1999. The president, who is

both head of state and head of government, is popularly elected for a four-year

term and is eligible for a second term. The bicameral legislature, the National

Assembly, consists of 109-seat Senate and a 360-seat House of

Representatives. All legislators are elected by popular vote for four-year terms.

Administratively, the country is divided into 36 states and the federal capital

territory.

4.9.10 Qatar

Qatar, officially State of Qatar, is an independent emirate 863,000

population (in 2005) and 11,400 sq km, East Arabia, coextensive with the Qatar

peninsula, which projects into the Persian Gulf. The capital and largest city is

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Doha. Qatar is largely barren and a flat desert. Water is scarce and agriculture is

minimal. Once a nomadic society, Qatar now has little rural population. Doha, the

main urban center, is on the eastern coast of the peninsula. About 40 per cent of

the inhabitants are Sunni Arabs of the Wahhabi sect of Islam. There are Christian

and other minorities. Other ethnicities include South Asians, Iranians and

Palestinians. Less than one fifth of the population are native Qataris. Most of the

workers associated with the important oil and gas industries are foreigners.

Arabic is the official language, although English is widely used.

Qatar imports the majority of its food. Agriculture is limited to fruits,

vegetables, and livestock, and there is some fishing. Oil and natural gas, the

mainstays of the economy, account for roughly 85 per cent of the country's

export earnings. Although total oil reserves are somewhat modest in comparison

to other Persian Gulf countries, Qatar is one of the largest natural-gas producers

in the world. The vast North Field gas reserve, an underwater field northeast of

the Qatar peninsula, began production in the 1990s. Natural gas, crude oil,

refined petroleum, and petrochemicals are produced and ammonia, fertilizers

and steel are some of Qatar's developing diversified industries. The country has

also become a regional banking center. Native Qataris have one of the highest

per capita incomes in the world. In addition to oil and gas products, steel and

fertilizer are exported while machinery, transportation equipment, food, and

chemicals are imported. Japan, South Korea, France and United States are the

major trading partners.

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Qatar is a traditional monarchy headed by an emir, who is the head of

state. The government is headed by the prime minister, who is appointed by the

emir. A new constitution came into force in 2005, providing for a 45-seat

consultative council, two thirds of whose members would be elected and one

third appointed by the emir. Elections were expected in late 2007. The previous

provisional constitution (1972) called for elections to the 35-seat advisory council

(Shura), but none were held; council members were appointed by the ruling

family. Administratively, the country is divided into ten municipalities.

4.9.11 Saudi Arabia

Saudi Arabia, officially Kingdom of Saudi Arabia, has 26,419,000

population (in 2005) and 2,149,690 sq km, comprising most of the Arabian

peninsula. It is bounded on the west by the Gulf of Aqaba and the Red Sea, on

the east by the Persian Gulf, Qatar, and United Arab Emirates, on the south by

Yemen and Oman and on the north by Jordan, Iraq and Kuwait. Saudi Arabia

formerly shared a neutral zone with Iraq and another with Kuwait; both are

divided between the countries now. Riyadh is the capital and largest city. The

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south and southeast of the country are occupied entirely by the great Rub al-

Khali desert. Through the desert run largely undefined boundaries with Yemen,

Oman, and United Arab Emirates. In addition to the Rub al-Khali, Saudi Arabia

has four major regions. The largest is the Nejd, a central plateau, which rises

from 610 meters in the east to 1,520 meters in the west. Riyadh is located in the

Nejd. The Hejaz stretches along the Red Sea from the Gulf of Aqaba south to

Asir and is the site of the holy cities of Mecca and Medina. Asir, extending south

to the Yemen border, has a fertile coastal plain. Inland mountains in the Asir

region rise to more than 2,743 meters. The Eastern Province extends along the

Persian Gulf and is the oil region of the country. The oasis of Al-Hasa, located

there, is probably the country's largest. Saudi Arabia's climate is generally hot

and dry, although nights are cool and frosts occur in winter. The humidity along

the coasts is high. The population of Saudi Arabia is about 90 per cent Arab, with

Asian and African minorities. The vast majority belong to the Wahhabi branch of

Sunni Islam although there is a small percentage of Shiites, mainly in the

northeast. Islam is the only officially recognized religion, and other faiths are not

publicly tolerated. A large proportion of the population are farmers in the Hejaz.

The large number of foreigners living in Saudi Arabia work in the oil industry, as

computer technicians and consultants, and as construction and domestic

workers. Arabic is spoken by almost everyone. Because of the scarcity of water,

agriculture had been restricted to Asir and to oases strung along the wadis, but

irrigation projects have reclaimed many acres of desert, particularly at Al-Kharj,

southeast of Riyadh, and Hofuf, in the eastern part of the country. Riyadh's

desalinized water supply comes from a pipeline on the Persian Gulf. Wheat,

barley, tomatoes, melons, dates, and citrus fruit are grown, and livestock is

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raised. Agriculture is a growing economic sector, and the country is approaching

food self-sufficiency. Manufacturing, which has also increased, produces

chemicals, industrial gases, fertilizer, plastics and metals. Minerals include iron

ore, gold, copper, phosphate, bauxite and uranium. There is also ship and

aircraft repair. Saudi Arabia has a growing banking and financial-services sector

and the country is beginning to encourage tourism, especially along the Red Sea

coast. Mecca, Medina and the port of Jeddah have derived much income from

religious pilgrims; the annual hajj brings more than two million pilgrims to Mecca.

The oil industry, located in the northeast along the Persian Gulf, dominates the

economy, comprising 90 per cent of Saudi export earnings. Imports include

machinery and equipment, foodstuffs, chemicals, motor vehicles, and textiles.

Major trading partners are the United States, Japan, China, South Korea, and

Germany. Oil was discovered in Saudi Arabia in 1936, and the country is now the

world's leading exporter. It contains about one quarter of the world's known

reserves. Fourteen major oil fields exist. A huge petroleum industrial complex

has been developed in the town of Al Jubayl, as well as at Yanbu on the Red

Sea. There are refinery complexes at Ras Tanura and Ras Hafji on the Persian

Gulf; oil also is shipped to Bahrain for refining. The oil boom after World War II

led to the construction of the Al Dammam–Riyadh. The development of Al

Dammam as a deepwater port, and, especially since the 1970s, the general

modernization of the country. Saudi Arabia, like other oil-rich Persian Gulf

countries, depends heavily upon foreign labor for its oil industry; workers are

drawn from Arab countries as well as South and South East Asia. Saudi Arabia is

governed according to Islamic law. The Basic Law that articulates the

government's rights and responsibilities was promulgated by royal decree in

142

1992. The monarch is both head of state and head of government. The

unicameral legislature consists of the Consultative Council, which has 150

members and a chairman, all appointed by the monarch for four-year terms.

Administratively, the country is divided into thirteen provinces.

4.9.12 United Arab Emirates

United Arab Emirates, (U.A.E.) federation of sheikhdoms has 2,563,000

population (in 2005) and 77,700 sq km, South East Arabia, on the Persian Gulf

and the Gulf of Oman. The federation, commonly known as the UAE, consists of

seven sheikhdoms: Abu Dhabi (territorially the largest of the sheikhdoms),

Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Qaiwain. The city

of Abu Dhabi is the capital. The land is largely a hot and dry desert. Located in

the eastern portion of the federation is a portion of the Jabal-al-Akhdar

Mountains. Less than half of the inhabitants of the UAE are Arabs, while South

Asians make up about 40 per cent, and there are also Iranians, East Asians, and

Westerners. Only about 20 per cent of the UAE's population is of native citizens.

The nonindigenous population was first attracted by the employment provided by

the UAE's petroleum boom. Muslims comprise 96 per cent of the population (80

143

per cent of these are Sunni, the balance Shiite) and the remaining 4 per cent are

largely Christian or Hindu. The official language is Arabic, but Farsi and English

are widely used and Hindi and Urdu are spoken by many of the South Asians.

Industries involving the area's oil and natural-gas deposits are still critical

to the economy, and provide the bulk of export earnings. However, the country's

increasingly diversified economy relies also on international banking, financial

services, regional corporate headquarters, and tourism. The traditional

occupations of fishing and pearling are still practiced, and there is some

agriculture (dates, vegetables, watermelon and poultry). Aluminum, fertilizer, and

textiles are manufactured, and there is commercial ship repair. Imports include

machinery and equipment, chemicals, and food. Trading partners are Japan,

India, Great Britain, South Korea, and China. The UAE has a large trade surplus.

The UAE was governed under the constitution of 1971, which was made

permanent in 1996. A Federal Supreme Council (FSC), composed of the seven

emirate rulers, is the highest constitutional authority in the UAE. The president,

who is the head of state, is elected by the FSC for a five-year term, with no term

limits. The government is headed by the prime minister, who is appointed by the

president. The highest legislative body is the unicameral Federal National

Council, with 40 members. The members were previously appointed by the rulers

of the constituent states but beginning in 2006, elections (initially participated in

only by a select group of voters) were held for half the members; the rest are still

appointed. Local matters are dealt with by the sheikhs. Administratively the

country is divided into seven emirates.

144

4.9.13 Venezuela

Venezuela, officially the Bolivarian Republic of Venezuela, has 25,375,000

population and 912,050 sq km, North South America. Venezuela has a coastline

2,816 km long on the Caribbean Sea in the North. It is bordered on the south by

Brazil, on the west and southwest by Colombia, and on the east by Guyana. The

capital and largest city is Caracas.

Geographically Venezuela is a land of vivid contrasts, with four major

divisions: the Venezuelan highlands, the coastal lowlands, the basin of the

Orinoco River, and the Guiana Highlands. An almost inaccessible and largely

unexplored wilderness south of the Orinoco, the Guiana Highlands occupy more

than half of the national territory and are noted for scenic wonders such as Angel

Falls. Iron ore, gold, diamonds, and other minerals are found near Ciudad Bolívar

and Ciudad Guayana. The dense forests of the region yield rubber, tropical

hardwoods, and other forest products. The boundary with Brazil is mostly

mountainous; its rain forests are home to thousands of indigenous inhabitants.

The Orinoco, one of the great rivers of South America, has its source in this

region. The Orinoco basin is a great pastoral area. North of the Orinoco and

about the Apure River and its tributaries are the llanos, the vast, hot Orinoco

plains where there is a great cattle industry.

145

Oil is found north of the Orinoco in Anzoatequi and Guarico states, but it is

thick and was not easily extracted and refined. Prior to the 1990s, the most vital

oil region economically was an area in the coastal plains, the lowlands around

Lake Maracaibo. There since 1918 foreign and later Venezuelan interests have

developed astonishingly rich oil fields. The coastal lowlands are exceedingly hot,

but coastal ranges rise abruptly from the Caribbean to cool altitudes of 1,830–

2,130 meters. Further to the southwest, close to Barquisimeto, the mountains

rise to their greatest height at Pico Bolívar (5,007 meters) in the Sierra Nevada

de Merida. Densely populated, the highland region is the political and commercial

hub of the nation. Coffee, the keystone of the economy before the oil boom,

comes from the slopes and cocoa from the lower foothills. Valencia and Maracay

are, next to Caracas, the chief cities of the mountain basins. Economically

dominant in the 19th century they are still major urban centers, despite some loss

of power because of the oil boom along the coast. Cattle from the llanos are

fattened on the rich valley grasses near Lake Valencia. Field crops are

intensively cultivated in the vicinity.

The politically and economically dominant landowning class is mainly of

Spanish descent. About 65 per cent of the population is mestizo, 20 per cent

white, 10 per cent black and 2 per cent indigenous. Spanish is the official

language. There is no established church but nearly all Venezuelans are

nominally Roman Catholic. There are 20 universities in the country.

About 13 per cent of Venezuelans are engaged in farming. The chief

crops are corn, sorghum, sugarcane, rice, bananas, vegetables and coffee.

146

There is also extensive livestock raising and fishing. Venezuela's mountains for

long impeded the nation's economic development because of the

communications problems they presented. The country has developed a fine

highway system, but goods are still carried primarily by ship. Oil accounts for

about 90 per cent of the export income, 50 per cent of government earnings and

30 per cent of the gross domestic product. Venezuela is the largest foreign

supplier of oil to United States. Other exports are bauxite, aluminum, steel,

chemicals, iron ore, coffee, cocoa, rice and cotton. Imports include raw materials,

machinery, transportation equipment, and construction materials. The main

trading partners are United States, Colombia and Brazil. A large amount of oil is

exported to the Netherlands Antilles11 and Aruba12 for refining. Maracaibo, Puerto

Cabello, La Guaira, and Cumaná are the important ports.

The government has used oil revenues to stimulate manufacturing

industries. Food processing, automobile assembly and the manufacture of

construction materials, textiles, steel and aluminum have become well

established. Heavy-metalwork have been built on the Orinoco near Ciudad

Guayana. Venezuela also uses its rivers to great advantage as sources of

hydroelectric power. Despite government reform programs, Venezuela's wealth

remains in the hands of a small minority. A disproportionately high percentage of

the population lives in poverty. After the end of the oil boom in the early 1980s,

the percentage of poor Venezuelans has increased dramatically, from 28 per

11Two Dutch island groups in the Caribbean Sea. One group is situated off the northern coast of Venezuela and the other lies east of Puerto Rico in the Leeward Islands. 12An island off the Venezuelan coast, formerly a Dutch dependency and since 1986 a self-governing part of the Netherlands.

147

cent to 68 per cent in 2003. Many cities have squalid shantytowns and in the

countryside, many people are still tenant farmers.

Under President Hugo Chavez, the government has held down the price

of staples with price controls (since 2003) and has increased state control over

and participation in the economy generally. The government has also

emphasized the use of microloans to develop small businesses and the

formation of cooperatives. In an attempt to improve the lives of poorer

Venezuelans, it has seized factories, farmland and other assets it has

determined to be “unproductive,” and forced multinational oil companies to cede

a controlling stake in their Venezuelan ventures to the government. Since late

2005, price pressures on wholesalers and other middleman due to inflation and

price controls, have led to shortage of many staples in retail stores.

Venezuela was governed under the constitution of 1999. The president,

who is both the head of state and the head of government, is popularly elected

for a six-year term and may be elected to a second term. Members of the 167-

seat unicameral National Assembly are elected for five-year terms.

Administratively, Venezuela consists of 23 states, a federal district, of which

Caracas is a part, and a federal dependency, which includes 11 island groups.

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