Some news for the 1980s: Two Saudi Arabian princes have just joined the board of directors of General Motors, in which they are major shareholders. The Kuwait Investment Co. is erecting a chain of "Arabian Nights" motels across the U.S. The Sheik of Abu Dhabi has bought a 30% interest in the Columbia Broadcasting System, to add to a communications empire that already includes the Washington Star-News and Metro-Goldwyn-Mayer. The White House issues a statement welcoming the huge investments by "our Arab allies" as a way of stopping the dollar drain ("If they cause us trouble," adds one White House economist, "we can always nationalize them"), but it expresses some concern at reports that Libya and Iraq are negotiating with France to obtain nuclear weapons . . .
FANCIFUL, perhaps, but by no means impossible. In fact, allowing for variations in detail, this vision of the world a decade or so hence is now widely shared among economists. The world's consumption of oil is increasing by 8% a year, and U.S. consumption, now nearly 40% of the total, is rising by 8.7%. The petroleum-producing countries of the Middle East, all of which are Arab states except Iran, control 60% of the world's known reserves, and they are bargaining with increasing skill. Their income, which was $4.4 billion a year five years ago, has soared to more than $10 billion and by 1980 could easily reach $40 billion. If that holds true, the income of the Arab nations would then exceed the combined earnings of FORTUNE'S current 500 largest U.S. industrial corporations. The richest oil state of all, Saudi Arabia, which has a population smaller than that of New Jersey (about 7,000,000), would have greater monetary reserves than the U.S. and Japan combined.
If the Arab states as a whole spend only half the money they are expected to make on their oil between now and 1985, they would still have nearly $120 billion left—or almost as much as the entire world's official reserves of gold and foreign exchange today. That is enough to buy all the issued stock of all the world's petroleum companies. As James Akins, director of the U.S. State Department's Office of Fuels and Energy, writes in the current issue of Foreign Affairs: "With the possible exception of Croesus, the world will never have seen anything quite like the wealth that is flowing and will continue to flow into the Persian Gulf."
In many respects, the age of Arab wealth—and power—has already arrived. Arab oil money was a major element in the monetary crisis that led to the second devaluation of the dollar last month. Some European financial analysts claim that perhaps one-fourth of the $6 billion that flowed to West Germany in mid-February consisted of Arab-owned Eurodollars. Other experts say that the Arabs simply did what everybody else did: sold dollars to protect their holdings. Whatever the case, many international bankers are deeply concerned about the effect the Arabs' growing financial power may have on the West in the next few years. They feel that to hold meetings in Paris about the future of currencies without including the Arabs is weirdly unrealistic.