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The Gulf States have undergone a number of serious challenges both on their economic and political existence. These numerous challenges have been brought about by the prosperity and accelerated growth as well as the heightened levels in social services. There tends to be some sort of deception in some certain levels when one looks at the external wealth and modernity of some of these Gulf States. For example, it is true that Kuwait as a country is in possession of 9.5% of the proven oil reserves in the world (out of a combination of 64.9% of all Gulf States) and many of the Kuwaitis are very rich people thanks to their oil rich nation. While this is so, the oil revenues in Kuwait are very modest when comparisons are made to the gross domestic product of the developed countries of the world. The fluctuating prices of oil have greatly influenced the reliability of development as well as long term planning; this is so especially when the price per every barrel remains low on the world market like it was in the eighties and the nineties. According to reliable sources, studies have shown that the low oil prices in 1980’s was the cause of deficit budget operation by the Gulf States; which was barely the size of Switzerland’s GDP if they were combined i.e. (U.A.E, Kuwait, Oman, Iran, Bahrain, Iraq, Saudi Arabia, Qatar). The Gulf States wealth illusion is as a result of control of the oil reserves by only a hand full of people who easily access the world markets through exports in ships; this clearly explains the long gap between the rich and the poor; which is bad for the economy.


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