Renewal or regression: Arab world faces crucial moment

As we enter 2025, the Middle East and North Africa region stands at a major turning point shaped by a complex mix of unique internal dynamics and political economies, shifting geopolitical realities, economic dependencies, significant demographic shifts and persistent external influences.

The impending return of Donald Trump to the White House signals a seismic shift for the Arab region, as a rehashed “America First” agenda promises an aggressive decoupling from entanglements in the MENA region. This approach, characterized by a reduced US presence and a reliance on normalization efforts or coalition-building, seeks to empower key regional players as primary stabilizers and collaborators in overseeing the Arab world’s hotspots.

However, today’s geopolitical climate demands a reevaluation of such plans. The blend of autonomy and ambition seen in the actions of key regional players — pursuing independent security and economic agendas — reflects a departure from any reliance on or even expectation of US oversight. This independence complicates any simplistic American exit strategy, tying Washington’s hands as it navigates a myriad of intersecting disputes and alliances.

Meanwhile, Arab countries are progressively asserting themselves, filling vacuums left by US disengagement — challenging the efficacy of a wholesale withdrawal or any reconfiguration mirroring past policies. Thus, the Trump administration will be forced to consider a more integrated and contextually aware strategy, sensitive to the evolved dynamics of power and influence in this strategic part of the world.

After all, despite the region’s shifting dynamics, its strategic importance remains poised to increase even further, driven primarily by an anticipated rise in the region’s share of global oil production. Forecasts suggest that the Arab world’s contribution to global oil output will surge from under 30 percent to more than 40 percent, with Saudi Arabia alone responsible for half of the Gulf’s production. This uptick not only cements the region’s dominant role in energy markets but also underwrites the growing influence of Gulf Cooperation Council states within global economic and political frameworks.

Despite the region’s shifting dynamics, its strategic importance remains poised to increase even further

Hafed Al-Ghwell

Economically, countries like Algeria, Libya, Saudi Arabia, Iraq and Iran stand to benefit significantly from high revenues linked to the continued global demand for oil and gas. The crucial challenge, however, lies in modernization. Iraq, for instance, must proactively overhaul its production infrastructure to secure vital oil assets and mitigate risks associated with dilapidated pipelines, vulnerable export terminals and contested maritime routes. These vulnerabilities could potentially disrupt the flow of oil, causing dangerous fluctuations in national revenues.

Furthermore, rationalizing domestic consumption is pivotal. Without enhancing energy security and efficiency, the impressive potential economic windfall from oil sales may remain untapped. This predicament echoes the larger narrative of the Middle East’s economic history, where heavy dependence on oil revenues has often led to short-term prosperity but long-term instability. Nations that fail to diversify their economies and reinforce their energy sectors may find themselves unable to sustain economic growth. This year, oil producers must thus determine whether they can modernize and grow or risk regression due to infrastructural and strategic deficiencies.

However, as parts of the Arab region lean on their dependence on hydrocarbons to navigate a changing world, this reliance reveals vulnerabilities that extend beyond economic fluctuations to geopolitical instability. For instance, the presence and potential spread of weapons of mass destruction and their delivery systems, particularly among unaccountable nonstate actors, poses profound threats. For countries heavily invested in petro-economies, any disruption in safety or security could precipitate economic freefall and amplify regional volatility.

Moreover, the growing possibility that regional states might pursue more aggressive nuclear capabilities as a means of deterrence further complicates this security dilemma. In this environment, the risk of an arms race looms large, exacerbated by the interplay between regional adversaries whose hostilities compound the fragile peace and could prompt conflict spillovers that reverberate globally.

Should the situation worsen, it will test and ultimately fracture our fragmented global order, which is already stretched thin trying to address multiple crises in real time. The proliferation of delivery systems for weapons of mass destruction, especially among proxy actors not beholden to any state, adds another layer of complexity, making it increasingly difficult for the international community to engage effectively and promote de-escalation. As global powers grapple with shifting alliances and their own internal challenges, the Arab region risks becoming a theater for proxy confrontations, driven by miscalculation or opportunism.

Further compounding these concerns is the profound impact of demographic trends to the internal dynamics and political economies of the Arab region. Despite a forecasted drop in fertility rates, the region’s population is set to grow significantly, with the working-age population expanding by almost 50 percent. This transformation requires substantial economic opportunities and reforms to integrate the emerging workforce effectively. Some countries are already experiencing how insufficient job creation leads to high youth unemployment rates — now almost double the global average. The consequences are far-reaching.

This year, oil producers must thus determine whether they can modernize and grow or risk regression

Hafed Al-Ghwell

A failure to provide economic pathways for this swelling demographic risks breeding disillusionment, potentially driving young people toward radical ideologies or mass migration, both of which could destabilize the region’s sociopolitical structures. The previous wave of youth discontent ignited the so-called Arab Spring, upending governments and causing widespread unrest. Today’s scenario, compounded by an already unstable geopolitical context, demands urgent and strategic responses before a regression into turmoil.

Next, a significant force shaping the Arab region over the next decades is the escalating scarcity of resources, particularly when combined with deteriorating infrastructure and environmental degradation. Water scarcity poses the most acute challenge, given its central role in food, energy and human security. The overlapping issues of population growth, climate change and unsustainable resource management amplify these pressures. The further straining of rapidly dwindling water resources and arable land has already-visible consequences, heightening risks of social unrest and interstate water conflicts, especially in river basins like the Nile, Tigris and Euphrates.

Finally, the region’s diminishing governability is a growing concern. Internal cohesion faces threats from myriad directions, including economic mismanagement, corruption and external geopolitical meddling, complicating effective governance. National borders are already porous to these risks, diluting state authority and fostering environments where nonstate actors and extremist groups can flourish, exploiting governance vacuums.

In sum, the year 2025 and those beyond it present a complex array of challenges and opportunities for the Arab world. Economic potential remains limitless, but only when coupled with the imperatives of modernization and security. Demographic shifts necessitate agile political and economic reforms to harness the youth bulge as an asset rather than a liability. Resource management and environmental sustainability require urgent attention to prevent further sociopolitical deterioration. The period over the next half-decade demands both strategic foresight and adaptability from leaders and international actors alike.

• Hafed Al-Ghwell is a senior fellow and executive director of the North Africa Initiative at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies in Washington, DC. X: @HafedAlGhwell