(via Daniel Drezner)   A scary report titled Islam, Globalization, and Economic Performance in the Middle East -

The Middle East is a demographic time bomb.  the population of the Arab region i sexpected to increase by around 25% between 2000 and 2010 and by 50 to 60 percent by 2020 - or by perhaps 150 million people, a figure equivalent to more than two Egypts. 

...the region as a whole will experience labor force growth of more than 3 percent for the next 15 years or so. On current trends, according to an Arab League report, unemployment in the region could rise from 15 million to 50 million over this period. Under plausible assumptions about the rate of productivity growth and required investment levels, the economies of the region will have to maintain investment rates on the order of 30 percent of GDP and income growth of 5 to 6 percent a year to absorb all this labor. This is a very tall order. And recent history is not reassuring....

...Yet the implications of not achieving rapid growth to absorb the rising number of entrants to the labor force could be dire. In the Zogby (2002) poll of Arab attitudes, Saudi males stand out as uniquely dissatisfied and pessimistic about their children’s future. Presumably these feelings are rooted in the reality of dwindling employment prospects, the 40 percent decline in per capita income from its peak in 1982...   The youngest, most advantages sections of society have the bleakest appraisal of the future.   it goes without saying that 15 of the 19 September 11 hijackers were Saudi males.

..It is almost impossible to imagine the region generating the rapid employment growth necessary to absorb new entrants ot the labor force without a big expansion of international trade.  Other countries such as South Korea or Taiwan, which achieved sustained periods of growth at this rate, did so in the context of an outward-oriented development strategy.

Reducing Oil Dependence won't solve this problem (in fact, reducing Oil income could in some ways make this problem worse - but that shouldn't be an argument against conservation / alt energy).  I'm the first to point out that poverty and unemployment do NOT uniquely create terrorism (if so, where are the sub-saharan African terrorists?).  BUT, all other things being equal, an additional 35M unemployed young men in the mid east can only make an already volatile situation worse.   The unemployment rate certainly has a far more direct impact on Al Qaeda's vitality than the current price / barrell.

Earlier, I'd suggested that econ development may be a higher priority for swamp draining rather than political development.   Econ and political development are ridiculously difficult things to tease apart and I'm not about to suggest that I know enough to suggest how to create a Singapore-like non-representive govt rather than a Saddam-like non-representative one or even a Mugabe-like representative state.   Whatever the case, following the economic development news from Iraq will be an important thing....