Tuesday, Jul 12, 2011

Gulf News

Dubai: The announcement that the Gulf Cooperation Council (GCC) is considering the inclusion of Jordan and Morocco came as a surprise to many, but there are at least some who believe that it reflects a readiness to think out of the box, politically and economically.

Analysts wonder if attempts to create a larger economic bloc would eventually open the doors to countries like Egypt, Syria and Iraq.

Going forward, the GCC could develop as a major force like the EU a club with privileges as well as responsibilities economic, social and political.

Economist Dr Mohammad Al Asoomi told Gulf News that adding new members to any economic or political bloc usually strengthens it.

GCC leaders had welcomed Jordan, who requested entry to the club, and invited Morocco during their summit in Riyadh on May 10.

This strengthening is possible particularly in the economic sphere when the appropriate conditions exist, such as harmonious relations between the members, Al Asoomi said.

Differences

However, he highlighted a problem facing the group. There is a big difference between the economies of the six countries on the one hand, and that of Jordan on the other in terms of population, GDP and per capita income.

Setting the joining criteria and getting Jordan and Morocco to adhere to those criteria are necessary so that their membership would be based on strong and well-established grounds. Allowing them to join would not cause harm to the Gulf bloc.

To achieve an orderly expansion, Al Asoomi said it is necessary to establish a multi-year programme for Jordan and Morocco during which major investments would be injected into both economies.

This is similar to the predetermined time schedules set by the European Union for the qualification of new candidates before allowing them to join. Some of these time schedules span tens of years, he said.

Al Asoomi also said that despite the existence of these programmes, the EU is still suffering from poor economic conditions in the countries of southern and eastern Europe. Part of the current crises in Greece and Portugal was a result of the huge gap between their economies and those of countries such as Germany and France, he said.

In addition to pumping in investments, the qualification process should also include preparation of the legislative and legal infrastructure in new entrants to better comply with laws and legislation in the Gulf countries.

Lagging behind

Without doing so, he added, Jordan and Morocco will continue to lag behind the Gulf economies.

If these qualifications are implemented, we can then welcome Jordan and Morocco to join us in the Gulf club, which would push it forward and contribute to maintaining it despite the dangerous and sharply volatile changes in the region and the world, Al Asoomi said.

However, Simon Williams, chief economist at HSBC Middle East, told Gulf News that the primary aspect behind this grouping is merely political and doesnt have clear economic advantages.

This call for merging with the other Arab monarchies is not a coincidence. But it has been organised to be a motivational bind at a time when the region is witnessing a political unrest, he said.

He doubts whether the alliance would succeed. Apart from their political structure, they have enormous economic and geographical differences.

He added: I dont think there would be any call from the GCC to other Arab countries to join. I dont see any reason or any mutual gain from this membership.

New horizons

The central square in Marrakesh, Morocco. The possible entry of Morocco and Jordan into the GCC has triggered wide-ranging debate about the economic benefits of expansion for the bloc.

Mutual exchange

Jordans bid to join the GCC will enhance trade and investment opportunities within the bloc, according to a study by the Dubai Chamber of Commerce and Industry. The study suggests that by adding Jordan to the GCC existing trade links and strong investment in Jordan by Gulf countries will continue to benefit Jordans economy, while increased tourism and the free-flow of Jordans skilled and educated workforce will boost GCC countries.

The GCC is one of Jordans major trading partners. Last year, bilateral trade between Jordan and the six Gulf states exceeded the $5 billion mark. According to the Jordan Department of Statistics, the GCC accounted for 24.2 per cent of Jordans imports in 2010, while 18.4 per cent of Jordans exports were destined for Gulf states.

Jordans imports from the GCC mainly comprise mineral fuels, oil, plastic articles, iron and steel and aluminium products. On the other side, Jordans exports to the GCC chiefly consist of vegetables and fruits, pharmaceuticals, inorganic chemicals, precious metals, stones, machinery, electrical and electronic equipments, and iron and steel products.

There is ?a big difference between the economies of the six countries on the one hand, and that of Jordan on the other in terms of population, GDP and per capita income.

By Zaher Bitar, OStaff Reporter

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