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The Gulf Union that Never Was 20, May 2012

Posted by thegulfblog.com in Bahrain, Oman, Qatar, Saudi Arabia.
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The following article appeared on RUSI.org on 17 May 2012.

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The leaders of the Gulf Cooperation Council met on 14 May in Riyadh to discuss the formation of a new Gulf Union. This Union was to entail even closer relations between the states. In particular there were high expectations that Saudi Arabia and Bahrain would form some kind of a deep Union, potentially as a pilot before the other states joined. Or so it was thought.

Instead, essentially nothing has emerged from this key meeting. This highlights that while the Gulf Co-operation Council (GCC) States have common histories and common problems today, there remains key, perennial, and divergent opinions as to the best way to assuage these concerns.
Saudi Arabia leading the way

Saudi Arabia is a conservative country in many ways. It is not flashy with its policies and while it does occasionally engage in fanfare it generally operates with reservation and careful reflection. Yet in the run up to the recent consultative meeting, Saudi authorities and a stream of editorials had been hyping the importance of this meeting and the expected outcomes. The loyal Sunni press in particular relentlessly banged the GCC unity drum, championing the ‘inevitable’ coming together of fraternal states against the spectre of Iran and its numerous perfidious policies.

Their logic flows that Bahrain, a fellow Sunni Kingdom, is – depending on who you read – either under attack from Iran or at least suffering from Iranian-inspired activities that have energised the majority Shia community in Bahrain. This led to a response from the Bahraini Government, which has, among other things, adversely affected the Bahraini economy. Saudi Arabia has stepped in to physically and economically secure Bahrain in recent months and a Union between the two states is the inevitable and sensible conclusion to protect Sunni interests in Bahrain and Saudi Arabia from a further descent into Shia-inspired violence.

The level of expectation of some kind of outcome from this summit was high, given the hype surrounding the meeting and the breathless commentary. Yet any dispassionate analysis of a putative GCC Union reveals that such an outcome is highly unlikely.
Distrust of Saudi Leadership

For the ruling Al Khalifah family in Bahrain, the situation does not look good. The economy is suffering badly and highly reliant on continued Saudi support. This is compounded by the social fabric of the country being ripped asunder and polarised; law and order is a mess with riots, protestors being killed, and reprisals being taken against the police. All of these issues highlighted Bahrain’s murky international image, coming again to the fore after the recent Formula 1 race.

Yet, despite these difficulties, to submit Bahrain to some kind of Union with Saudi Arabia would be a huge gamble by the Bahraini monarchy. Despite Saudi Arabia’s unwavering support, for which most Sunni Bahrainis are deeply grateful, joining a country thirty-nine times bigger and with a population twenty-two times bigger is a different proposition. Depending upon the depth of the Union, such a measure could be considered to be surrendering Bahrain’s sovereignty to Saudi Arabia. And such an outcome – realised or not – would please neither the majority of Sunnis nor Shia.

For most Government supporters there is just no need to join with Saudi Arabia: Bahrain already receives considerable support from Saudi Arabia. While those in Riyadh, according to some sources, have become impatient with the ongoing struggles in Bahrain, the chances of them removing military or financial support are remote. As for the Shia, there would likely be an immediate and vociferous reaction against such a notion with fears that it would mean the deep entrenchment of a staunchly anti-Shia position.

As for Qatar and the United Arab Emirates (UAE), neither have hugely positive relations with Saudi Arabia. For Qatar, after many difficult years, the rapport with Saudi has improved, but still the states disagree fundamentally on key topics, such as how to deal with Iran. While Abu Dhabi in particular supports Riyadh’s line on key topics such as Iran there are outstanding issues. There are sporadic border disputes and the UAE pulled out of the GCC Common Currency when they learned that Riyadh would host the central bank. The fact that the UAE only sent their Deputy President, Sheikh Mohammed Bin Rashid Al Maktoum, to the recent summit shows a calculated snub and a reluctance to take such a Union seriously at present.

Oman, despite being somewhat reliant upon Saudi Arabia and other Gulf States for economic support, was the first country to pull out of the GCC Monetary Union in 2007 and is wary of any eroding of its sovereignty that a Union might entail. Kuwait is beset with its own political problems at present and, depending on the level of the Union, would likely be concerned that its political progressiveness be hampered by such a move dominated as it would naturally be by Saudi Arabia and its less than progressive political system.
Is the Idea Finished?

The GCC states are not against improving their joint relations or boosting economic cooperation. But the fact that this move was so strongly led by Saudi Arabia, the state that dwarfs all other GCC states combined, is concerning for the smaller states.

Fears that a Union might be a slippery slope to greater cohesion in which the individual states and their nascent identities and social practices would be subsumed in a Saudi-dominated context dominate. An egalitarian Commonwealth of Gulf States, as suggested by a Saudi expert on a recent research trip to Riyadh, might be a suitable way to square this difficult circle, but otherwise Saudi Arabia’s apparent good intentions will be lost through a base fear of absorption and homogeneity.

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Oman arrests Emirati spy ring 31, January 2011

Posted by thegulfblog.com in Oman, The Emirates.
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Omani authorities have announced that they have ‘dismantled’ an Emirati spy ring that was

targeting the regime in Oman and the mechanism of governmental and military work there…The accused will be presented for trial

This is a most curious development. There have not been any overtly strange or interesting incidents involving the UAE and Oman recently even though this incident appears to stretch back to the summer.

My first thought would be that this is some kind of industrial espionage gone awry, but the story indicates that it was the government and military that was targeted. The notion that the UAE wanted to know more about Iranian-Omani relations is plausible but unlikely. I doubt that Oman knows that much that Dubai with its strong Iranian links does not know.

Perhaps we’ re simply left with the typical sort of intelligence gathering operations that countries undertake in one’s region. Even friendly relations, I am sure, from time to time, spy on their neighbors. Also, as I have noted several times before, the relations among the Arab Gulf States are significantly more fraught that one is led to believe. I think that this is simply further proof of this.

Subway and international rail on the way for Qatar 23, November 2009

Posted by thegulfblog.com in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia.
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A $25 billion deal has been announced between the Qatari Government and German rail company Deutsche Bahn to build Doha a subway system and subsequently to construct a high-speed train link to Manama, Bahrain.

The subway is expected to have four lines, 98 stations and over 300km of track. The high-speed train to Bahrain is predicted to top 350km per hour which, if my maths is vaguely correct and my playing around with distance calculations on Google Maps is up to scratch, should mean Doha-Manama in (very) roughly 45 minutes.

Subways are clearly the latest ‘must have’ accessory for any Gulf city this season. Dubai’s metro garnered copious pages of copy when it opened recently and Doha does not want to be left behind in the ‘appendages of modern city’ stakes. Also Doha, again like many if not most of the larger Gulf cities, is groaning under the weight of the traffic and a tube/subway/metro/underground railway system will be a welcome relief to residents. However, so far, I haven’t come across any projected completion dates for either of these ventures. One supposes that the subway would have to be in place for (inshallah) ‘when’ Qatar hosts the Football World Cup in 2022. Indeed, having the Bahrain-Qatar link would be a welcome addition for the event too, though it sounds like they’ll be concentrating on one huge transport infrastructure project at a time.

It will be interesting to see exactly how this will develop. Gulf cities are notorious for not having a particularity good sense of long-term planning. Buildings are built without the proper planning making the ‘after the fact’ input of electricity lines, sewerage and telephone lines (to give just three examples) often exceedingly complex. This is certainly the case in Kuwait and Dubai where property development has raced ahead of planning. I fear that Doha is following suit too. I heard that there would have been a spectacular debacle if Qatar had won the Olympics that it was in the running for whereby they would have had to have bulldozed one of their newest and poshest malls (Villagio) as that land was on the original Olympics schematics. So watch this space…

 

How, the more observant of you may be wondering, will the train get to Manama, given that Bahrain is made up of islands? Plans are well afoot to build a 40km bridge/causeway linking Qatar and Bahrain. Indeed, ground is expected to be broken in the coming months and work finished by 2015.

In the wider GCC scheme of these things, these developments will enable the fabled pan-GCC train linking Kuwait to Oman via Qatar, the Emirates, Saudi and Bahrain. Whether this particular mammoth rail project comes off, however, is debatable. The population of the GCC may not warrant such an extensive rail system and given the astronomical costs involved and the slow but sure realization that the region’s oil and gas resources will run out some day, the airlines need not fear just yet.

(Thanks to x for the metro map)

Kuwait most corrupt GCC state: 2009 Corruption Index 17, November 2009

Posted by thegulfblog.com in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, The Emirates.
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(Saudi: Red. Kuwait: Purple. Bahrain: Green. Oman: Orange. UAE: White. Qatar: Blue)

2004 2005 2006 2007 2008 2009
Qatar 38 32 32 32 28 22
KAS 71 70 70 79 80 63
Bahrain 34 36 36 46 43 46
Kuwait 44 45 46 60 65 66
UAE 29 30 31 34 35 30
Oman 29 28 39 53 41 39

Transparency International have released their 2009 index of perceived corruption around the world. The above graph and table show how the GCC states fare on the latest rankings in comparison to previous years.

Whilst Saudi Arabia has made the largest improvement jumping up some 17 places, as it did this from such a low base I feel that Qatar’s 6 place improvement from 28th to 22nd is just as (and if not more) impressive. For Saudi Arabia, it is good to see them make such advances. As I have discussed before, their relatively good placing in the ‘East of Doing Business’ tables can only be maintained if they get a serious grip on their somewhat endemic corruption problems. A rise of 17 places suggests that someone in Riyadh is thinking much the same thing.

As for the other GCC states, the UAE improved a not enterily unimpressive 5 places to 30th place, Oman rose a negligable place to 39th, Bahrain dropped 3 places to 46th and Kuwait dropped a place to 66th leaving with them with the dubious title of the GCC’s most corrupt member state.

Improvements in the Emirates have taken them back to where they were back in 2005. The effect of the credit crunch is unlikely to have been fully appreciated in this survey so – either which way -I expect a sizable change next year too. Bahrain are now 10 places higher (in a bad way) than in 2005-6. Of all the GCC states, they can least afford to become some quasi-corrupt backwater: they need to address these difficulties quickly. Kuwait, as I have discussed on several occasions, currently operates under the false assumption that they do not need foreign investments. As such, they may well not really care too much about their poor score. Yet now that they are rock-bottom of the GCC table and are fully 20 places worse than they were 4-5 years ago, perhaps they may seek to redress this balance, yet, given their institutional/governmental paralysis, their anti-foreign investment mindset and their apparent belief that oil will last forever, I doubt this very much.

India and Oman in joint military exercises 17, November 2009

Posted by thegulfblog.com in Oman, Qatar, The Emirates, The Sub Continent.
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The Indian Air Force and the Royal Air Force of Oman engaged in joint exercises towards the end of October. Omani Jaguars and F-16s along with Indian Darin-I Jaguars and IL-78 MKI air-to-air tankers took part in the joint manoeuvres to “enhance understanding of operational, maintenance and administrative procedures between RAFO and the IAF.” The reasons for this joint exercise, however, are far more complex that simply answering questions to do with military logistics.

It comes as no surprise to see India’s military conducting such exercises with a county on the Arabian Peninsula. In recent years India has signed numerous military agreements with Oman, the UAE and Qatar. Most of these refer to arms sales, military cooperation and various innocuous notions of ‘exchanges of information’. However, Qatar and Oman have ‘harder’ agreements whereby India has pledged to militarily come to Qatar’s assistance ‘if and when requested’ and Defence News reports that last year India and Oman discusses stationing Indian troops in Oman.

India is, therefore, going to considerable lengths to involve itself in security related affairs of the Arabian Peninsula. Aside from a deep historical intertwining of India and the proto-states of the Arabian Peninsula, today there are two primary reasons for India’s involvement.

Firstly, the Gulf is home to over 5 million Indian expatriates. They represent almost 50% of India’s total expatriate ‘workforce’ spread across the world that sent back to India, according to the World Bank, an estimated $52bn in remittances in 2008. This amounts to approximately 4.3% of India’s 2008 GDP and is, therefore, crucial. Even though India’s expatriates in the Gulf are mostly employed in low skilled and low paid jobs they are nevertheless thought to be responsible for roughly one fifth of India’s total remittances i.e. roughly $10.4bn or 0.8% of India’s GDP.

Secondly, the Gulf is – of course – the world’s energy hub. India, with ever greater energy demands, must seek more and more of its energy requirements from the Gulf in the decades to come.

India’s consumption of Gas mirrors this oil consumption graph. Statistics taken from the BP Statistical Review of World Energy.

For India, having close relations with Gulf States to the degree that in some cases they even seek a stake in the state’s security, can only increase their energy security. This is done by not only fostering better, closer relations with frequent delegation visits, arms sales and other such activities, but if India shows that they are willing to ‘stick their neck out’ and actually guarantee military aid and support if requested, this clearly deepens their relations. It would, therefore, be only reasonable to expect the Gulf States in question to respond in kind with guarantees of oil and/or gas supplies.

 

 

Relative competitiveness in the GCC 7, November 2009

Posted by thegulfblog.com in Bahrain, Oman, Qatar, Saudi Arabia, The Emirates, The Gulf.
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ppoint slide

Here’s a slide taken from a survey of business attitudes in the Middle East. As you can see, it shows what business men and women think about which country in the GCC is leading the way, in their opinion, in terms of 1) making government more business friendly, 2) strides being made in legal reform, and 3) strides being made in educational reform.

In such a poll I would have expected the UAE to be the number one, but not necessarily as far ahead as they are. I would also have expected to have seen Qatar a bit higher up. These results broadly follow what Transparency International with their corruption perception index and Doing Business with their ‘ease of doing business in…’ index conclude.

Country Ease of Doing Business in…Index 2008 Corruption Perception Index 2008
World Ranking GCC Ranking World Ranking GCC Ranking
Qatar 39 4 28 1
UAE 33 3 35 2
Saudi Arabia 13 1 80 6
Bahrain 20 2 43 4
Oman 65 6 41 3
Kuwait 61 5 65 5

Things to note about these statistics:

  • Qatar is well placed: highest in region for lack of corruption and moderately placed in terms of ease of doing business.
  • Saudi Arabia is (astonishingly) well placed, coming 13th in the world for ease of doing business. Surely it can’t possibly go any higher given its atrocious placing on the corruption perception index. How on earth do they overcome this low score, coming 80th? Surely corruption ‘that bad’ will eventually tell its toll…
  • I have written about Kuwait before. Long story short, their poor showings in these indexes are indicative of their overall lack of enthusiasm for foreign investment or cooperation.

The historical corruption data:

corruption percetions inced 2004-8

(Apologies it’s so small: save it as a picture file to zoom in on it. Qatar-bright red. KSA-Reddy-brown (at the top). Bahrain-green. UAE-light blue. Kuwait-puprle ascending line. Oman-the variable yellowy-orange line.)

A few more things to note:

  • The higher on the graph, the worse the corruption.
  • Saudi Arabia is getting more corrupt and endemic corruption is notoriously hard a trend to reverse.
  • Qatar have, since 2004 (the oldest data I have to hand) been on a consistently ‘less corrupt’ trajectory.
  • The Emirates’ boom years from 2004-2008 have also seen corruption rise a not insignificant 6 places from 29th to 35th.
  • Bahrain are yo-yoing around (though not as bad as Oman). They will have to get a hold of these trends and keep them under control and on a downward spiral now that their oil deposits are severely depleted. Saudi and Kuwait can afford high corruption scores: Bahrain cannot.
  • Kuwait – disparaging of their need for foreign investment as they are – must address their upward spiral (44th-65th in four years) joining the likes of Cuba and El Salvador (and heading towards Columbia) on the index. Yes, technically, they may not need foreign investment now, but by the time they realise that they are beginning to need it, their corruption and economy more generally may be in no fit state to receive it.

Saudi snub Qatar and Oman 5, November 2009

Posted by thegulfblog.com in Oman, Qatar, Russia.
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Al Sharq Al Awsat reports that Saudi Arabia’s Crown Prince summoned the Foreign Ministers of the UAE, Bahrain, Kuwait and Jordan to his residence for a discussion. Plainly and pointedly missing from this meeting are the Foreign Ministers of Qatar and Oman. Whether this is a deliberate snub is difficult to say. Veteran – if implacably angry – commentator on the region Assad Abu Al Khalil certainly takes this for a snub towards the excluded countries.

Oman and Qatar have the highest levels of Israeli interaction in the Gulf. In Doha there is an Israeli trade office which has been closed since the January Israeli incursion. As for Oman, they too have a (now closed) Israeli trade office in Muscat but there is also an Omani Embassy in Israel and formal diplomatic representation for Israel in Muscat. Both countries also apparently offered to resume relations in return for Israeli movement (or lack thereof) on settlements.

This is, therefore, a perfectly feasible reason or common denominator as to why the two states may have been excluded. Perhaps the UAE are lucky still to have been invited given that the Israeli flag was raised for the first ever time in Abu Dhabi a few weeks ago, but their relations still do not really compare to Oman and Qatar’s.

Indeed, at higher levels of the Saudi government, there is believed to be considerable anger remaining from the Qatar-Saudi Arabian conference scuffle in January, with each seeking to hog the limelight and host the summit to get Arab agreement on how to proceed to resolve the recent Israeli invasion.

There are no firm conclusions to be made, only interesting suppositions to be conjured up and – essentially – gossip to be spread.

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