By Arab News
By Roberta Fedele
“Gulf Cooperation Council (GCC) Consolidation: Analyzing the economics of greater GCC integration” was the theme accompanying yesterday’s afternoon session of the 2012 Jeddah Economic Forum (JEF).
Chief Economist of Dubai International Financial Centre Authority Nasser Saidi, chairman of Zamil Group Holding Company Abdulrahman Al-Zamil and Chairman of the Gulf Research Center Abdulaziz Sager tried to analyze and give their opinion on the necessary steps to achieve further integration between GCC countries and play a more effective role within the political and economical international arena.
The build up of transport links and infrastructures, financial markets integration, monetary union along with the foundation of a central bank and finally the prospect of a political union were identified as the main ingredients necessary to win the challenge of acquiring more voice in international affairs.
Saidi made relevant considerations regarding the need for GCC countries to give birth to a GCC central bank with various branches in the region, diversify their economies investing in research, renewable energies and nanotechnologies and adapt to the new direction of the world’s economy. He also highlighted the Gulf’s important role within the wider context of the region’s fast changing political scenario.
“The Gulf has the necessary stability and capital resources to bring stability and integration among all Arab countries that are undergoing significant political changes and become a central actor within the international arena. A lighter and more effective bureaucracy, intra-trade and transport system development, vision and leadership are however essential to reach the goal,” explained Saidi.
“First of all we should reconsider our foreign trade and link our currencies to Eastern countries and particularly China that are the new protagonists of the world’s economy and give us less political restraints in comparison to the US. Diversifying our energy sources and investing in solar energy and research is also an imperative. A report from Saudi Aramco says that by 2035 Saudi Arabia risks to have no more oil to export,” he added.
According to Saidi, incentives to the private sector are also essential to generate labor force that can contribute to the diversification of the economy much more than employments in governmental institutions.
Saidi’s final suggestion on how to better invest in health, infrastructure, transport and education – key elements to build up concrete links and cooperation policies between the GCC countries – is the foundation of a Reconstruction and Development Bank, an institution that already exists in other regions including Asia, Europe and America.
Al-Zamil focused his intervention on two key issues: The Saudization of the Kingdom’s labor force and the ongoing opportunities made possible by the present and future availability of natural energy resources in the country.
As concerns the first point, Al-Zamil stated that Saudi Arabia and in general GCC countries (he quoted specifically UAE and Kuwait) are excessively relying on foreign workers. Particularly when it comes to low-qualified labor force the Kingdom should not depend almost solely upon workers coming from abroad, as it is the case today.
Moreover, women are particularly under-represented in the work force, depriving the economic system of a fundamental asset for its competitiveness and growth potential.
As regards the issue of the future development of the main economic sectors in the Kingdom, Al-Zamil, in countertrend with most opinions, did not push for the diversification of Saudi Arabia’s productive base away from over-dependence on the oil and gas sector. On the contrary, he stated, the future of Saudi Arabia will continue to be energy, and notably petrochemicals, because of its comparative advantage in this sector.
Sager’s position is that the success of the Gulf Cooperation Council experience is beyond doubt, however there is still room for improvement in may areas.
The obstacles to further integration can be overcome easing bureaucratic barriers, strengthening economic and political coordination, and moving toward economic and monetary integration.
On these issues, answering a survey on “which area will the GCC mostly benefit from coordinating further,” the audience showed a preference for “joint investment and infrastructure ventures” (74 percent), followed by the “single currency and central bank” (16 percent) and at last “GCC wide visas and residence permits” (10 percent).
Another question to the audience – “which regional block the GCC countries should follow?” – showed a clear preference for the EU (43 percent), followed by ASEAN – (Association of Southeast Asian Nations – (33 percent), APEC – Asia-Pacific Economic Cooperation and NAFTA – North American Free Trade Agreement (11 percent).