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Marshall Plan for the Middle East?

March 3, 2011

I’m not sure who’s been reading this blog lately, but I’m encouraged to learn that my suggestion a few weeks ago that some form of regional development fund be set up to help lagging economies in the region is being contemplated within the Gulf Cooperation Council. I take no credit for the idea. It’s blindingly obvious.

Today’s Gulf Daily News runs a story about a plan to aid the two GCC countries – Bahrain and Oman – that have been most affected by the recent unrest. This would be a sensible measure of self-preservation on the part of Gulf leaders who are undoubtedly concerned about the unrest spreading to their own countries. Bahrain and Oman do not have the financial clout of the other GCC members – Saudi Arabia, Qatar, the UAE and Kuwait. So they cannot afford grand gestures such as Saudi Arabia’s recent injection of $35 billion into social programmes and pay rises for civil servants.

Aid for Bahrain and Oman is a good step, although describing such a programme as a Marshall Plan is a trifle overblown. These countries have not been devastated by six years of war as had the European beneficiaries of the original Marshall Plan in 1948. But it’s a short-term measure that might pay off.

Looking to the longer term, there are two further measures that the GCC could consider.

The first came up in a conversation I had with some delegates at yesterday’s Capital Markets and Investor Relations Conference in Bahrain. One of them suggested that the GCC should “adopt” Yemen.

Yemen is the gangrenous thumb of the Arabian Peninsula. It is the only state in the peninsula that is not in the GCC. Like Bahrain and Oman, it has some oil and gas, but its reserves are declining. It has an increasingly critical shortage of water. It is wracked by tribal conflict and the Houthi rebellion in the north. It hosts a resilient Al Qaeda faction deep in its mountainous region that threatens the stability of its neighbours, particularly Saudi Arabia. The fault line between north and south has re-emerged as President Saleh’s regime looks increasingly likely to fall.

A perennially unstable Yemen threatens the stability of the whole Arabian Peninsula. Foreign intervention against Al Qaeda causes resentment, especially when attacks go wrong and innocents are killed. The Houthi conflict spread across Saudi Arabia’s southern border a couple of years ago, and sparked armed intervention on the Kingdom’s part.

Yemen’s borders with the rest of the GCC are so long and porous that keeping the country in quarantine is not an option. Some form of associate membership of the GCC combined with a substantial reconstruction programme – funded by Arab brother nations rather than powers from outside the region – could be Yemen’s best option for the future. And it could be the GCC’s best option for creating long-term stability in its back yard.

But the GCC leaders will be acutely aware that they cannot ignore the turmoil immediately beyond the peninsula. Leaving aside the thorny problem of Israel, the bigger Marshall-style regeneration opportunity is in Egypt, the Levant, the Maghreb, Somalia and the two Sudans. I wrote about this in a previous post. Although I envisaged a massive programme under the auspices of the UN, the GCC could do much to change the perception of it beyond its borders as an alliance of self-interested oil-rich sheikhs by extending its largesse to the less fortunate nations in the wider region.

It would take a heavy financial commitment to make a serious difference in those areas, I agree. But even if funding outside the region were also needed, the GCC, by leading an Arab solution for Arabic-speaking nations, would win itself lasting respect and influence. It would find itself riding with the wave of change in the Arab world rather than against it. And in a region deeply conflicted about the influence of non-Arab nations in its affairs, there might even be the prospect that Pax Arabica could replace Pax Americana as the facilitator of stability in the region.

A little optimistic perhaps. And the thorny problems of Israel and Iran would remain if not addressed in a parallel process.

But the GCC has the economic power. It has much to gain by leading, rather than battening down the hatches.

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