Taking their cue from the U.S. aid effort for Europe after World War II, Gulf Arab oligarchs are readying their own version of a “Marshall Plan” for Oman and Bahrain, seeking to quell the unrest that has come to their doorstep and presented them with their most serious challenge in decades.
The plan, to be discussed by the Gulf Cooperation Council finance ministers on March 5, will include measures to improve the economic and social conditions in the two countries, the poorest members of the six—nation regional bloc, according to GCC officials, who spoke on condition of anonymity because they were not authorized to discuss the details of the plan.
Key to the plan will be the injection of several billion dollars into Oman and Bahrain’s economies, experts said, with Gulf leaders looking to cap some of the economic triggers for the unrest. The hope is that such a move will at least buy them more time to deal with the broader calls for political reforms.
“This is a test for the GCC union, and it’s important that they’re meeting,” said John Sfakianakis, chief economist for the Riyadh, Saudi Arabia—based Banque Saudi Fransi. “It’s not going to be a meeting just to meet and greet. It’s going to be a meeting to discuss the dollars and cents and the actual programmes.”
Much is at stake for the sheiks, emirs and kings of Saudi Arabia, Kuwait, Qatar and the United Arab Emirates.
They have watched with growing alarm the wave of protests sweeping through the Arab world. First Tunisia and Egypt’s presidents were ousted. Now, Yemen’s president is clutching at lifelines and Libya’s longtime strongman is locked in a bitter fight for survival against rebels who have wrenched the country’s east from his control.
While those protests have served as a wake—up call in the region - building momentum on the back of decades of political repression and growing economic disparity - the protests in Bahrain and Oman are what have truly rattled the other Gulf royalty.
There also are calls for protests in Kuwait on Tuesday and Qatar on March 16.
“Anything that happens in (Oman and Bahrain) will have a huge impact on the other Gulf states,” said Mustafa Alani, a regional analyst at the Gulf Research Centre in Dubai, adding that Gulf officials “believe that the political demands could be placed under control if the economic demands are met.”
The plan, which was outlined by the GCC officials, includes funding for affordable housing and giving Bahraini and Omani citizens preference in securing jobs in other Gulf nations. The finance ministers will meet in the Saudi capital, Riyadh, to discuss the Gulf customs and tariffs union, but the officials said the focus on the sidelines will be the economic aid to the two countries.
“The Gulf Marshall (Plan) is aimed at improving the living standards in Bahrain and Oman,” the official said, adding that the finance ministers’ recommendations will be sent to the Gulf leaders “in the coming period so that it can be implemented as quickly as possible.”
Even as they weigh support for the two countries, the rulers have not been idle at home.
Saudi Arabia’s king last week ordered an injection of $37 billion - more than Bahrain’s entire GDP - into various programmes targeting the oil kingdom’s lower income population. The United Arab Emirates’ federal government also ordered a 5.7 billion dirham ($1.55 billion) cash infusion to upgrade the electrical grid and water connections in the seven—state federation’s less—developed emirates north of Dubai.
The government is portraying the effort as a way to forge closer bonds between the country’s seven semiautonomous emirates, but it also addresses a possible source of unrest in the UAE amid the Arab world’s groundswell for reforms.
The five northern emirates - Sharjah, Ajman, Umm al Qaiwain, Ras al Khaimah and Fujairah - are significantly less modernized, compared with Dubai and the capital Abu Dhabi, and there are frequent complaints about power cuts from the area’s overtaxed electrical network.
Turning their sights on Bahrain and Oman, however, highlights efforts to extinguish an economic spark that could ignite a regional political wildfire.
Oman and Bahrain are minor oil producers in a region of crude titans. Their combined economies are less than a fifth of that of Saudi Arabia - the Arab world’s largest. While hardly impoverished like Egypt or Yemen, they face major economic challenges.
Unemployment among youth is a key concern in Oman, while in Bahrain, the government’s foreign debt stands at a staggering 139 percent of GDP, second only in the Arab world to Lebanon, according to London—based Capital Economics. Their problems are mirror images, albeit on a smaller scale, of those confronting the region’s more robust economies.
Dealing with the problems in Bahrain and Oman can be accomplished with “less resources than what you would need in a place like Saudi Arabia,” Mr. Sfakianakis said. “In the case of Bahrain, you can really address the housing or quality of life issues by pumping in money.”
Already a nascent protest movement is building momentum in the kingdom. A petition circulating on the Internet and signed by nearly 120 top academics, businessmen and activists calls for a constitutional monarchy and the election of the Shura Council, an advisory body, among other political changes.
International oil markets have grown worried that the unrest could affect output from the kingdom if the Shiite minority in the country’s oil—rich eastern province takes its cues from the Bahraini Shiites demanding greater rights.
But regional experts play down the potential risk presented by a Shiite uprising in Saudi Arabia, saying that most of the calls for reform in the kingdom have focused on greater accountability and freedom for the population.
In many ways, that presents an even more dangerous challenge for nations that have for years been used to winning support through cash.
Kuwaitis, for example, enjoy a cradle—to—grave government safety net that has, in the past, included the government covering investor losses on the stock exchange. Protests, which arise with surprising frequency in the emirate, often develop when citizens feel they are not getting enough government help.
Qatar, meanwhile, enjoys the world’s second highest per capita income and, on a more negative note, one of the world’s highest obesity rates.
In both countries, as well as in Saudi Arabia, there have been calls for protests though such demonstrations have yet to surface.
The Gulf leaders want to keep it that way and have reverted to the age—old formula of buying their way out of trouble - a push for reform that in the case of the Gulf takes the shape of “an evolution, instead of a revolution,” said Mr. Alani.
“Throwing money at the problem is not a long—term solution. It’s a way to calm the storm rather than deal with the root cause of the problem,” he said. “But I don’t know how long this kind of policy can work.”
