Arab countries' foreign policy ambitions could start hurting their economies - Business... - 1 views
www.businessinsider.com/hurting-their-economies-2016-9
GCC MENA conflict diplomacy military trade finance aid politics analysis
shared by Ed Webb on 20 Sep 16
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There is a certain irony in the Arab Gulf states’ rising power across the Middle East and North Africa. International prestige, the ability to intervene militarily in regional conflict, and holding the same leverage as international financial institutions in aid and investment are what these states have long coveted. But now that they have the power – both economic and military – Gulf states like Qatar, Saudi Arabia and the UAE are faced with the dilemma of demonstrating their dominance without destroying the neighbourhood.
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The economies of the Gulf states have changed dramatically since the beginning of the second oil boom, between 2003 and 2014. Joined together in the Gulf Cooperation Council (GCC) trade bloc, they are more integrated into the regional and wider international economy in trade and investment flows
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The GCC’s outward investments in equity markets, especially towards Europe and the US, means it is also more integrated globally. And it has large amounts of foreign direct investment in infrastructure, agriculture and real estate across the MENA region.
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The strength of their economic influence in the region lies in huge flows of capital – often a mixture of remittances, foreign aid, and foreign direct investment under the auspices of state-related bodies. This has enabled the Gulf states to usurp international institutions in shaping economic reform across the MENA region, especially in Egypt and other oil importers.
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Politically, however, the GCC is engaged in numerous interventions across the region that have caused significant disorder and pose a threat to their mutual economic prosperity. The Gulf states were successful in crushing the Arab Spring within their own countries and cementing their development agenda. By contrast, their interventions in Libya, Syria, Yemen and Egypt have stoked the chaos there, putting the stability of the region at risk.
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In each of these interventions, there is an incumbent economic cost to the GCC states. The war in Yemen is probably the best example of a mounting military expenditure that will only be dwarfed by the cost of re-building Yemen, which surely the UAE and Saudi Arabia will have to help foot. The Gulf States would therefore be wise to start dovetailing their foreign policies with their economic interests by fostering stability instead of conflict.