Official: GCC weighing 'stability' fund

AP News
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Posted: Mar 06, 2011 3:55 PM
Official: GCC weighing 'stability' fund

Gulf Arab officials are considering setting up a fund that would help Bahrain and Oman deal with some of the economic issues that have helped stoke unrest in those two nations, an official with the six-nation Gulf Cooperation Council said Sunday.

GCC finance ministers had met a day earlier in the Saudi Arabian capital and expectations were that they would announce what officials, ahead of that gathering, had described as a Gulf "Marshall Plan" to help Manama and Muscat. The plan called for a hefty financial contribution by the four wealthier GCC member states that would target key economic issues such as a housing shortage and unemployment.

The financial boost is seen as pivotal for Bahrain and Oman, whose concurrent protests have brought the unrest that has thrown the Arab world into unprecedented turmoil right to Saudi Arabia's doorstep. It also threatens to test the durability of the region's monarchies, with nascent calls for demonstrations focusing largely on greater accountability by the rulers and a more direct political participation in government by the people.

"The political commitment is there" for such a plan, said John Sfakianakis, chief economist with the Riyadh, Saudi Arabia-based Banque Saudi-Fransi.

Bahrain's protests are more rooted in sectarian strife, with the Shiite-majority demanding greater rights from the Sunni-minority monarchy. Oman, meanwhile, is seeing building pressures against the country's sultan, who has tried to stave off the unrest with a Cabinet reshuffle and some financial measures. But neither country has the wealth of the other oil-rich GCC nations: Saudi Arabia, Kuwait, the United Arab Emirates and Qatar.

Momentum is building in the region for demonstrations. Calls for protests in Kuwait and Saudi Arabia this week have surfaced, and Riyadh issued a statement outlawing all forms of demonstrations as contrary to Islamic laws and Saudi values. It warned that security forces were authorized to take action against violators.

Unrest in Saudi Arabia is particularly worrisome for many. The kingdom sits atop the world's largest proven reserves of conventional crude oil _ much of it in the eastern provinces where the country's minority Shiite population lives. The violence in Libya has already rattled oil markets and even the perception that oil supplies from Saudi Arabia could be disrupted would be enough to send shock waves through global oil markets.

GCC foreign ministers are slated to meet in the Emirati capital Abu Dhabi on Monday, with the GCC's secretary general quoted in Gulf newspapers as saying that the meeting takes on "particular importance" given the unrest in the region.

It appears unlikely that the ministers will make any formal announcement about providing funds for Bahrain and Oman during that gathering, and many experts expect that the steps could take place behind the scenes, without the official framework of a fund or a specific plan.

Analysts said the general hope in the region is that propping up Bahrain and Oman will help the two nations address some of the economic catalysts behind the disquiet and that, in turn, could buy other GCC nations with more time to gradually phase in at least some of the political reforms that are being demanded.

"The money will be allocated," said Sfakianakis. "It's a matter of how they will do it and what will the mechanisms be."