GCC pledges $20 billion in aid for Oman, Bahrain

AP News
|
Posted: Mar 10, 2011 3:59 PM
GCC pledges $20 billion in aid for Oman, Bahrain

Gulf Arab foreign ministers pledged $20 billion in financial aid Thursday to Bahrain and Oman, and warned against any foreign interference as the oil-rich region struggles to rein in the unrest that has ravaged the Arab world and sent global oil prices spiking.

The growing protests in Bahrain and Oman _ the poorer brothers in the oil-rich region _ have rattled the other members of the six-nation Gulf Cooperation Council, raising concerns that the unrest tearing through the Middle East will affect the key OPEC members.

The GCC pledged $20 billion in aid over 10 years to be split between the two nations, said the United Arab Emirates' foreign minister, Sheikh Abdullah bin Zayed Al Nahyan. A committee representing the donor nations will meet in two weeks to discuss the program.

Foreign ministers from the GCC announced the measures after a meeting in the Saudi capital, Riyadh. The bloc also issued a statement warning that it would not allow any foreign interference in their affairs.

The pro-Western Saudi monarchy _ the de facto leader of the Organization of the Petroleum Exporting Countries _ is concerned protests could open footholds for Shiite powerhouse Iran and it has accused Shiites from outside the country of spurring the protests in Saudi Arabia.

Bahrain and Oman have tried to allay the discontent in their countries through a variety of economic measures. But neither country has the economic firepower or oil wealth of the other GCC members: Saudi Arabia, the UAE, Qatar and Kuwait.

"This is a very important message sent to markets inside the region, and globally, that the GCC countries will be unified and will stick together to support those in need," said John Sfakianakis, chief economist with the Riyadh, Saudi Arabia-based Banque Saudi Fransi. "They have the commitment and the willingness to do so, and of course, the money."

The combined economies of Bahrain and Oman are less than a fifth of that of Saudi Arabia and the sheer size of the financial aid package will be a major boost for their budgets.

The money will likely not be enough to tamp down the unrest completely, but the aid does allow Oman and Bahrain to press ahead more aggressively with social initiatives. Oman has been looking at some form of unemployment aid and would now have the funds to move forward with that plan and others. Youth unemployment is a major problem for the nation.

Saudi Arabia also has been working to get ahead of unrest that has swept the region in recent months. Demonstrations could seriously unsettle oil markets that have already been shaken by the violence in Libya that has cut that OPEC nation's oil output by at least two-thirds.

On Thursday, Saudi police opened fire to disperse a protest in the mainly Shiite east, leaving at least one man injured, as the government struggled to prevent a wave of unrest sweeping the Arab world from reaching the kingdom.

The other Gulf states already have launched economic measures of their own to ease the potential for unrest.

Saudi Arabia's king ordered roughly $37 billion to be pumped into various programs targeting the oil kingdom's lower income population. That amount was more than Bahrain's GDP.

Separately, the United Arab Emirates' federal government 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.

___

AP Business Writer Adam Schreck contributed to this report from Dubai.