Wednesday, August 11, 2010

Kuwaiti economist discusses the expansion of Iraq joining the GCC; Iraq as consumables market is important for the Gulf countries...

August 10, 2010

On more than one occasion to express the Iraqi officials that Iraq is a natural extension of the Cooperation Council for the Arab Gulf states.

In a clear reference to the possibility of broadening the north, Iraq ’s accession to the system of the Gulf Cooperation Council, has called on Iraq after the 2003 war, in more than one occasion, in acceding to membership of the Organization of the GCC countries.

The matter is not new issues on the scope of research, I believe that Iraq’s accession to the Council system will be in the interest of the system and increases the power and influence, whether regional or international, but there are two questions are very important and which should be discussed at length before the accession of Iraq:

The first is: Iraq is now really ready for membership in the Council?

The second is: Can the Council to accommodate the burdens that can have on Iraq ’s accession to membership of the Council?

There is no doubt that the answer to these questions are very important in order to identify opportunities for the successful accession of Iraq to the Cooperation Council for the Arab Gulf states.

In theory, theory suggests that the economic integration of economic blocs to be successful in the case of similarity of economic and political structures of the Member States, and the convergence of income levels and patterns of consumption and expenditure trade creation، Etc., where it is easier in this case, trade creation trade creation, between the bloc’s member states and increase the chances of raising growth rates and levels of employment and living in all functions are members of the bloc, and review the applicability of the conditions of economic integration at the GCC States and Iraq observes that there are some similarities between Iraq and the rest of the Council, particularly with respect to the structure of production as Iraq is a prime producer of crude oil, although Iraq has potential opportunities to diversify production structures are larger than the rest of the world, especially in the field of agriculture.

Add to that Iraq can be a major consumption market of the industries current GCC, particularly Saudi Arabia, and as such might have on Iraq ’s accession to the Council to achieve some economic gains. However, it should be noted that the economic gains from joining is not the only element to be taken into account when assessing the decision to expand with new members in any economic bloc, it is certain that Turkey’s accession to the European Union will result in economies of the European Union also gains, but the Union Up to this moment the European rejects Turkey’s membership due to the wide disparities similarities between Turkey and the rest of the Union, or so published on the public.

On this basis, in my opinion too, that the differences between Iraq and the Gulf Cooperation Council diverge at the moment clearly, to the extent that it may be consequent on Iraq’s accession to membership of the Council serious problems that threaten the safety of a Council.

There is no doubt that the assessment of revenue and costs resulting from Iraq ’s accession to the GCC system must take into account the following factors:

First: the existence of significant differences in the unemployment rate between Iraq and the GCC, where the rate of unemployment in Iraq , according to some reports, about 50%, which may be of the highest unemployment rates in the world. When Iraq’s annexation to the membership of the GCC countries will give the Iraqi factor preferential treatment for employment opportunities available in the GCC countries, such as those granted to citizens of other Member States of the Council, in view of the significant differences in income levels and current salary between Iraq and other GCC countries, it is expected in the case were brought Iraq now occur flooding a huge migration of Iraqi workers to the GCC drawing on the facilities granted by the current agreement between the GCC and to move freely between the GCC countries, there’s no doubt that the labor markets in the GCC countries may not be now prepared to make the necessary adjustment to accommodate this huge supply of migrant workers from Iraq into the rest of the Council, in particular, and some other council members had already begun to suffer from high unemployment rates among the citizens of new entrants into the labor market.

The other hand, absorb large numbers of Iraqi workers must be combined with the application of a replacement policy for employment of workers belonging to States outside the Council to the Iraqi labor Basically, it is clear that the efforts of the substitution in the labor markets in the GCC States to face difficulties associated with the process of bringing employment foreign national employment, due to weak private sector response to the efforts of the replacement. More than that, the flow of Iraqi workers can result in a breach of existing policies aimed at creating some sort of balance between the different nationalities of the workers in the labor market Gulf.

Second: There are clear differences in levels of education and human capital formation between Iraq and the GCC states in the interest of the rest of the GCC countries, with low levels of education and facilities is clearly in the current system of education in Iraq, compared to the rest of the Council, as well as the modest opportunities for training and rehabilitation of human capital on in Iraq, which might mean not suitable output current education and training system in Iraq to the requirements of labor markets in the GCC, which makes the process of absorption of labor in the labor market Iraqi Gulf burden by more than an addendum.

Third: Despite the breadth of the Iraqi market as an opportunity to market products the Gulf, thus creating greater opportunities for trade between the GCC and Iraq, but that there are clear differences in income levels and consumption among all of Iraq and the rest of the Council, which limits the access of the GCC States of trade creation between them and Iraq, where Iraq will continue, at least at the present stage, a market limited by the apparent decrease in the purchasing power of consumers, in comparison with the rest of the Council and expenditure patterns differ between them.

Fourth: that Iraq was now a need to a massive program of rehabilitation and restoration of Iraq to the conditions before the Iran-Iraq war, and to become an economic level parallel to the levels of economic growth in the rest of the Council, which would require big plans to spend on infrastructure, on education and health sector development Iraqi financial and telecommunications sector .. Etc., which may require the allocation of huge financial budgets for that, because of the high obligations of other GCC countries before their economies, the possibility of providing these facilities for the rehabilitation of Iraq may no longer be limited.

In my opinion that without the rehabilitation of the Iraqi economy, the chances of success of the system to joining the GCC countries will remain weak and may create many problems beyond the impact, the expected return on the countries of the Council on Iraq ’s accession.

Fifth: there are significant differences in the levels of infrastructure between Iraq and the GCC states, will remain modest levels of infrastructure in Iraq for the rest of the constraint on the growth and competitiveness of the Iraqi economy as a member of the Council, and thus to differences in growth levels between Iraq and the GCC great for many years In the future, which reduces the chances of integration optimum between Iraq and the GCC states, which limits the effectiveness and dynamics of the Iraqi economy in the interaction with the requirements of close cooperation is expected between Iraq and the GCC states, unless the other GCC States is ready to provide the necessary funding to build a modern infrastructure in Iraq , which undoubtedly will require a huge allocation of funds for this purpose, I do not think that the GCC ready for this option is currently.

Sixth: This may be the point of the most important factors that constrain the opportunities to join a successful Iraq is to the GCC, which is a clear difference in the political system in Iraq and the rest of the Council, and non-political and security stability in Iraq, where it is not clear yet when will stabilize the political situation in Iraq, and what does the future hold for this country, especially in the case of the withdrawal of United States of America and leave matters related to security and defense for the Iraqis, in light of the multiplicity of ethnicities and creeds is clear in Iraq, it is the stability of Iraq’s political future is a matter surrounded by a lot of uncertainty. On the other side with the GCC countries to very high levels of political stability and security, hence the inclusion of Iraq at this time could jeopardize the degree of political stability and security enjoyed by the GCC countries currently, and it is known that under conditions of political instability to become the business environment is at all appropriate for the flow of direct investment both in the GCC countries to Iraq, or vice versa, which means that even the imposition of Iraq’s accession, it will stay the Iraqi economy, semi-closed like it or not, before the Gulf capital, given the high level of risk significantly, resulting from the political situation and the current security.

The bottom line is that the process of analyzing the gains and costs associated with Iraq’s accession to the system of the Gulf Cooperation Council is currently taking place not in favor of Iraq’s accession successfully to the Cooperation Council for the Arab Gulf states, but if so is there a way to raise the degree of mutual benefit between Iraq and the GCC states? The answer is yes, it is possible to accept currently at lower levels of cooperation between Iraq and the GCC countries, such as establishing a joint free trade zone between Iraq and the GCC countries, and expand cooperation through the establishment of joint projects are in the interest of both parties such as linking the railway link electricity and water .. Etc., and at a level commensurate with the capabilities of the Iraqi economy is on cooperation, so as to improve the economic situation of Iraq and be ready to join the GCC countries the lowest possible cost him and the rest of the Council.