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   Economic Cooperation in the Middle East

By Prof. Dr. Seong Min Hong

CONTENTS

* This paper was read at the International Symposium held on October 17 - 20 1997, Seoul Korea. The 2nd International Symposium of Asian Federation of the Middle East Studies Association & the 6th International Symposium of Korean Association of the Middle East Studies held at Myongji University, Capital Hotel, Seoul, Korea in the name of New Middle East beyond 2000: Oil, Desert, and Construction

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Economic Cooperation in the Middle East

By Prof. Dr. Seong Min Hong (RIES)

Ⅰ. Forward

The important thing in the Middle East is a peace settlement including Arab-Israeli peace. Although the Middle East has her own dynamics and characteristics, the region is extremely vulnerable to political situations by the Arab-Israeli conflict. For example, the Arab-Israeli conflict was manipulated by Iraqi Saddam Husein during the Gulf War. Hence the Arab-Israeli conflict is a principal barrier to economic development in the region. This barrier prevents the capitalist countries from investing in the Middle East.

The Middle East has been faced with its new era in accordance with the Peace Talk of the Middle East. The peace process in the Middle East opened new chapter in 1977. Since the historic declaration in 1977 by the Egyptian president Anwar Sadat: "No More War", the Middle East has paved the long way to comprehensive Middle East peace. Aftermath of it, the Madrid Conference in 1991, the Declaration of Principles with PLO in 1993, the Treaty of Peace with the Hashemite Kingdom of Jordan in 1994 and the Interim Agreement with Palestinian Arab neighbours were agreed. Any way, the year of 1977 would be recorded as a first step to approach the peace settlement in the region.

In accordance with the Israel-PLO peace talk, economic order in the Middle East brought out various changes. After the Gulf War, PLO had been suffered from economic difficulties due to the UN' s economic sanctions against Iraq. PLO that is a key factor of the conflict in the Middle East selected Israel herself and turned her back to Iraq. Furthermore Israel is expecting to find new friends in the neighbour Arab countries. After a break in conversation of eight months, moreover, Benjamin Netanyahu met with Yasser Arafat to discuss the comprehensive Middle East peace problem on October 8, 1977. Along with it, Iran attacked Iraq to get rid of the Iranian anti government front on August 29, 1997. To constrain Iranian influence, US dispatched navy and aircraft carrier to the Gulf on October 13, 1997.

All these things are hard to predict the economic order in Middle East right now. In relation to it, this paper deals with World Economic Order and the Middle East, the Process of Economic cooperation, economic Cooperation Organization in the Middle East, economic cooperation among the Arab Countries and development of the economic cooperation in the Middle East.



Ⅱ. World Economic Order and the Middle East

The present stage of world order after the end of the Cold War displays no simple pattern. The United States is no longer hegemonic over the capitalist economy in the manner that it achieved in the 1940s, 1950s, and 1960s. But in some fields, particularly the military and the cultural, its dominance is greater in the 1990s than it has ever been. The collapse of Communism and the disintegration of alternative development strategies in the Third World has reunited the global political economy around the ideological principles of the United States (Andrew Gamble and Anthony Payne, 1996; 260-261).

Meanwhile regionalism is in part a response to this situation. The United States, the European Union, and Japan might use the undoubted economic dominance that they enjoy in their regions to establish a political and security framework and a set of economic institutions which promote prosperity and development through trade, investment and aid. If such regionalist projects embrace open regionalism, they would still be compatible with the pursuit of policies at the global level through the G7 to stabilize the world economy and maintain economic growth (ibid.)

The Gulf War may have marked the return of American unipower system, but it also demonstrated the need for the United States to exert its leadership as part of a coalition. The Gulf War was but one example of the types of threats the world will confront in the future. These issues will pose problems for the traditional pattern of U.S. hegemonic leadership, because they require collective leadership and policy coordination(Yoichi Funabashi, 1992; 68).

The Middle East has been faced with its new era in accordance with the Peace Talk of the Middle East. Israel and Palestinians that have maintained hostilely relation over 45 years signed the bilateral Palestinian autonomy plan on Sept. 13, 1993. Iraq's status was weakened in the Middle East due to the peace talk between Israel and PLO. The US could secure the hegemony that enabled her to manage the other Arab states in a better position. Except Iraq after the peace talk between Egypt and Israel in 1978, the Middle East had no real country that could act as a spokesman of Palestinians. The background of Iraq's survival was Iraq's will to be a spokesman of the Arabs against Arab-Israeli conflict. This situation provided to Iraq an opportunity that could be supported by Jordan, Yemen, Libya and PLO during the Gulf War of 1991. On the contrary, the neighbour Arab countries, especially Egypt and GCC countries with the western allies turned away their face from PLO. PLO had suffered severely from economic difficulty with UN's economic sanctions against Iraq. This situation, however, was changed with the peace talk between Israel and PLO. In Palestinian issues, Egypt and Iraq are no longer direct partner to solve it, because PLO, an apple of discord of the Middle East, joined hands with Israel and got out of the reconciliation table directly. Iraq and Egypt had lost their specified duty as a spokesman of the Arabs and now are in the face of a new era for transformation that they can remain the leading nation among the Arabs(Seong Min Hong, 1994; 19-21).

In accordance with the Israel-PLO peace talk, economic order in the Middle East brought out various changes. After the Gulf War, PLO had been suffered from economic difficulties due to the UN' s economic sanctions against Iraq. PLO that is a key factor of the conflict in the Middle East selected Israel herself and turned her back to Iraq. Furthermore Israel is expecting to find new friends in the neighbour Arab countries.

These caused increased Iraq's isolation in the Middle East and the other side Israeli status rose. Iraq has been suffered from severe financial embarrassment aftermath economic sanctions. This prolonged situation caused that Iraq is eager to close her hand with US and try to solve the economic difficulties including economic rehabilitation. US was pressed with time table at the time of the Gulf war, however, Iraq is pressed with time table now. As for time affairs in the Middle East, US is in a better position rather than Iraq as time flies. Current issues of the Middle East is the removal of economic sanctions against Iraq in the international oil market. But its removal depends on US attitude that act as a UN's spokesman. US, therefore, takes advantage of any current available means in the negotiations with Iraq.

Certainly Iraqi situation on September 3, 1996 brought out the changes in the Middle Eastern economic order. Iraq was waiting the expectation to remove UN's economic sanctions after the Gulf War. Really UN agreed to remove it on May 29, 1996. Finally the removal act was approved by UN on July 18, 1996. Under the hopeful conditions, US attacked Iraq on September 3, 1996 on account of Iraqi repressing to Kurds. This situation was different from the impacts of the last Gulf War. All the Arab countries including Egypt and GCC countries supported Iraq under banner of the non-intervention in the domestic affairs. Besides, Iran and Turkey joined in this trend. Iraq regained its proud and the Arabs began to unite around Iraq. Thus the economic order of the Middle East is proceeding unclearly till now. Therefore the issues how to sole this situation is the greatest concerns and tasks in the new economic order in the Middle East.



Ⅲ. The Process of Economic cooperation

The important thing in the Middle East is a peace settlement including Arab-Israeli peace. Although the Middle East has her own dynamics and characteristics, the region is extremely vulnerable to political situations by the Arab-Israeli conflict. For example, the Arab-Israeli conflict was manipulated by Iraqi Saddam Husein during the Gulf War. Hence the Arab-Israeli conflict is a principal barrier to economic development in the region. This barrier prevents the capitalist countries from investing in the Middle East.

The Gulf War, and the response to it, were historic watersheds in intra-Arab, the Gulf, and international politics. They coincided with, and were made possible by, an even greater historic watershed, namely the end of the cold war and the collapse of the socialist bloc. As with other historic events, the Gulf War and its aftermath led to much talk about New World Order. Yet the outlines of this new order are not clear. But it is quite clear that the challenge to Gulf security is different from that of the past. The Middle East faces a new challenge to develope her economy and keep friendly relation with Arab and non-Arab countries (Seong Min Hong, 1994 20-25).

After the Gulf War, many experts predicted new order of GCC Axis. This order, however, is not clear till now. If the new order of US-EU-GCC Axis is embodied by the west, Iraq, Libya and other radical Arab countries will stimulate neighbour Arab countries with the issue of Arab unity. Moreover Iran, non-Arab country will support Iraq to persue joint interest among the OPEC member countries, and its impact will bring out more complex problems. Iraq, Iran and Libya are the radical countries urging high-price policy inside OPEC. These countries will cooperate economically as far as oil concerned. Even though the former USSR lost her power, these countries will ask for cooperation USSR. It is a reason that new GCC Axis's order was not realized easily in the Middle East. Table 3-1. shows the economic zone of the Middle East and merchandise trade of 1992.

Table 3-1. Middle East Economic Zone

 


Population

1991

(million)

GDP

1991

(billion US$)

Merchandise Trade 1992

(billion US$)

Total

Exports

Imports

Israel

4.9

62.7

28.4

12.0

16.4

Arab League:

228.2

419.2

265.8

141.0

124.7

Arab Levant

75.3

61.0

34.4

10.5

23.9

GCC

21.1

184.8

164.9

95.1

69.8

Maghreb

64.3

104.9

58.5

32.7

25.8

Other

67.5

68.5

8.0

2.7

5.2

Israel & Arab League

233.1

481.9

294.2

153.0

141.1

For Comparison:

NAFTA

363.3

6,404.1

1,368.0

653.8

714.2

EU

345.9

6,102.5

2,935.6

1,465.2

1,470.4

World

5,351.0

21,639.1

7,416.3

3,765.7

3,650.6

Note: Levant includes Egypt. Maghreb includes Libya.                                                                                 

Source: Patrick Clawson, 1994. Journal of International Affairs, Summer.                                                       


Ⅳ. Economic Cooperation Organization in the Middle East

At present, the Middle East has four economic cooperation organizations. Three of them consisting GCC, ACC and AMU is Arab cooperation bloc and the other, ECO is non-Arab economic bloc as follows. Firstly the Gulf Cooperation Council (GCC) was established in 1981 and its members are Saudi Arabia, Kuwait, UAE, Bahrain, Oman and Qatar. Secondly Arab Cooperation Council (ACC) was established in 1989 and its members are Jordan, Iraq, Egypt and Yemen. Thirdly Arab Maghreb Union (AMU) was established in 1989 and its members are Morocco, Libya, Algeria, Tunisia and Moritania. lastly non Arab bloc, Economic Cooperation Organization(ECO) started, at first, in the name of Regional Cooperation for Development (RCD) that is composed of Turkey, Pakistan and Iran in 1967. RCD is the first organization of economic cooperation in the Middle East. But its activities never have been realized. To reopen its activities, the foreign ministers meeting at Teheran agreed to change the name ECO instead of RCD in 1985. Now ECO's member countries are Turkey, Iran, Pakistan and some Islamic countries such as Azerbaijan, Uzbec, Trukmen from CIS (Seong Min Hong, 1992; 368-422).

Since these economic Blocs have a political characteristics, economic cooperaton is greatly influenced by the political impacts. For example, ACC countries such as Jordan and Yemen, supported Iraq at the Gulf War. Egypt is the only country among ACC countries, which lined up the side of multinational army on account of political interest. Libya, as a AMU country and Iran, as a non-Arab state also supported Iraq at that time against the west. This situation shows the disruption of the Arab countries in the Middle East. After the Gulf War, this tendency has changed flexibly with the Arab-Israeli peace talk in this region. Now the economic cooperaton bloc in the Middle East is a political body rather than economic body. Therefore economic cooperation within the Middle East is very flexible with the political situations.

Though ACC and AMU hardly operate in the Arab region, these four economic blocs have to search for a new line of economic cooperation. In the process of economic cooperation, US' s influence acts greatly as a main partner. The situation like US' s attack to Iraq and PLO-Israeli clash are hard to set up the line of the Middle Eastern economic Order. The four economic blocs in the Middle East will act according to the national interest. Now it is difficult to predict their ongoing cooperation issues. New economic order of the Middle East, however, will develop in the form of a comprehensive cooperation including non-Arab countries in coincide with the political and economic interest.



Ⅴ. Economic Cooperation among the Arab Countries

Table 4-1. shows the value of Arab trade as a proportion of the total international trade for 12 Arab economies in 1990. As in EU, because of domestic market size the proportion of regional trade is highest for the smaller countries with more restricted industrial bases and only limited possibilities for import substitution. It is these countries, rather than the larger states, that have the most to gain from economic integration. This is clearly the case with Bahrain, Jordan, and Lebanon, which have the most highly integrated regional trading links. The figure for Lebanon is probably a substantial underestimate since official figures do not include the extensive illicit smuggling into Syria. Also excluded are the trade flows between Israel and the 10 percent of Lebanese territory Israel occupies; this zone is almost entirely supplied from Israel(Rodney Wilson, 1994; 281).

Table 4-1. Intra-Arab Trade as Proportion of Total International Trade, 1990

(Unit: %)                                                                

 

Country

Proportion

Country

Proportion

Bahrain

Jordan

Yemen

Lebanon

Sudan

Syria

38.7

25.4

23.3

22.7

19.8

10.2

Morocco

Kuwait

UAE

Saudi Arabia

Egypt

Libya

9.8

7.7

7.1

5.3

5.1

1.2

Source: Rodney Wilson, 1994, Middle East Journal, Vol. 48, Spring.

Egypt, Libya and Saudi Arabia appears to be the least regionally integrated countries. In the case of the latter two states, regional trade is insignificant in comparison to oil trade with the outside world. Libya could, of course, serve as a bridge between the western and eastern Arab worlds, but is instead regarded by most other Arab government as being on the fringes in every sense of the word, including in terms of its politics. As already indicated, Egypt's trade with other Arab states is also hindered by the country's separation from its eastern neighbors by Israel and the poor communications infrastructure linking it with Jordan and Saudi Arabia. Its protected industries overlap those of other Arab countries rather than being complementary. Competition from other producers within the region would be unwelcome to Egypt if it resulted in state sector industries losing domestic market share, and perhaps collapsing, with unfortunate consequences for employment (ibid.; 281).

Benjamin Netanyahu noted in his Programs for Regional Cooperation 1997 that economic development consists of two major tracks. The "short term" projects are intended to promote prosperity by facilitating cross - border trade and commerce, improving agricultural capacities, and creating a "business friendly" environment in the region. The "long term" projects are an insurance policy. They are our "letter of intent" to our people, which reflect our commitment to the way of Peace.

He also asserted that the Middle East - North African region has served as a bridge between east and west, north and south, since the dawn of time. It is a center providing unlimited economic possibilities in such fields as transportation, trade, tourism, agriculture, natural resources, energy, and telecommunications. When the region stride into peace, these advantages will benefit all.

Changing the situation of the Middle East peace process, the Gulf state of Qatar decided on May, 1977 to host the Middle East and North African Economic Summit in autumn. The Gcc countries have agreed upon a peaceful approach in settling the Arab _ Israeli problem, but no concrete plan was put forth regarding the normalizing of relations with the Jewish state (Abdul Jalil Marhoun, 1997; 1)

There are many factors - both internal and external - which must be considered before a common stand can be reached. The three major factors that will determine Gulf policy on this point are geographical location, oil resources and the conservative political outlook within the countries themselves. Taking the first of the three, the Gulf states are of course at no great distance from Israel. The oil factor is also decisive in assessing the power and clout of the Gulf states. The decidedly conservative political set-up prevailing in the Gulf states has been an advantage to them in their relations with the West. It has also made them opt for peaceful solution to the Middle East problem. While the first two factors undoubtedly increase the Gulf's importance, the political factor has helped them win the cooperation of the West in solving the problem.

In addition to these three, there are local factors within each GCC state and other neighboring states that govern the formation of guidelines regarding the normalization of relations with Israel or any other uniform strategy or policy decisions (ibidem.)

Oman has been the first country that normalized relation with Israel in the Gulf region. Oman established the bilateral trade relations with Israel on August 1, 1995 and opened a commercial office in Tel Aviv. Unlike Bahrain or Kuwait, Oman was not prey to internal pressure or foreign compulsion in making such a move. Its foreign policy is comparatively free from the influence of regional powers.

Qatar seems likely to be the next state to follow Oman's lead. Bahrain's relation with Israel cannot at present realistically be expected to undergo any major change. In Kuwait, the opposition parties strongly oppose any accord with Israel. There is, however, a section of the population which, as a result of the Gulf War, are inclined to be lenient toward Israel. Kuwait's continuing mistrust of its neighbor. Iraq, will only help to improve relations with Israel. UAE has not shown any particular interest in building friendly relations with Israel. The largest and most powerful of GCC states, Saudi Arabia, not only is against cooperation with Israel but also disapproves of any other GCC state becoming friendly with it.

It seems that the president-elect of Iran, Khatami, will pursue the same policy as his predecessors in regard to the Middle East peace process. This will surely increase the challenges to attempts at normalization. Given the existing conditions, a weak Iraq cannot possibly influence events as Iran might do.

Egypt and Syria view with concern any attempt by Arab states to get closer to Tel Aviv. Israel is of course annoyed by the Damascus Declaration which expressed displeasure at Israel's efforts to find friends among the Arab states. Cairo is naturally not ready to give up its status in the Gulf in favor of Israel. It is with this in mind that we must look at certain recent events. There were discussions afoot to bring water, with Israeli cooperation, from Turkey to the Gulf which Egypt killed by offering to transport Nile water to the Gulf via the Red Sea. Another Israeli proposal to pump Qatari gas to Europe via the port of Haifa was also scuttled by Egypt who offered Qatar very attractive toll rates for using the Suez Canal. It is obvious from these two examples that Egypt was not at all happy with the possibility of relations developing between Oman, Qatar and Israel.

The improving relationship between Turkey and the GCC states can be instrumental in accelerating the normalization process between Israel and the Gulf countries. The GCC states are financing the updating of Turkey's armed forces with Israel, the US and Germany offering technical assistance. This is not to imply that the GCC states support any military accord between Turkey and Israel; they certainly do not. At the GCC Foreign Ministers Meeting in Riyadh in May, Turkey was also criticized for its incursion into northern Iraq (ibidem). How the GCC states can maintain their unity and re-establish good relations is a task in the future.



Ⅵ. Development of the Economic Cooperation in the Middle East

1. MENA

1) General background and objective of MENA

For the first time in recent history, Arab and Israeli business people met and interacted in an open forum to discuss the mutual benefits of regional commercial and scientific exchange from October 31 to November 2, 1994. Participants agreed to meet in the coming year to continue building the institutional framework required to consolidate the extraordinary accomplishments of the Casablanca Summit. The goal of Middle East/North Africa Economic Summit specified at Amman Declaration as follows:

" The goals of the Summit were to facilitate the expansion of private sector investment in the region, to cement a public-private partnership which will ensure that end, and to work to enhance regional cooperation and development.

In this spirit, business leaders from the Middle East, North Africa, and other regions were able to conclude a number of significant commercial and business transactions at the Summit that will help augment the productive capacity of the region and contribute to its broad-based economic development. These ventures involved projects in the fields of tourism, telecommunications, and transportation. Reflecting this public-private partnership, a number of these ventures will benefit from government guarantees, technical assistance, and other support from the international community " (Middle East/North Africa Economic Summit, Amman Declaration; 1995).

2) MENA Summit

The first summit was presided by the Kingdom of Morocco. In August 1994, King Hassan II of Morocco, created a dramatic break- through in the glacial progress of contact and concrete accomplishment. He invited representatives of Middle East and North African countries, the United States, European and Asian countries to attend a three day conference in Casablanca, Morocco.. This conference, which was convened by the World Economic Forum and the Council on Foreign Relations, was an opportunity to discuss a framework for regional economic cooperation and scientific exchange.

King Hassan II also invited business people from the region and from the developed world to attend the event and to begin the process of open discussion and discovery fundamental to the establishment of profitable economic relations on the eve of the 21st century. In response to the Monarch's call, over 3,000 senior political representatives and leading economic figures from 61 countries attended the Casablanca Summit. from October 31 to November 2, 1994. Its main goal was to allow business people of the region to meet and to support the peace process in the Middle East.

The second Middle East/North Africa Economic Summit was held in Amman, Jordan under the patronage of His Majesty King Hussein bin Talal from October 29-31 1995. The Summit, cosponsored by the United States and the Russian Federation, with the support of the European Union, Canada, and Japan, brought together government and business leaders from the Middle East and North Africa, Europe, the Americas, and Asia. One of the achievements of the Amman Summit was the decision to move forward with the establishment of an Executive Secretariat, based in Morocco (http://www.mena.org).

The third MENA Economic Summit took place in Cairo from November 12 to 14, 1996. 63 nations are participating in the conference. This is in addition to some 850 international companies and 1500 businessmen and investors. The summit is aimed at enhancing the peace process by widening cooperation among the states of the region, including Israel. One of the basic aims of the conference is to create a huge market for profitable investment in the region. It also aims to open Arab markets to Israel. It is an attempt to free economic relations between the Arabs and Israel from political restrictions and is designed in essence to render powerless the Arab economic boycott of Israel (Hassan Tahsin, 1996; 1). And the fourth Summit will be held in Doha, Qatar in Autumn, 1997.

2. Mediterranean Development Forum (MDF)

Some agreements have been reached at Amman Summit in 1995. A Bank for Economic Cooperation and Development in the Middle East and North Africa will be established in Cairo. The establishment of a Regional Tourism Board, the Middle East-Mediterranean Travel and Tourism Association, to facilitate tourism and promote the region as a unique and attractive tourist destination..The establishment of a Regional Business Council to promote cooperation and trade among the private sectors of the countries of the region. The formal inauguration of the Economic Summit Executive Secretariat, which is located in Rabat and works to advance the public-private partnership, promoting contacts, sharing data, and fostering private sector investment in the region. The participants expressed their appreciation to the Moroccan Government for its contribution to this effort, and confirmed their support for its ongoing activities.

As a complement to the regional institutions called for at Casablanca, the Steering Group of the Multilateral Peace Negotiations has decided to establish REDWG Monitoring Committee Secretariat as a permanent regional economic institution to be based in Amman. All participating parties have agreed that this institution will promote and strengthen regional economic cooperation in the Middle East and North Africa. The regional parties strongly recommend that the Secretariat's activities will cover the range of sectors within the REDWG Monitoring Committee's work, ie infrastructure, tourism, trade, finance, and areas within the Copenhagen Plan of Action. The core parties in close consultation with the European Union and other members of the Monitoring Committee undertake to finalize the appropriate document on the structure and operational functions of this institution, which will be submitted to the next meeting of the REDWG plenary, with a view to the commencement of the institution's activities in the first half of 1996. This REDWG plenary will consider the matter, take appropriate action, and report to the upcoming meeting of the Multilateral Steering Group.

The Economic Development Institute (EDI) of the World Bank and the Government of Morocco, with the assistance of the Executive Secretariat of MENA Economic Summit, and on behalf of a diverse consortium of governmental, private sector, and NGO partners, is organizing a major conference.. Knowledge and Skills for Development in the Information Age in Marrakech, Morocco in 1997.

This conference will launch the Mediterranean Development Forum (MDF), a broad partnership initiative devoted to harnessing the information revolution for improved policies to alleviate poverty and to achieve sustainable development in the Mediterranean region. The MDF will pursue its objectives by organizing an annual development fair for the region, working to disseminate knowledge, and encouraging the formation of skills among the development community in the region (The Mediterranean Development Forum,1997, http:www.mena.org).

The efforts of the Mediterranean Development Forum are based on the recognition that throughout the region, countries are confronting similar challenges and opportunities as their economies become more integrated with the global economy. The principal objectives of the MDF initiative are to:

help develop, codify, and distribute knowledge about 밷est practice?approaches to development (as well as development pitfalls) from those engaged in a broad range of related sectors in the region and throughout the world;

    create a dialogue within the region among senior government officials, the development community, and the private sector on the importance of knowledge, and on strategies for building and mobilizing knowledge; explore the critical role of learning and knowledge in building effective management, good governance, and sustainable economic growth, through lessons drawn from both the public and private sector; and

    investigate the impact of knowledge and information technology on economic growth, drawing attention to the interactions between institutions and technological developments that enable them to harness technology in productive ways to meet regional needs (Objective of the MDF, 1997; http:www.mena.org). The core participating countries are the developing countries of the Mediterranean, with the geographical reference used in its broad sense. This would include the countries of the Arab League, Iran, and Turkey.

 


Ⅶ. Concluding Remarks

Various changes are taking place in the Middle East after the peace treaty. Among them, it is noticeable thing that Israeli changed their mind. Nowadays Israelis take more flexible stand than before against the establishment of Palestinian State. Accordingly, it seems that these situations greatly affect the economic cooperation between inter Arab and non-Arab. It also affects the economic cooperation that strengthens the economic bloc in the form of Arab unity in the Middle East.

In inter-Arab side, Syria proposed the establishment of Arab Common Market, having the main point of free trade and duty free with Egypt and six Gulf states including Syria on June 8, 1997. Mubarak, the Egyptian president welcomed it at once and came to an agreement for its foundation in Damascus on June 25. It is important that Egypt become a leading state in this trend. To discuss the Free Trade Zone issue as a previous stage of Arab Common Market, Egypt is reinforcing relations with Libya, Saudi Arabia and the neighbouring Arab countries. It is reported that Mubarak visited Libya to conclude the Free Trade Agreement on June 12, 1997 and discussed the comprehensive issues with Qadafi, Libyan president. After the peace treaty between Israel and PLO, it is a remarkable characteristics that Arab world strengthens the unity against Israel in Arab economic cooperation. In short, Arab countries make an effort to embody the establishment of Arab Common Market and Egypt hopes to play the major role among them.

In non-Arab side, Turkey established a new economic cooperation organization, 'D-8' that consists of Turkey, Iran, Indonesia, Malaysia, Pakistan, Bangladesh, Nigeria and Egypt in Istanbul on June 15, 1997. D-8 launched to compete with G-7. It is a Pan-Islamic economic organization that includes Arab, non-Arab, Asia and the Middle East. The Middle East countries struggle for survival under WTO system. Taking into account EU, they hope to unite in the form of Arab country or Islamic country. Another economic cooperation moves including MENA will follow the peace process of in the Middle East.

By the reason of it, 'Pan-Islamic economic cooperation' projects are spreading widely in the region. In short, Pan-Islamic economic bloc aims that the establishment of economic bloc, that is consisted of the developing countries beyond the Arab concept, reduce the political dispute and extend the geographical bound. These facts gives Turkey the opportunity as a mediator in the non-Arab economic cooperations. At the beginning of this year, moreover, the reorganization of the Middle Eastern economic order is accelerating and the pattern of economic bloc tends to divide it into two parts, i. e. Arab vs Israel or advanced countries vs Islamic countries.



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KMEA Newsletter

Publisher: Korea Institute of the Mideast Economies (KIME). Editor: Dr. Seong Min HONG.

Kwanak P.O. Box 49, Seoul  09775, Korea, Tel: 82-2-876-4249, Fax: 82-2-876-4349.


This publication is consisted of  Korean, English, Arabic and the other languages concerned. The contents of the newsletter do not necessarily reflect either the position or the views of  KIME. Copyright ⓒ 1997-2017 KIME. All rights reserved.