Is it really possible to launch an Arab common market ?

Formed on the 22nd of March  1945 after the Alexandria Protocol, the League of Arab States gathered six Arab countries, namely Egyt, Iraq, Syria, Transjordan, North Yemen and Saudi Arabia. It aimed at bettering the diplomatic ties and the foreign relations between the member states, in addition to setting up a geopolitical cooperation that would also respect the national sovereignty of each country. Numerous political conflicts had divided the Arab world in the past decades, such as the 1934 Saudi-Yemeni War, the overwhelming of Arab countries by France, Great Britain and the Ottoman Empire, among other powerful entities, and countless other issues. In the aim of uniting all Arabs, six Arab states took the initiative to bringing the newly-decolonized countries together and building what will embody an old Arab dream : the Pan-Arab unity, uniting all Arabs regardless of their religions or actual ethnicities. Indeed, the Arab world was composed not only of Arabs, but also of  Kurds, Armenians, Jews, Berbers and multiple other peoples, and many religions were represented, including Christianity, Judaism or Druzism.

The current League of Arab States is an institution composed of varied committees and subcommittees. Special committees are featured, namely the Political Committee, the Economic and Financial Committee, the Communications Committee, the Cultural Committee, the Social Committee the Health Committee, the Arab World Committee and the Human Rights Committee. Each committee is composed of Delegates embodying the member states.

Despite the fact that the main aim of the institution is to maintain peace, increase cooperation between the member states and making the Arab World prosperous, those projects are facing huge hurdles.

The Arab world is currently torn in several conflicts, including Shia/Sunni gap, territorial disputes between Egypt and Saudi Arabia, Israeli-Arab issues, the spillover of the wars in Yemen, Iraq, Syria and Libya, the post-Arab spring situation, The Western Sahara conflict, intervention of foreign countries and so on. Those conflicts prevent the states from fulfilling the project of united Arabs.

Numerous journalists and experts in the field of international relations doubt the efficiency of the Arab League, and have criticized it harshly, especially regarding the Yemen and Syria crises. That’s precisely why this committee has to prove its ability to reuniting the Arabs and solving the conflicts.

 

 

Several measures have been taken throughout the decades to increasing the economic cooperation between the member states of the League. The first economic and financial cooperation council was the Special Economic Committee of the Arab League Council. It has been followed by a variety of initiatives to improve economic integration within the Arab world, paving the way for a unified Arab market.

 

  • Arab Monetary Fund (AMF) : :established in 1976 and operational from 1977 on, the headquarters of this sub-organization of the League of Arab States are located in Abu Dhabi, UAE. It aims at bettering the monetary cooperation between the member states, remove payment restrictions between the 22 Arab states and therefore making trade within the League more productive.

 

  • Arab Fund for Economic and Social Development : It is an organization set up by the Arab League Economic and Social Council, based in Kuwait and which the first meeting took place on the 6th of February 1972. The main goal of the AFESD is to develop finance institutions in the Arab world. In the light of global and regional developments, the Fund seeks to holding conferences and seminars and finding the necessary factors to support the Arab economic growth.
  • Council of Arab Economic Unity : Founded on the 30th of May 1964 following the 1957 agreement of the Arab League Economic Council, the CAEU is composed of 18 members states, including Egypt, Iraq, Jordan, Yemen, Tunisia, Saudi Arabia, United Arab Emirates, Palestine, Mauritania and Sudan. The CAEU suggests measures to tighten economic links between Arab countries and ensuring prosperity, such as the creation of a unified customs area, the coordination of fiscal policies, the free exchange of goods and products and the cooperation with other regional powers.
  • The Greater Arab Free Trade Area : Created in 1997 after the adoption of the 1981 Agreement of the Arab League Economic and Social Council, this free trade zone was originally composed of 14 member states, namely Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia and the UAE. Algeria joined the Pan-Arab trade zone later in 2009.
  • Arab Customs Union : in 2009, the League of Arab States announced the creation of an Arab common market by 2020 to make the inter-Arab trade more dynamic. Contrary to the other member states, Morocco and Egypt disagreed on the establishment of such a plan, but suggested the implementation of an independent agreement which would govern the Arab Customs Union.

 

Current Situation

Economic integration among Arab countries is edging towards a dramatically new phase in its 60-year history of small successes and grand disappointments. In January 2015 an Arab Customs Union (ACU) became operational, creating a single economic border between the 22 members of the League of Arab States (LAS) with the rest of the world, paving the way for free flow of products, with zero tariffs between Arab markets. The Economic and Social Commission for Western Asia (ESCWA) estimates that the full implementation of this Arab summit resolution would lead to a dramatic boost of growth and employment in almost every Arab country. The corridors of the LAS headquarters in Cairo are bustling with experts and officials from member countries, with ESCWA’s technical assistance, working out the complex and difficult compromises needed to run the Customs Union. However, the 2020 target of creating a ‘common Arab market’ is yet to be achieved. Arab states are desperately trying to diversify their economies and become economically sustainable. Such would increase resilience to oil price volatility, which in recent times has been very high. A common market would be useful in facilitating states such as the UAE, Qatar, and Saudi Arabia, to tap into potential markets and begin to expand their economic portfolio’s. By 2020 the Arab world will have close to 500 million citizens, a strong economy and a combined GDP close to 3.5-4 trillion dollars if everything goes as it should. The economic potential of the Arab world is enormous. It’s strategic location, natural riches, human capital, unexplored markets, potential of growth and the upcoming legal reforms in many countries render it a region of immense prospects. Delegates must consider however, that political instability will inevitably cause rift between member states. The conflict in Yemen, Syria and the unstable states such as Libya means that internal problems may impede the collective economic development of the Arab world. Furthermore, would the common market allow individual states to trade independently with the rest of the world? If so, what are the political implications of this. In addition, reduction of tariffs is inevitable in this scenario; how will member states decide on this? Will the common market have any effect on OPEC? Where will the legitimacy of the common market extend to? In view of these questions, 2020 may seem too short a notice for kicking off such a dramatic venture. However, the opportunity is too great to miss, and the political and social challenges facing all Arab countries should encourage them to go the extra mile down regional integration. After all we are fully convinced that without integration, development in the region will always be constrained and sub optimal.

Hurdles to overcome

 

There is a huge discrepancy between the member states of the League. While the Gulf Cooperation Council members have a high standard of living and a high Human Development Index, Yemen is among the 48 Least Developed countries. In addition, currencies of the Arab countries do not have the same values, which makes the project of a common currency difficult to establish.

Furthermore, the geopolitical situation is another hurdle preventing the Arabs from uniting economically, as they have to solve territorial disputes, intrastate and interstate conflicts before projecting an Arab common market.

 

Which problems prevent the Arabs from uniting economically and financially?

  • How would the Arab countries set up a custom union despite the ongoing wars and political conflicts, both civil or between each other ?
  • How would the Arab world overcome the financial discrepancies between the member states?
  • Is a common Arab market feasible, and most importantly, lasting?
  • Which means would be deployed by the League of Arab States to compete with the other regional organizations ?
  • Would the common Arab market cooperate with other regional powers?
  • Which economic fields would be developed by the League of Arab States?
  • Apart from oil, which resources would be useful to the economic development and expansion of the Arab world?

 

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