Trade bridges Shi'ite-Sunni
divide By Meena Janardhan
DUBAI - While Iran and the United States
exchange aggressive statements, the Arab countries
of the Gulf Cooperation Council (GCC) have been
busy building trade relations with Tehran and
charting an economic course with a potential of
mending ties in a tough neighborhood.
After an official proposal by Iran, the
GCC - which groups Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia and the United Arab Emirates - is
considering negotiations that may lead to the
creation of a
free-trade area.
"As
long as there is a desire from the Iranian side,
the GCC cannot but be positive in relation to such
an issue," GCC secretary general Abdul-Rahman
al-Attiya said on September 2, after receiving a
letter from Iranian Foreign Minister Manouchehr
Mottaki expressing Iran's interest in trade talks.
Similar ideas have been floated in the
past, including a 10-point plan proposed by Iran
in April for establishing a security and
cooperation organization in the Persian Gulf
region, but this is the first time Iran has
presented an official letter.
The call for
economic engagement comes in the background of a
flurry of reciprocal visits by Iranian and GCC
leaders over the past year. The effort to bridge
the Sunni-Shi'ite divide, especially with a view
to stabilizing Iraq, has led the Arab League to
call for high-level dialogue between the Arabs and
Iran.
The schism in the religion goes back
to succession struggles after the death of Islam's
founder Prophet Mohammed in AD 632.
Today
about 85% of all Muslims are Sunnis. But Iran is
overwhelmingly Shi'ite and, in fact, has a
constitution that is theocratically Shi'ite.
After the US removed Saddam Hussein from
power, Iraq became the first Arab country to
become Shi'ite-controlled. Historically, the
region now called Iraq was Shi'ite-dominated until
1533, when the Sunni Ottomans seized Baghdad.
But Sunni Arab countries now see the need
for a rapprochement with Iran and the Shi'ites. On
March 3, King Abdullah of Saudi Arabia invited
Iranian President Mahmud Ahmadinejad for a summit
to discuss the issue, and the two leaders declared
that the divide only served the interests of
foreign powers.
"Both Iran and Saudi
Arabia are aware of the enemies' conspiracies,"
Ahmadinejad said on his return to Tehran from the
summit. "We decided to take measures to confront
such plots. [We hope] this will strengthen Muslim
countries against oppressive pressure by the
imperialist front."
An official Saudi note
said, "The greatest danger threatening the Islamic
nation is the attempt to fuel the fire of strife
between Sunni and Shi'ite Muslims."
And
now the GCC countries have responded positively to
the Iranian proposal by setting up a committee to
tap the economic potential and advance political
cooperation with their large neighbor. Though born
out of security concerns in 1981 after the
outbreak of the Iran-Iraq War, the GCC has over
the years evolved into a political and economic
bloc.
Said Eckart Woertz, an economist
with the Gulf Research Center in Dubai: "Given the
proximity of Iran and the GCC countries, a
free-trade agreement makes sense, although trade
relations are not very diversified so far. Iran is
mainly exporting oil-related products, while it
receives machinery, spare parts and more
sophisticated goods from the re-export hub,
Dubai."
Mohammad Amerah, an Abu
Dhabi-based economist, said a free-trade agreement
with Iran would be beneficial to all GCC
countries.
"I think they will go about it
gradually. Eventually, tariff barriers would be
reduced to the minimum and there would be smooth
trade transactions between the countries exporting
and importing among themselves," he told the UAE's
English-language daily Gulf News on September 5.
At the political level, Qatar's minister
of state for foreign affairs, Ahmed bin Abdullah
Mahmoud, asserted that relations with Iran are
remarkable and that the two countries have many
things in common besides diplomatic and economic
ties.
The minister said bilateral trade
relations are good, especially since there is a
joint commercial committee that meets regularly to
discuss all avenues of cooperation. "The Iran-GCC
geographic proximity is an advantageous factor
that helps the setting up of a free-trade zone,"
he said.
Encouraged by high oil prices,
developing and diversifying their economies have
been high on the agenda of the GCC countries in
recent years. The emphasis on economic integration
led the bloc to establish a customs union in
January 2003, with the transition period ending in
December 2005. Further, the GCC countries also
joined the Arab Free Trade Zone in January 2005.
The bilateral trade volume among the GCC
members rose from 6% before the initiation of the
customs union to 21% after that - from US$18
billion in 2002 to more than $31 billion in 2005.
Though there are few signs of progress on
a plan to adopt a single currency by 2010,
especially after Oman said last year that it would
not be able to meet the deadline, the GCC is
expected to create a common market by the end of
this decade.
However, economic expansion
has coincided with security concerns over Iran's
controversial nuclear program, the likelihood of a
military confrontation between Iran and the US,
and growing Shi'ite influence in Iraq and Lebanon.
Ahmadinejad claims his country has
achieved a milestone and is now running 3,000
centrifuges to enrich uranium.
The GCC
countries have publicly stated that they would not
allow their territories to be used as a launch pad
for any military attack on Iran. But they have
very little room to maneuver if the US decides in
favor of a military adventure, because it is the
chief security guarantor for the six-member bloc.
The GCC is also considering a peaceful
atomic program of its own in partnership with the
International Atomic Energy Agency, and progress
on these plans are to be discussed at a conference
in Qatar in November.
Even though the US
claims to be a proponent of free trade, it is
unlikely to encourage the proposed GCC-Iran trade
negotiations because it would boost the Iranian
economy while giving GCC traders better access to
Iran.
The Jebel Ali Free Zone in Dubai,
one of the seven emirates in the UAE, is already
the biggest source of commodities and consumer
products to Iran.
On September 1, the UAE
issued a new law to control the export of military
equipment or dual-use items, heeding a US warning
that action would be taken if enough were not done
to halt the flow of technology to Iran and Syria,
especially anything that can be used in improvised
explosive devices, used as roadside bombs by
insurgents in Iraq.
As a follow-up, the
UAE also shut down last Sunday about 40
international and local companies in a crackdown
on money-laundering and illegal dealing in
dual-use equipment and materials banned under the
nuclear Non-Proliferation Treaty.
"Serious
political contradictions exist in the case of the
Iranian nuclear standoff and the occupation of
three UAE islands by Iran. The GCC countries
perceive Iran increasingly as a threat, and this
could jeopardize any trade negotiations," Woertz
said.
"But on the other hand, political
differences have not impeded thriving trade
relations between the UAE and Iran so far," said
Woertz, adding that there is a potential to scale
it up to the GCC level.
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