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Sat 10 Sep 2011 09:56 AM

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Jordan's GCC bid will enhance security, says analyst

Jordan’s economy also seen benefiting from closer ties to its oil-rich Arab neighbours

Jordan's GCC bid will enhance security, says analyst
Flag of Jordan

Jordan’s membership of the GCC will enhance security within the political bloc and the country’s cash-strapped economy is unlikely to be a drain on the oil-rich members’ resources, an analyst has said.

J Brad Phillips, an economist specialising in the Middle East at US-based analysts Global Insight made his comments as it was announced the kingdom is to start talks to join the group this month.

“The GCC (Gulf Cooperation Council) is very serious about admitting Jordan to their exclusive club. Jordan will provide the GCC with added security, a buffer against Iranian influence and other extreme Shia muslim influence in the region, and more robust trade linkages with Europe and the US,” Phillips told Arabian Business.

In May, GCC leaders announced Jordan, along with Morocco, had been invited to join the political bloc, which currently consists of the six states of Saudi Arabia, Kuwait, Bahrain, the UAE, Qatar and Oman.

Jordanian Foreign Minister Nasser confirmed last week official talks regarding the kingdom’s formal accession into the GCC will start on September 10.

Analysts said the unexpected offer for Jordan to join the GCC may be a sign that Gulf leaders are seeking to cement ties with other monarchies against a wave of popular protests that have swept the Arab world.

"The GCC is increasing its more muscular role in foreign policy ... they are leading the counter revolution and it makes more sense for them to join with other Arab autocracies," said Shadi Hamid, director of the Brookings Doha Centre.

"Arab autocracies are trying to diversify aid sources away from the United States and other players that might be more concerned with their rights and democracy record," he said.

Hamid suggested they might be considering a two-tiered membership system. He and other observers suggested the partnership with the oil exporting region might be an economic boon to the two Jordan and Morocco, which have faced unrest in past few months.

In March the GCC pledged $20 billion in aid to Oman and Bahrain to help the member states cope with anti-government protests which have engulfed the two countries since the onset of the Arab Spring movement.

While the GCC regularly offers financial support to member states in time of need, Philips said Jordan, despite its $366m budget deficit and high unemployment, was unlikely to be a major drain on GCC funds.

“Jordan’s economy represents a fraction of the current GCC economy; meaning, there is more than enough oil revenues to support the cash-strapped kingdom’s needs,” he said.

He added: “Jordan provides the GCC with greater trade and financial linkages to Europe, a highly developed service and manufacturing sector, and a corridor for linking the Gulf peninsula with Turkey by railway.”

A study published in July by the Dubai Chamber of Commerce and Industry also said Jordan had the "most efficient and low cost labour force in the region", which could benefit the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman.

"Jordan has one of the highest literacy rates among Arab countries and it has remained a major supplier of high calibre professionals to Gulf countries," the study said.

"Rough estimates suggest some 600,000 Jordanians are working in the GCC. Free movement of labour from Jordan to the GCC would not only help the GCC acquire cheap labour, but it will also add considerable remittance to Jordan. Foreign remittance accounts for nine percent of Jordan's GDP," it added.

The Dubai Chamber study said that if Jordan was to become a member of the GCC, with the eased visa policies, the number of visitors to both sides may also "increase considerably".

"Jordan has already been a popular tourist destination for many Arab countries. According to data from the Jordan Ministry of Tourism, between 2009 and 2010 some 1.65 million visitors from the six GCC states entered Jordan," the study added.

Last year, bilateral trade between Jordan and the six oil-rich Gulf countries exceeded the $5 billion mark.

According to the Jordan Department of Statistics, the GCC accounted for 24.2 percent of Jordan's imports in 2010, while 18.4 percent of Jordan's exports were destined for Gulf states.

Among the GCC, Saudi Arabia is the top trading partner to Jordan, with total trade surpassing $3 billion, while total trade between the UAE and Jordan was reported to be over $700 million.

Jordan's bilateral trade with Bahrain, Kuwait, Oman and Qatar was estimated at $306 million, $212 million, $60 million and $110 million respectively during the same period, according to the study.

According to the UAE Ministry of Foreign Trade, UAE investment in Jordan is estimated to be in the range of $15 billion, which is expected to grow in the coming years, the report added. Kuwaiti investment in Jordan increased to S$8 billion in 2010, while Bahraini investment in Jordan stood at $473 million.

According to the IMF, Jordan's GDP growth in 2011 is expected to be around 4.2 percent and above 5 percent for the next coming five years.

However, unemployment has remained a major problem for the Jordanian economy and was 12 percent last year, but this is expected to slide slightly to 11.5 percent in 2011.

Dr. Husam M. Yaghi 8 years ago

This is a blessed plan which should add to the strength of all involved countries. Jordan is composed of people of different backgrounds which have lived together peacefully and productively for over 100 years. This rich history should add value to the almost unified Arabian Gulf culture and traditions. This is in addition to economic and political value.