I write this week from Australia, where I traveled from Melbourne to Canberra to Sydney to assess areas of the greatest potential for cooperation between the Gulf Cooperation Council and Australia. It has become quite clear for some time that the level of GCC-Australia engagement has been below the promise that both sides possess.
Because of that realization, the GCC and Australia have been engaged in an exploration exercise that included wide-ranging ministerial discussions and consultations on regional and international issues, as well as discussions between experts in all fields of potential cooperation.
In 2011, agreement was reached to enter into a “strategic dialogue,” and a memorandum of understanding to that effect was signed in Abu Dhabi in March 2011.
From all indicators, it appeared that several areas had significant potential for win-win cooperation. They include joint investments, renewable energy, mining, education and agriculture. The sooner partnerships between key players in these areas are identified, the sooner the two sides can reap the benefits, it was proposed.
Based on those understandings, a “joint action plan” was agreed upon to map out cooperation between the GCC and Australia for the next three years in the economic, political, cultural and educational fields, as well as energy and the environment. That plan has entered into effect this month and its implementation is due to start immediately.
Australia is a land of superlatives. Its continental size (7.7 million square kilometers) makes it the sixth largest country in the world. Because of its relatively small population (23 million in 2013), it is one of the most sparsely populated countries, especially in its western and northern regions. This low density accounts, in part, for Australia’s relatively liberal migration policy.
As a result, Australia today is one of the most diverse countries in the world. Its population hails from about (170) different countries and lives in relative harmony. The Middle East can learn a lot from the Australian experience in managing diversity over the past two decades, after earlier failed experiments.
Economically, Australia is a powerhouse. It is a member of the G2 group. Its gross domestic product is estimated at (1.5) trillion US dollars, making it the 12th largest economy in the world. This is roughly equivalent to the combined GDP of GCC states.
Because Australia is sparsely populated, its per capita GDP, at $ 66,000, is the 5th highest in the world, after Luxembourg, Qatar, Norway and Switzerland. This high level of income, more than the volume of its population, makes a better indicator about its market size.
With a combined GDP of three trillion dollars, you would expect larger trade and investment between the GCC and Australia. Sadly, that is not the case and GCC-Australia trade has been quite modest. In 1992, trade in goods totaled merely $ 1.8 billion. It remained in the (2-3) billion range until 2002. Since then, their two-way trade has quadrupled to reach $ 13 billion in 2012. Since 1997, Australia has maintained a persistent surplus in trade with the GCC, although that surplus has been shrinking in recent years.
However, the new levels pale compared to GCC trade with China, for example, or India or Korea. Two decades ago, GCC-Australia trade was close to the same level as GCC-China trade, i.e., in the (2-3) billion range. But today, GCC trade with China exceeds $ 150 billion, or (12) times GCC-Australia trade.
While the two sides try to maximize their trade exchange in goods, it is more important to explore the potential for trade in services and investment, where a greater potentials lie. Partnerships between Etihad Airways and Virgin Australia, and between Emirates and Qantas are but two examples of possible partnerships between GCC and Australian service providers.
It is for this reason that the GCC sought, and Australia agreed, to reach a comprehensive trade agreement does not deal with trade in goods only, but also investment and trade in services. Significant opportunities abound in the energy, mining and agricultural sectors to benefit from the comparative advantages that each side has. For example, Australia has considerable experience in dry land farming, something that GCC countries can benefit.
GCC-Australia investment and services partnerships do not have to be deployed only in Australia and GCC countries. The two sides could combine their efforts to invest in other countries. One case in point is the possibilities that exist in agricultural investment in developing countries to help them improve their production capacities and reduce global food shortages.
In addition to economic potential, Australia and the GCC play significant and unique roles in their respective regions. They have also become increasingly active international players. As such, they would be amiss if they did not develop their political and strategic coordination.
Australia is beginning to assert independent positions in international discussions. It made a key decision last November when it declined to join the United States and Israel in opposing the United Nations General Assembly decision granting Palestine a non-member state status at the UN. Prior to that, Australia usually supported the US-Israel line at the UN.
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