JEDDAH, 27 February 2007 — EU Trade Commissioner Peter Mandelson at the Jeddah Economic Forum yesterday called for “clear political leadership” from the members of the Gulf Cooperation Council (GCC) to enable agreement on a free trade agreement between the GCC and the EU. He opined that a completed agreement would make an important contribution to the diversification of Gulf economies by attracting foreign direct investment and increasing the competitiveness of Gulf exporters to Europe.
Mandelson was in the Kingdom to further the negotiations of the free trade agreement. His visit was part of a tour of the GCC over the last week.
“We are now very close to an agreement that would not only be the first ever region-to-region FTA in the global trading system but which has the potential to open doors for new investment and new trade beyond what we can offer through the WTO (World Trade Organization),” he said. He believed that with clear political leadership from the GCC that the remaining issues would be resolved and a deal agreed soon. He noted that the Gulf economies were looking for alternatives to oil and fuels to sustain their economies and pointed to the increasingly youthful profile of the Gulf population compared with Europe’s ageing one. As the Gulf’s biggest market, Europe had supported regional economic integration that was vital to create diversified economies of scale and generating opportunities for investment needed for employment growth to match the population growth. He said that the GCC had to create five million new jobs a year just to keep abreast of population growth.
Mandelson said in a post speech interview that an economy that stays fixed to “an energy foundation” not only has a finite life but it was not going to generate the employment opportunities or diversification of the economy. “That is important for it will not develop the number of jobs necessary to keep pace with the growth of population but also the wider range of tradable goods and services essential if this economy is going to perform in the future as it did in the past.”
“It is important for both sides both economically, socially and politically as long as we conclude it at a reasonably ambitious level,” he said. “There are close historical ties between Gulf and Europe and it is those ties that need to be transposed into 21st century and the sort of political cooperation and relation we want to see in the new age.”
Mandelson said there was a conflict between the changes necessary to take on the requirements of a globalized economy and the traditions of the region in general and the Kingdom in particular. He felt that the religious traditions and habits of the region could be reinforced and strengthened by the technological and other courses of globalization. The way people organized their communities had as much to do with the Internet as with economic activities. “Technologies and marketing are not displacing traditions of the past — if anything they are making them easier to achieve for more people in more parts of the world,” he said.
Although economic change brought with it certain cultural baggage, Mandelson said they could be separated. “Even though outward appearances may change, the underlying values endure. The symptoms of change are all around us,” he said. The question was; were they supplanting traditional values and religious practices or offering a new guise? “I don’t think you should eject the latter as long as the underlying values can continue. I see no reason why they shouldn’t.”
He said that education operated as an engine of empowerment, individual opportunity and emancipation for individuals — men or women — and the development of both the economy and society. He thought that the EU and the UK could help build the educational infrastructure of the Kingdom and region and offer educational opportunities. “Education is a very precious commodity but it is not an ordinary tradable good,” he said. “We have to put in place government to government relations rather than rely on market forces to ensure that that transfer takes place to the greatest extent possible.”
In his address to the JEF Mandelson said that: “You cannot expect others to open their markets if you do not open yours.” He was however keen to acknowledge that economies in the Gulf did not want to put themselves into the hands of foreigners. “I am sympathetic to that, but that should not be allowed to hold back the economic development and diversification of the Gulf,” he said, adding that it was essential to strike a balance between what people wanted to preserve and what needed to change in order to meet the employment needs and aspirations of the population of the Gulf.
In response to the suggestion that the free trade agreement was partly motivated by the rising demands for energy by India and China and the huge investment drive by China in Africa, Mandelson said that it was very important to achieve the right energy mix and security of supply.
“We have relied heavily on the Kingdom in the past and we will in the future. We don’t want to see our deep and strong relations displaced by opportunism shown by others in their quest for natural resources,” he said.
Mandelson said that the five new economic cities in Saudi Arabia is the Saudi way of having the best of both worlds and manifesting that balance.
“And why shouldn’t the Kingdom want the best of both worlds — the best of the old and the best of the new? If they can find the right policy mix to achieve that then they will have my strong personal commitment. I believe in that. I am not someone who believes that economics should rule regardless of its consequences,” he said.
