Waiting for a free lesson

How the Gulf countries are going to be affected by the looming world economic recession? The question arises from the fact that so far there is hardly any coherent or swift move based on a clear political will to do take some action.
The more alarming fact is that the world seems to be waiting helplessly for disgruntled Greek electorates to decide its fate.
In fact, the world will be looking at two important dates this month.
Come Sunday, when the Greeks go to polls in what many see as a chance to what the Economist magazine termed “Grexit,” referring to the possibility that the new poll may push Greece out of the euro zone with a potential domino effect.
And the second date is 11 days later when European Union leaders will meet in a summit to thrash out some decisions that reflect the much-awaited political will to face up to the tough choices challenging the world economy.
The situation is aggravated by the fact that no solution might ensure that the situation could be salvaged.
Those experts speak of the need for the Europeans to move along with the kind of swift measures the US Federal Reserve Fund and the Treasury took back in 2008 to face up to the financial crisis ignore the basic difference.
In the US, it was a national crisis met with national solutions. A good chunk of European debt is spread across borders. Eventually, the burden falls on respective national governments. This is the root problem of the euro zone.
Can the EU states agree to cede their national sovereignty for the sake of a bigger goal?
Moreover, and unlike the financial crisis four years ago, this time there seems to be no strong economy to fall back on to act as an engine pulling others behind it.
In addition to the recession that has engulfed Europe, the US is pinning its hopes on not falling back again into one of its own.
The consecutive poor jobs figures are not only alarming, but are also indicative that the US economy is far from going out of the woods yet.
But the slowdown in both China and India is more serious. Though they still register respectable growth rates compared to what is happening in Europe or US, for a country like China that has been registering close to 10 percent growth rate annually for the past three decades, anything below that is seen as a serious warning that has potential political, economic and social implications.
On the other hand, India is more or less in the same boat.
Though it registered a respectable 5.3 percent growth rate, it is still the lowest growth rate in seven years.
One thing seems to be crystal clear.
None of these two countries and definitely not China is going to pour billions of dollars into troubled western economies as it did four years ago. After all, both of them are going through a delicate political change at the helm.
Though eyes and ears will be focused on what is happening in Greece and Spain, and for that matter Germany, as the main architect of the bailouts, equally other questions also could surface. The possible impact of all these on the sea of tranquility so far — the GCC countries, led by Saudi Arabia for instance.
The GCC economies are in a solid position. Their economies have been performing well during the past three years, thanks to the bull oil market. Still, there are worries because they are all part of the world economy that is fueled by oil.
It goes without saying that a worldwide economic recession will impact immediately on the demand for oil. But again, unlike other countries, the GCC countries have a good starting point as outlays in the region are slated to top more than $ 480 billion this year and more important close to $ 160 billion has been pledged to be spent domestically.
Spending domestically has been one of the ways to diversify the hydrocarbon-based economies to add value to crude oil exports and more important open new economic frontiers by turning GCC cities into investment, trade and touristic centers in various forms.
Given the fact that the GCC population is expected to reach close to 40 million in less than a decade, the goal remains to maintain, if not increase the current average growth rate of 4 to 6 percent. And that is where the idea of the GCC Union surfaces from time to time.
Though some steps along the customs union and a common market were taken, but the more sensitive issue of a currency union still awaits the political will to forge ahead.
And that is why the unfolding lesson of the euro zone is important. It is always good to learn from other’s bitter experiences.
— Alsir Sidahmed is media consultant, trainer and freelance journalist.