Gulf News | 1 May 2013
By Mohammed Al Asoomi, Special to Gulf News
Currently, joint Arab investments are passing through a crisis, in keeping with the general political conditions prevailing in most Arab countries. This is despite attempts by the GCC to increase investments and help these countries stimulate their economic conditions, increase growth rates and offer more job opportunities.
According to the IMF, the GCC has pumped investments totalling $100 billion into Arab countries since 2002. Unfortunately, the GCC efforts face many obstacles, often caused unconsciously by the beneficiaries themselves. There is also the poor legislative and legal infrastructure that makes investment in Arab countries risky due to the lack of adequate guarantees.
The misinterpretation of the GCC’s intentions also contributes to cancelling or postponing development projects in many Arab countries.
By taking Sudan, for example, one can clearly notice the GCC’s approach aimed at help developing the agricultural sector there. All success factors are available except for lack of money and that can be provided by the GCC. According to the Sudanese Ambassador in Bahrain, GCC’s investments in Sudan amounted to $25 billion.
In addition to developing the Sudanese economy, Gulf investments in agriculture are important for Arab food security, especially in light of the high food prices in world markets. It is a move that serves the common interests of both parties.
However, many beneficiaries are not aware of the importance of this co-operation. Last week, hundreds of Sudanese protested in Eastern Khartoum demanding the government revoke the sale of farming lands to Gulf investors and urging the government to give them the lands instead of selling them to investors planning to set up a modern agricultural project there.
If they do get the land, they will not have the necessary funds to develop them. Hence they will barely produce their daily food and remain below the extreme poverty line. In contrast, GCC investors have the funds to purchase equipment necessary for agricultural production based on advanced techniques and seeds to double production, but they do not have the land.
The Sudanese government will get huge amounts in return for the lands. The funds will be reinvested in other projects where farmers can be trained and employed and also get salaries better than their individual income.
These projects may turn into joint stock companies where farmers can be able to buy part of their shares to become owners alongside being employees. Gulf nations will benefit from the proceeds of such investments.
Consequently, the government, employees and investors stand to benefit. What is wrong with that? And where is the problem that has prompted the Sudanese farmers to protest?
It seems there is no logical reason behind these demonstrations except ignorance of the reality of the GCC approach and the importance of the strategic approach. It is vital for Sudanese authorities and civil society organisations, as well as Arab countries, to launch awareness campaigns to clarify the facts and potential gains resulting from attracting foreign investments.
Another important thing that needs to be highlighted is that agricultural lands should not be left without development and access to modern technology. Otherwise their modest production will not meet the local market’s needs, let alone end up as exports which is of greater importance to the Sudanese economy.
In fact, the GCC countries are caught between a rock and a hard place. If they reduced investments in Arab markets and eye elsewhere, they will be blamed by opinion writers and the protesters themselves.
And if they decide to help their Arab brethren by increasing investments despite the risks, they will be accused of seizing lands.
There are probably more feasible opportunities and secured guarantees in other non-Arab countries, such as Thailand, and even in some of the African and Latin American countries which welcome GCC investments and grant them privileges.
Since the GCC countries have made it clear that they adopted a strategy that aims to support Arab economies, the latter must help overcome obstacles that hinder the flow of investments. Such funds will not return easily once gone, and thereby lead to further complications and even instability.
— Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.