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Gulf Security: the fire next time?

Pictures of burning oil fields as Iraqi troops evacuated Kuwait in 1991 symbolised the vulnerability of the Gulf and the fragility of their security. Crude oil, the unique basis of their prosperity, went up in flames lit by one of their own kind. Two years later, the Gulf looks as uneasy as ever. Not only do the GCC countries have to watch Iraq and Iran with wary suspicion, but they are divided within their own ranks.

OPERATION DESERT Storm was a brilliant success in coordinating Arab and Western outrage at Iraq's attempted annexation of Kuwait and repelling it with combined military force. Subsequently, it has exposed serious fissures in the relations between the GCC and the rest of the Arab world, and within the GCC itself. The regime of Saddam Hussein has managed to survive a massive defeat on the battlefield largely because of these, while Iran has begun to exploit the divisions between the Arab states to its own advantage.

The war over Kuwait was a dispute over sovereignty -- rather serious in that particular case since Iraq laid claim to all of Kuwait's territory. The crushing rebuff delivered to Baghdad seems, paradoxically, to have inflamed other territorial disputes throughout the region.

Even the frontier between Iraq and Kuwait is far from settled. Iraq still refuses to give up its claim to Kuwait, which means that the seeds of the confrontation in 1990 have not been eradicated. Indeed, they may be encouraged to grow again since the United Nations commission charged with settling the border question has decided that Kuwait possesses a legitimate claim on previously thought to be Iraqi territory. This can only exacerbate Iraq's particularly sore point -- namely, its throttled access to the Gulf which is the practical basis for its demands on Kuwait.

During 1992, two other frontier disputes became dangerously acute (The Middle East, December 1992). One is the question of Saudi Arabia's border with Yemen, nominally settled under an agreement signed in 1934 but which fell due for renewal last September. Saudi Arabia has chosen to make an issue of this. It held military manoeuvres along the border and questioned Yemen's rights to make oil concessions in the area.

The argument is more than a simple squabble over land rights. Saudi Arabia is intent on issuing a warning to recently unified (and heavily populated) Yemen about who is the major power in the Arabian peninsula. It also feels threatened by Yemen's headlong excursion into democratic elections.

Saudi Arabia has also become involved in a seemingly trivial quarrel about demarcating its frontier with Qatar. This is important only because of the seriousness with which it is treated by Qatar. Since the border flare-up, Qatar has boycotted meetings of the Gulf Cooperation Council. There have been suggestions that Qatar might suspend its membership of the GCC. As The Middle East went to press, neither side seemed in a mood for compromise. It can only be assumed that the Saudi-Qatari argument has a symbolic value insofar as Qatar is determined to assert its independence and Saudi Arabia wishes to underline its authority.

Qatar's threat to walk away from the GCC focusses attention on the organisation's internal differences. There has been little progress towards establishing a customs union, which is a prerequisite for reaching a free-trade agreement with the European Community.

More important, attempts to come up with a common defence policy appear to have run into the ground. Oman still insists that a 100,000-strong joint GCC armed force must be set up. Unfortunately, no-one else in the GCC is enthusiastic.

The failure of the GCC to coordinate their defence makes them vulnerable to Iranian pressure. This is where yet another territorial dispute poses a challenge to Gulf security. Both the UAE and Iran have asserted their possession of the strategically-placed islands of Abu Musa and the Greater and Lesser Tumbs. Last summer, Iran unilaterally abrogated an agreement dating back to 1971 whereby the two countries would share use of Abu Musa and oil revenues in the offshore field between the island and Sharjah.

Diplomatic efforts have made no headway in resolving the disagreement. It is not clear why Iran should wish to provoke its Arab neighbours. One assessment is that Tehran is taking advantage of the GCC's disarray to assert its role as the Gulf's leading power.

Iranian relations with the Arab world are exacerbated by an increasingly virulent war of words with Egypt. The growing militancy of Islamist extremists in Egypt (demonstrated most recently by attacks on foreign tourists) has prompted Cairo to accuse Iran of meddling in its internal affairs.

Some of the accusations are overblown. Iran is not, for example, plotting to blow up the Aswan High Dam and flooding Egypt. But the Iranian media is replying in kind. The Tehran Times, which acts as an unofficial spokesperson for the Foreign Ministry, has talked of death threats against Egypt's President Hosni Mubarak. Iranian radio accuses Egypt of mounting an "hysterical propaganda war" aimed at persuading the GCC states to allow Cairo to protect them in exchange for a financial hand-out.

This accusation gets to the nub of the problem. Collective self-defence among the GCC countries is a non-starter, even though member states continue to make polite noises about the idea. During the Kuwait crisis, when Egypt and Syria rallied to the anti-Saddam coalition, an agreement was signed in Damascus whereby the two countries would send troops to the region to bolster its defensive capabilities. The GCC has studiously avoided implementing the plan ever since.

Instead, the Arab Gulf countries have turned unashamedly to the West for military protection. The conclusion drawn from the freeing of Kuwait is, straightforwardly, that the oil consumers will always protect their primary source of supply.

So rather than combine their own military resources or call in the Egyptians or Syrians, the Gulf states have resorted to signing up the United States and the Europeans to look after their security and their perceived defence needs. Kuwait, Bahrain, Qatar and Oman now each have security agreements with the United States. Another is expected shortly with the UAE which will involve the expansion (presumably for military purposes) of Abu Dhabi port.

Other defence deals have been signed with Britain and France. Kuwait is even talking to the Russians, of all people, for extra insurance. All of which contains a certain irony since the planning for American intervention laid down in the 1970s (and acted upon in 1990) was specifically designed to protect the Gulf from a hypothetical Soviet invasion.

Saudi Arabia has a superficially different approach. Rather than sign a defence pact, it will proceed with existing agreements with the United States and allow foreign forces to use its air bases and ports, and like the other GCC countries coordinate training and military exercises.

The other aspect of this approach to Gulf security is an increased demand for Western arms supplies. Since the end of the Kuwait war, around $40bn of arms have been ordered from American, French and British suppliers. Kuwait alone will be spending $12bn over the next ten years.

In effect, the Gulf is buying protection from the West and, for the sake of its amour propre, arms for its own use as well. Twenty years after Britain lifted its protectorate from the Gulf and two years after the allied coalition saved Kuwait, not a great deal will change in 1993.

Saudi Arabia

GDP: SR458bn; $122bn GDP per capita: $9,568 Population: 12.75m GDP growth: 1992 4.5%; 1993 5.0% Inflation: 1990 2.5%; 1993 2.5%

* The Consultative Council appointed last year will be as far as King Fahd is prepared to go into broadening institutionalised political participation. If further changes in the government's domestic political orientation take place, they will probably show a leaning towards Islamic sentiment rather than Western-style liberalisation.

* Given its predominant weight within Opec, Saudi Arabia's oil pricing policy will be crucially important to the world economy in 1993. It in turn will be determined by the need to maintain income, so the kingdom can be expected to take a self-interested line within the organisation.

* The budgetary outlook is far from clear over the next few years. The government is already coming under growing pressure to reduce its chronic deficits on public spending and the current account (the rate of import growth is worth keeping an eye on in 1993). Doubts must also be entertained about the continued buoyancy of the stock market and the post-Kuwait war boom may have peaked. So look forward to a slowdown in non-oil sector growth this year, even though there will be nothing like a recession.


* Meaningful current economic data for Kuwait are hard to obtain. Admittedly speculative estimates put GDP in 1992 at about half the level of 1989, the last full year of economic activity before the Iraqi invasion. GDP may increase in 1993 by around 30%. Inflation is probably running at around 10% to 15%.

* Oil production at the end of 1992 stood at 1.3m b/d. This is much higher than forecast earlier last year and underlines the government's determination to boost output to the maximum (whatever the impact on the long-term viability of the oilfields). Exports are projected to reach 1.6m b/d this year, exceeding the pre-invasion level. As a result the estimated 1992 current account deficit of $1.5bn should be converted into a surplus of $2bn. Delays in implementing reconstruction projects and postponed government spending are helping to reduce the deficit, but will also impede the vitality of the domestic economy.

* The strong showing by the opposition in last October's legislative elections presages a noisy political debate. The government will have to put up with criticism since it can hardly disband parliament as it has done on two occasions in the past. But it will feel very uncomfortable if opposition deputies pick on sensitive issues such as foreign policy and the wisdom of past investment strategy. Kuwait will also be nervously watching development in southern Iraq. The last thing it wants to see is the emergence of an autonomous Shia entity there with all the questions this would raise about oil rights, borders and Iranian influence.


GDP: YR97.1bn; |pounds~5.9bn GDP per capita: $505 Population: 11.7m GDP growth: 1991 -4.8% Inflation: around 50%

* Elections to a parliament for unified North and South Yemen will be held in February. They have been postponed because of political and organisational problems. Perhaps more remarkable is that they are taking place at all. The major parties have little alternative but to press ahead because as it stands the government enjoys rather weak authority.

* Relations with Saudi Arabia will continue to be a thorny question thorny question throughout the year, possibly leading to renewed friction. Saudi Arabia remains angry about Yemen's support (albeit lukewarm) for Iraq during the Kuwait crisis, suspicious of its headlong plunge into electoral democracy and wary of the emergence since Yemeni unification of a highly populated potential rival in the Arabian peninsula.

* Yemen's economic crisis shows no sign of lifting in the near future. Only the rapid expansion of oil output will lift the gloom. Currently, the country is producing around 230,000 b/d. Under optimistic projections, this will grow to 650,000 b/d by 1996. More realistically, it is likely to be 450,000 b/d. Without greatly increased oil exports, however, it will be impossible for Yemen to break free from the grip of chronic and massive current account deficits.
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Title Annotation:Outlook 1993; includes related articles
Publication:The Middle East
Date:Jan 1, 1993
Previous Article:Fortress Europe?
Next Article:Oman: consensus and consultation.

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