April 1990, Page 42

Trade and Finance

By John Haldane

Arab Aid Drops Sharply

The Paris-based Organization for Economic Cooperation and Development (OECD) reports that official development assistance by Arab countries fell to its lowest level ever in 1988. Estimated Arab aid fell to $2.4 billion, 27 percent less than in 1987. Saudi Arabia continued to be the major contributor of Arab aid, accounting for 90 percent of the 1988 total. Kuwait, which formerly was a major donor, reduced its aid to only $108 million in 1988.

Arab disbursements have fallen throughout the 1980s and now stand at less than half their 1980 level of $8.7 billion. The OECD report states that the decline is primarily due to the ending of large payments to Jordan and Syria under the 1978 Baghdad Agreement, which provided for $3.5 billion annually for ten years to Syria, Jordan and the Palestine Liberation Organization.

Net disbursements from national Arab aid agencies also dropped sharply in 1988, as did disbursements by multilateral Arab and OPEC funds, although not to the same degree as the national, organizations.

Iran Pushing for Closer Trade Links with Oman

Iran is moving to further cement its traditionally close trading relations with Oman. Muscat was one of the few Arab capitals to have maintained normal relations with Tehran during the eight-year Iran-Iraq War. An Iranian-Omani economic cooperation commission was established in March 1989. Talks during subsequent commission meetings have focused on cooperation in trade. industry, technology and transportation.

The Iranian ambassador to Muscat, Mohammad al-Arab, and Salim Ibn Abdallah al-Ghazali, the Omani Minister of Commerce and Industry, concluded a two day meeting last December by announcing that trade and economic relations would be significantly increased in 1990.

Iran is using its warm relations with Oman as a means eventually to enjoy closer economic and trade relations with the five other Gulf Cooperation Council (GCC) states. One of the main topics discussed at the GCC's tenth summit, held last year in Muscat, was ways to promote closer trade relations with Iran. While Saudi Arabia still has declined to resume diplomatic ties with Iran, several other states, notably the United Arab Emirates and Oman, are anxious to increase commercial activities with Tehran.

Early last year, Ali Maji Khamoushim, president of Iran's Chamber of Commerce, announced that Iran wanted to set up a joint chamber of commerce with the GCC, to be based in Dubai.

Sheikh Yamani Founds Center for Global Energy Studies

Sheikh Ahmad Zaki Yamani, the former Saudi Arabia Minister of Petroleum and Mineral Resources, is the founder and Chairman of the new Center for Global Energy Studies (CGES) to be based in London. Yamani stated in January that his new organization will be an independent, nonprofit institution designed to serve as a forum for the better understanding of world energy problems and will undertake non-partisan research in all energy areas. Two of the first in-depth studies on energy issues to be carried out by CGES will be a technical and economic assessment of oil production capacity in the Persian Gulf and a study of the energy implications of the political and economic changes presently occurring in the Soviet Union and Eastern Europe.

The high-powered CGES governing board includes Edward Heath, former UK prime minister; Denis Healey, former UK chancellor of the exchequer; Yousef al-Shirawi, Bahrain's Minister of Development and Industry; and Fadhil Al-Chalabi, former deputy secretary general of OPEC.

EC-Arab League Dialogue

The 12-member European Community (EC) and the 22-member Arab League decided late last December to resume a formal dialogue on political and economic issues after a six-year hiatus. During the conference, Italian Foreign Minister Gianni De Michelis proposed a substantial increase in EC development aid to Arab countries. The two groups agreed to establish three working committees, economic, technical and social/cultural, to explore such subjects as how to improve trade ties and strengthen cultural understanding. Several symposia also will be set up, including one on petrochemicals and another on promoting and protecting investments.

The Arab League members have been anxious to improve ties with the EC, in part because they fear they will be left out as the EC forms a barrier-free market by the end of 1992. Also, the Arab nations are concerned that they might receive less attention as the EC grows increasingly involved with helping East European nations.

John T. Haldane is a Middle East specialist who has served as a Foreign Service officer in Baghdad, Cairo, and Beirut, and as an international economist in the Departments of Commerce and Treasury.