Well-Being of Living in the GCC Persian Gulf - Case Study Example

Well-being of living in the GCC Persian Gulf (Welfare) Table of Contents Table of Contents 2 0Introduction 3 2.0Economic And Social Welfare Conditions In The GCC 4 2.1Merits of living in the GCC 4 2.2 Challenges of living in the GCC 6 3.0Conclusion 8 References 9 1.0 Introduction The Gulf Cooperation Council (GCC) also known as the Cooperation Council for the Arab States of the Gulf (CCASG) was formed in 25 the May 1981 as a political and economic block consisting of the states bordering the Persian Gulf. The members of this union include Saudi Arabia, Qatar, Bahrain, United Arab Emirates, Kuwait, and Oman. The block has sent invitations to Jordan and Morocco to join the council. The objectives of the GCC states include but not limited to: the formulation of economic, financial, trade, customs, tourism regulations trade, customs, tourism, legislation, and administration; the fostering of science and technology in the mining, agriculture, water and animal industry; fostering research and developing research centers; pursuing joint venture initiatives; Pursuing a unified military presence; developing structure of cooperation with the private sector; strengthening ties between the GCC citizens; and the establishment of a common currency by 2010 (Sturm & Siegfried, 2005). The GCC block includes states with some of the fastest growing economies in the world owing to oil and natural gas boom. The growing economies are also supported by decades of planning and investment in infrastructure. The region is also becoming one of the favorite recreation hot spot having secured the rights to hold the World Cup in 2014 and 2016 Summer Olympic Games, hosting the 2006 Asian Games, Qatar Formula One, golf tournaments etc. On the downside is the leadership of the council has been accused of not being aggressive in combating the economic slump. Their strategies have been faulted for failing to set clear goals, lack of prioritization, the crowding out of the private sector, failure to restore investor confidence. These allegations are seen to undermine the long term stability of the Council (Buiter, 2007). 2.0 Economic And Social Welfare Conditions In The GCC The GCC as an administration and a block is still delicate owing to the overreliance on oil and natural gas, utilization of migrant workforce and ideological differences among the member states. This section explores the merits and the challenges faced by the residents of the GCC, in relation to economic and social welfare. Section 1.1.1 discusses the advantages of living in the GCC in relation to the other Middle East Arab states. Section 1.1.2 explores the challenges faced by both the citizens and the administration of the GCC in relation to economic and social welfare. 2.1 Merits of living in the GCC Over the years the GCC countries have managed to utilize their oil resources to improve the welfare of the GCC citizens and aliens residing within the GCC. Although; the oil prices have been volatile over the years proper planning and stable political institutions have enabled the states to stay afloat when compared to the other Middle East Arab counterparts. The oil proceeds have been reinvested to provide the citizens with employment, improved infrastructure, improved social conditions, improved economic conditions. It is true that despite the advances, the GCC still faces a number of economic and social challenges (Khan, 2009). It is quite commendable to note that the GCC block is becoming more advanced in terms of infrastructure and economy. Even though most of the region is a desert, it is quite commendable that the issue of food has been adequately addressed with most of the imports being food stuff. The region is one of the major import destinations for meat products; however with the block having more imports than exports, the economic implications tend not to favor the Council. The region has invested heavily in research and especially in agriculture and animal husbandry, with focus on improving the resources they already have. With a rapidly growing labor force, the GCC is becoming a global force to reckon. The Council has managed to develop indigenous experts who are conversant with their local issues, at the same time they have managed to attract top brains that are currently reaching and developing local capacity. The consequence of this highly specialized local expertise translates to advancements in the medical, agricultural, construction, financial sectors of the economy. The effect in turn is better medical services, better production of food through agriculture and livestock husbandry, improved infrastructure e.g. Better roads, rails, schools, houses, hospitals etc. The consequences of developing indigenous skills are that the Council will be able to benefit from local expertise and localized solutions. The local skills and expertise presents a wealth of innovation capabilities (Buiter, 2007). There is a great gap when you compare the welfare state of the Gulf States and their northern Gulf neighbors. This is due to various fundamental reasons. One fundamental reason is due to the political structures inherent with variant historical experiences. It is quite true that better politics leads to better welfare conditions. When you compare Iran or Iraq from the GCC states, you will realize that the latter has unified social and political organization whereas the previous states exhibit complex societies infiltrated with divergent sectarian, linguistic, ethnic, and occupational communities. The Gulf States are also smaller in size thus the administration of such states becomes easier and the distribution of resources seem manageable and not as constrained like the counterpart Northern regions. The effect of this is that the states are more controllable, more cohesive and homogenous. A smaller population means that the proceedings from the oil and gas resources can be felt more than in the populous northern states. This translates to a better GDP, meaning that the benefits of the good economy can be felt even to the individual level in terms of social amenities, economic prosperity, employment opportunities, welfare programs etc. (Kopits & Symansky, 1998). It is true that a stable and progressive political system certainly leads to prosperity in the economic and social cycles. Over the last decade there have been challenges that have affected the welfare of the GCC citizens. Most prominently are the fluctuating prices of crude oil, lack of natural resources, low levels of education as compared to countries like Iraq and Iran and recent wave of political unrest and instability in the states surrounding the GCC. These factors have had a direct impact on the economy of the GCC states and thereby affecting the welfare of the GCC citizens (Khan, 2009). 2.2 Challenges of living in the GCC There are several challenges that affect the citizens welfare of the GCC, these include: ideological and political discontent; insecurity; retarded economic growth; low levels of education; poor relations with neighbors; rights of travel, residence and employment etc. Ideological and political discontent has been around for a long term from the period of the early monarchs of the region. In the early days of the states comprising the GCC, we has regime after regime being deposed due to ideological and clan feuds among the leading elites. In almost all the cases the elite have managed to repress these ideological differences. This is also true in the modern GCC states, with Bahrain being a good example. Ideologies of Islam vs. sectarian have been in dominant in these states. The state has diverse ideologies with some practicing totalitarian Islam with some moderate and secular regimes. The harmonization of such ideologies presents a delicate balance for the survival of the GCC. These ideologies mostly determine the welfare of the citizens with lifestyle being a predominant factor. Lifestyle will dictate the way of life for the citizens in a particular society, if the citizens are not allowed to express their lifestyle openly, they feel like they are oppressed and restrained by the government machination. The recent unrest in the Arab countries was due to some of the reasons that have to do with ideologies. There for the welfare of the GCC needs to improve and especially in states that have totalitarian regimes (Sturm & Siegfried, 2005). Security is a major concern for the GCC considering the volatility of the environment surrounding the states that surrounding states. There is a threat of terrorism for the states who are seen to be sympathizers of the western countries, there is frequent and real threat of attacks from the powerful neighbors, and there are also concerns about citizens’ protests like in Bahrain. All these security issues have a pointer to the welfare of the citizens. With insecurity, it means that the GCC members are going to allocate more funds to military activities at the expense of welfare programs like education, health and infrastructure. Insecurity also has a pointer to the health of the economy as it results in low investor confidence. Thus if a region is volatile, the investors are likely to invest in less risky regions (Bassett, et al., 1994). In comparison to Iran and Iraq long who have enjoyed a good measure of economic development and diversity reinforced with natural resources and education, the GCC still falls behind these aspects. The low levels of education means that the GCC states will spend more money to employ experts to train the local population depend on the expatriate community to deliver specialized services which is expensive, and lack of local skilled labor. The use of more experts means that the economy is importing knowledge which can be expensive than the oil they are exporting, this in effect brings an imbalance between imports and exports resulting in poor economies. Thus to mitigate this, the GCC needs to formulate policies that attract specialized knowledge while at the same time retaining the expertise the already have acquired (Sturm & Siegfried, 2005). Relooking at the GCC economy, there is evidence of a rocky relation amongst states with difference in ideologies of tariffs, common currency, residency, barriers, employment etc. There is a great disparity in the issue of unemployment in the GCC states prompting migration of people from one state to the other. The migration of these people brings fundamental imbalances in the social structures of the GCC states. Migration also has an effect in the utilization of the hosting state with some being overstretched. The proposed tariffs have an effect to the lifestyles and welfare of citizens. The application of subsidies by the more affluent states over its citizens created trading imbalances and between the states, this in effect affects the economies of the states. The reluctance of some states to agree on some of the proposed tariffs is a pointer to the upholding of national sovereignty, a key fundamental principle (Khan, 2009). Owing to over reliance on oil and natural gas by these states, the GCC is greatly affected by fluctuation by oil prices. Over reliance on oil proceedings means that any issue that affect the oil market and supply chain will certainly affect the welfare of the GCC citizens. This effect has also affected the labor market. When the fluctuations became rampant, there was rise of the unemployment rate and especially for the youth. The lack of employment opportunities prompted labor unrest in an economy fuelled by a migrant workforce (Bassett, et al., 1994). 3.0 Conclusion In conclusion, the GCC is still delicate owing to the overreliance on oil and natural gas, utilization of migrant workforce and ideological differences among the member states. At the same time it is commendable of the progress they have made in terms of infrastructure, reinvestments from the oil proceedings and science and education. All these factors have a direct impact on the welfare of the residents of the GCC and needs to be addressed and reinforced adequately. References Bassett S., Liuksila C. & Garcia A, (1994). "Fiscal Policy Sustainability in Oil-Producing Countries," IMF Working Papers 94/137, International Monetary Fund. Buiter, W H., (2007). "Economic, political, and institutional prerequisites for monetary union among the members of the Gulf Cooperation Council," Open Access publications from London School of Economics and Political Science. Retrieved on 24th February 2012, from: http://eprints.lse.ac.uk/ Khan, M. S. (2009) The GCC Monetary Union: Choice of Exchange Rate Regime. Washington DC, USA: Peterson Institute for International Economics. Kopits G. & Symansky S. A., (1998). "Fiscal Policy Rules," IMF Occasional Papers 162, International Monetary Fund. Sturm, M, & Siegfried, N., (2005). Regional Monetary Integration in the Member States of the Gulf Cooperation Council. Frankfurt am Main, Germany: European Central Bank. ISSN 1725-6534. Occasional Paper Series, No. 31. Read More