Bid to mend EU ties with Gulf states

Date: 11/04/1996

By Elizabeth Wise

IN a plea for the rescue of floundering relations with the nations of the Arabian peninsula, the European Commission last autumn asked EU governments to show more interest in the Gulf states and security in the region.

The Union will have a chance to do so later this month when its foreign ministers meet their counterparts from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Relations with the Gulf Cooperation Council (GCC), of vital interest to the Union because the council's six members jointly control half the world's oil supply, have been rocky in recent years.

Forecasting that the EU will rely on foreign oil and gas for 60&percent; of its energy needs by the year 2010, the Commission is lobbying ministers to secure that oil supply - and the GCC's good will - by allowing it to negotiate a free trade agreement with the Gulf.

“Lack of affirmative action at an EU level of interest in GCC security has led to the impression in the GCC that the United States plays an almost exclusive role in the political and security spheres,” the Commission warned in its report to EU governments.

That inaction has also helped US companies “to benefit economically ... not only with regard to military sales, but also in key sectors such as civil aviation and telecommunications”, despite generous EU military help during the Iran-Iraq and Gulf wars.

Even if the Union wants better ties, it may have a hard time convincing members of the GCC.

The Gulf states are not over-enthusiastic about EU efforts at rapprochement. Diplomats from some of those states, already benefiting from the EU's most-favoured nation status, say they see no pressing need for a trade agreement with the Union.

Oil already enters the EU duty-free and the only product that does face tariffs is petrochemicals. The EU has already said that it would fight for a long protection period for its own petrochemicals industry before abandoning tariffs in any free trade agreement.

Nor would the Gulf states gain from sending refining products to Europe, where there is already a surplus and where numerous oil companies have announced plans to close refineries.

What Gulf states want instead is control over their oil and many are already buying refineries and petrol stations in Europe: the Q8 logo owned by Kuwait is the most well known of many recent acquisitions.

Proposals for an EU-wide energy tax have not helped matters, as the Gulf states feel it would be directed primarily at them. And although Commission officials say this is no longer a bone of contention between the two sides - mostly because the tax plan is virtually on the rocks - some Gulf diplomats disagree.

Petroleum lobbies in Europe also say they would want a good look at any trade agreement before it was approved by their governments.

But one industry lobbyist commented: “We are happy to have closer links to reassure people in Europe that oil is a secure energy source.”

There are also signs of a split within the Commission on this issue. While the Commission report on relations with the GCC focuses primarily on supply security, its own White Paper on energy maintains that this is not a concern, arguing that the Paris-based International Energy Agency, created after the oil crisis of 1973, was effective in preventing a similar crisis during the Gulf War.

In fact, says the industry, ample global supplies mean Gulf states are as dependant on European consumers as Europeans are on their supply.

Nevertheless, they admit, good ties are crucial to maintaining that stable supply.

To that end, the Commission has asked EU governments to make the Gulf region a priority in their Common Foreign and Security Policy (CFSP).

It also believes that GCC states should become more involved in EU efforts in North Africa and the Middle East, insisting: “An EU vision to promote security and stability in the Mediterranean should not stop at the frontier of Saudi Arabia.”

Commission officials list ties with Iran, Iraq and the Middle East as examples of areas where the two sides “have very close common interests in a number of political and security issues”. Generally maintaining a policy of not isolating Iran, the Gulf states are more likely to support the EU's critical dialogue with Tehran rather than the US policy of freezing it out. The Union and the GCC both support UN sanctions against Iraq.

After the Union, the Gulf states are the second largest financial contributors to the Palestinian territories. EU and GCC funds often blend in projects there.

The EU also wants GCC help in understanding the Islamic issues at work in the nations linked to the Union through the Euro-Mediterranean initiative, as well as political and financial support for EU reconstruction in Bosnia-Herzegovina.

The Commission argues that governments should reinforce cooperation in these areas of common interest.

In Granada last July, a meeting of troika ministers and their Gulf counterparts agreed to provide new impetus to the dialogue, and recommended more frequent meetings at a high official level and increased economic ties.

At their meeting in Luxembourg on 22 April, EU foreign ministers are due to approve measures for implementing those recommendations.