This week SUSRIS provided the six panel presentations from the “Gulf Cooperation Council at 31: Implications of Trends and Indications for GCC and US Interests,” a symposium presented n Washington, DC, on May 24th by the National Council on U.S.-Arab Relations. The half-day panel presentations touched on a wide range of topics and challenges on the minds of GCC and American leaders. We conclude this series with the transcript from the question and answer session moderated by Dr. John Duke Anthony, President of the National Council. The panelists included Ms. Molly Williamson, former senior official in the Departments of Commerce, Defense, State and Energy; Dr. Odeh Aburdene, President OAI Advisors and authority on international monetary issues; Ms. Randa Hudome, former Energy Department Associate Deputy Secretary; Mr. Joshua Yaphe, State Department Bureau of Intelligence and Research; Mr. Andrew Rabens, State Department Bureau of Near East Affairs; and Dr. Robert Sharp, Defense Department Near East and South Asia Center for Strategic Studies. SUSRIS thanks the NCUSAR for organizing timely and insightful sessions such as this to share the perspectives of knowledgeable officials and specialists.
[Dr. John Duke Anthony] Now for the Q&A session and discussion. Again if you don’t have a 3×5 card hold your hand up and if you do and you have written a question, also hold your hand up and I’ll do my best to cover as many of the questions as have been submitted that were not directly addressed or even indirectly addressed by the members of the session here. Let me read them in terms of a group of five or six so that the speakers can begin thinking if they wish to make a point or comment here.
How can sovereign wealth funds be used to advance GCC interests?
What is the likelihood of GCC countries having to lessen their oil exports due to increased domestic demand in the coming years?
A missile from Iran could strike the UAE in minutes. With the acquisition of advanced air defense systems such as those that have been purchased in recent years by the UAE including the Patriot missile defense, is this enough to deter Iran? If so how is it enough; if not, what else is needed?
Can you explain the situation in Yemen in terms of US interests and how and where are they aligned with GCC interests given the steadfastness of the GCC as a whole, in terms of their unwillingness to admit Yemen as a full member? Professor Sharp touched on this somewhat.
What types of jobs will be needed to absorb the youth bulge, that Andrew, you addressed, in recent university graduates.
Will Iran enrich it’s nuclear material up to weapons grade and have a Japan-like position in a role of some ambiguity but also increased capacity or is this a little more than a rouse to keep the GCC and the United States on its toes in reacting to Iranian needs, concerns, and initiatives?
What is the likelihood of the proposed GCC federation coming to fruition and what are the positions of the GCC members regarding this Saudi Arabian initiative?
These are excellent questions. Perhaps, Odeh you want to have a crack at the one about how can sovereign wealth funds be used to advance GCC interests but the others are welcome to comment as well.
[Dr. Odeh Aburdene] I want to comment on what Joshua said. What are the motives for a GCC union? I think the economic reasons are very compelling. Saudi Arabia has the largest GDP in the region and if you have a totally economic union that could provide more investments in certain countries like Oman and Bahrain, you can have people from Kuwait going to a larger market like the Saudi market, the same thing for the UAE. So I think economically, it makes sense to have an economic union. And it would be beneficial for everyone.
Big markets are good. They create more opportunities. It could help in the case of Bahrain. Bahrainis could cross over to Saudi Arabia and work. It’s only a matter of 45 minutes. As far as the GCC, the sovereign wealth funds have been independently operating. There’s no coordination between SAMA or the Abu Dhabi Investment Authority or the Kuwait Investment Authority. However, if there is an economic union and they can pool their resources to create new industries, they have resources. The challenge now is really how to create a labor force that is talented, that is skilled, that’s innovative. First you have to have a good education. Secondly, you have to have a wider market. And a GCC market is bigger than an individual market. So I think in the area of new technologies, new investments, for example, in the area of transportation, a lot of innovation is necessary. And if this innovation is actualized, it would be used in America, it could be used in China, it could be used in Japan, it could be everywhere.
So I do feel with the challenges education, encouraging, private entrepreneurs, the states in the region are making efforts to go after clean energy, green energy, but I would like to see individuals, I like to see people become like John D. Rockefeller. As I said before we have traders but we don’t have really industrialists. When you look at the region, except for the national oil companies we don’t have any multi-national Arab companies. You don’t — despite the $2.2 trillion — I do not see a global Arab investment bank You have Kuwaiti banks, you have Saudi banks, you have Omani banks, you have Bahraini banks. So there are plenty of opportunities to become more of a global player in the fields of finance, in trading and in venture capital. I would like to see an Arab Microsoft and a Mark Zuckerberg. That’s the way ahead. If you really want to create jobs, if you want to eliminate unemployment, it has to come through industrialization, innovation and it has to go beyond just exporting oil.
[Anthony] Thank you. What is the likelihood of the GCC countries having to lessen their oil exports due to increased domestic oil demands in their own economies in the next ten years? Perhaps Molly, you and Randa have a whack at that.
It is the case now that the oil producing countries are using more of their revenues and more of their own commodities in order to develop their economies to build infrastructure and develop jobs and relevant education. As Odeh pointed out there is a growing skills gap in the region. The people who are unemployed and the jobs that are needed don’t have a good match. And so there is more and more attention being put to creating those institutions that will fill that gap and that means more and more of the oil revenues going to these institutions and these infrastructure needs and more and more of their commodity being used to fuel the growth of these economies. That has in turn produced tremendous effort on the parts of these same governments to come up with alternative fuels, alternative opportunities. Randa just went through a wonderful itemization of the alternative fuels efforts, the renewables efforts that would also have the impact of putting, leaving more of the traditional hydrocarbons in the marketplace, so that the very tight supply and demand equation that the world is looking at can have a little more stability and a little less volatility in the marketplace. [Ms. Molly Williamson]
So the governments recognize that these are at risk and that the needs are growing and that it is essential to create that skills bank that will make it possible for the young people to have opportunities, to have jobs, to have a better infrastructure with which to work.
[Anthony] Randa, do you want to comment?
[Ms. Randa Fahmy Hudome] Yes. Just a note. If we were to look ahead ten years from now it is very difficult to say what the price of oil is going to be. My guess is that it is going to be nowhere near what it is now, which is over $100 a barrel. It makes economic sense if you are producing oil, to export it, to get the most you possibly can for the exact reasons Molly was taking about, to be able to fuel your own internal economy. I think in the next ten years the renewable energy industry will take off like wildfire in the Middle East. And what you will see is the replacement of the renewable energy field not only to diversify the economy to provide jobs for the youth and to provide the energy resources. Remember, oil, petroleum, gas is a finite resource. At some point they are going to run out. And the better they are prepared for that the more likely they’ll be successful in the future.
[Aburdene] I think renewable energy will lengthen the life of the oil resources so it is in the interest of the GCC countries to have oil last for 200 years instead of 50 years. Therefore when you look at alternative energy resources it is an opportunity for you to make investments that will give you a return on capital and that will also give you a new source of energy.
[Anthony] Thank you, all three. Perhaps one would go to you, Bob. A missile from Iran could strike the UAE in 40 seconds. In other GCC countries, probably longer. With acquisition of advanced air defense systems such as the Patriot, is this enough to deter Iran? And, if so, how so? And, how do you read the Iranian annual seaborne exercises in the area of the Strait of Hormuz and their increased capacity at special operations, namely undersea activities, as much of the GCC’s offshore energy structure is indeed beneath the waters? Professor Sharp.
[Dr. Robert Sharp] I think the solution is an anti-air missile defense shield. Iran does pose a threat. What Iran will do and where it will do it depends on where Iran sees the weakness. It won’t necessarily try to attack targets people think they will attack. It will probably go for the ones that would least be expected. I can’t talk in environments of a classified nature in terms of specifically the threat, but I think my earlier comment will stand alone.
As far as what Iran was doing with exercising, it was being provocative and trying to stir up trouble. In so doing it is attempting to destabilize the region to determine some form of reaction and fragment the group of countries that are currently lined up, arguably, in opposition to their expansion efforts and their meddling and aggression. I think that the solution is some form of air defense shield. I believe Iran is trying every dirty tactic it can to generate some form of reaction to give them an extra day to continue to progress the process towards gaining nuclear weapons.
[Anthony] Joshua would you like to add something?
[Joshua Yaphe] Absolutely. Not to that particular issue, but I would address the other question on the likelihood of GCC union? There are a number of issues where there are clear reasons for greater cooperation, information sharing, combined action. You have issues of human trafficking and drug smuggling in the Gulf. You have issues of how to deal with questions over legal approaches to defining citizenship and naturalization. They all have common interests, common goals in these areas for the most part.
Health care and the environment, health tourism, which is a big issue in the Gulf. But also it’s a common environment. Certainly if Iran accomplishes its goal of a nuclear program there are environmental issues related to that, that all of the GCC nations are going to have to confront and terrorism is always an issue where greater combined effort is welcomed and necessary.
So then you can conceive of a number of institutions that would be valuable to grow out of the GCC Secretariat whether as stand-alone brick and mortar centers or as informal cooperative mechanisms. And then you can imagine more concrete efforts. There are articles earlier this year suggesting the GCC ministers of interior had discussed the need for a common police force or gendarmerie, maybe not a police force in terms of domestic policing sense, local policing sense, but in terms of more a gendarmerie, like you would get in Europe as an attachment to Peninsula Shield.
So there are many different gradations of union that can exist, many different gradations of cooperation beyond what already exists. And I think all those things will occur at some point, will progress at some point. How long that is, how long that takes to get there? I don’t know. But the Article Four of the GCC charter is very clear that the ultimate goal of this effort is union, is unity. So at some point down the road, I wouldn’t be surprised if there is a real political pact. Thank you.
[Anthony] Thank you, Joshua. Andrew what types of jobs will be needed to absorb the youth bulge and university graduates.
[Andrew Rabens] That’s a great question. I think if we knew that we would take that and apply it to the U.S. first then export it out to the Gulf. But you hit the nail on the head. That’s the golden question. And I would kind of triple track it, if I was advising one of the governments.
You have to first try to find where are the emerging markets? Some of the panelists here have touched on it. You have your tech sector. You have your renewable energy sector, transportation sectors. Where are the potential job markets that are going to be there 20-30 years down the road? The places where country leadership wants to start investing today? Then I think you have to start, regardless, reinvesting, expanded investment in your early and higher education programs.
I think that there is an element, you know we talked about the next Mark Zuckerberg, the next Bill Gates? Do you remember what college did Bill Gates graduated from? What college did Mark Zuckerberg graduate from? They didn’t graduate college. Or maybe they did way down the road.
These guys as freshman and sophomores in school already had the mental capacity and the technical capacity to start companies that were going to have incredible global reach and impact. So we’re talking about, I think there’s a piece of that that is the inquisitive question inducing thinking. You know, how do we apply programs and I think that we wrestle with this in the United States as well, but how do we get students at early ages to start asking those questions, to start applying, being a little bit arrogant in their thinking and starting to try things in an entrepreneurial fashion on their own?
So both from an early Ed and a higher Ed stand point, and finally, again I think as Ms. Williamson mentioned, it’s finding the mismatch currently with jobs and skill sets. There’s clearly at least at some level a gap between where jobs are in the Gulf and current skill sets so how can we provide some immediate vocational programs on the ground. I think State Department and the US Government does some of that already in the field but how can we work collaboratively with the government on a larger scale to try to find where those gaps are and then to build skill sets for either current recent graduates or frankly for graduates who are older who need the transition skill sets.
[Anthony] Yes, Odeh.
[Aburdene] It is missing in the region. Bill Gates and Steve Jobs and Mark Zuckerberg and Larry Ellison, when they began their research or their inventiveness, there was capital. There were people who were willing to risk that capital. In the Middle East, you don’t have this capital. People are willing to buy a hotel. People are willing to trade or represent Toyota or Mercedes Benz.
So we need to create an environment where you have, Arabs are talented as anyone else and what is lacking in the region and I see it — there are many American Arabs who have great ideas and would like to go back but you don’t find risk capital. Here, there is plenty of risk capital and that’s where the jobs have been created in the last 40 years, hundreds of thousands of jobs.
So that’s why I keep saying, you know you have to come up with risk capital. Capital is available. The banks are very liquid but very little money has gone to back entrepreneurs and venture capitalists. And that’s where I think the US can show the way.
[Anthony] Let me get back to the GCC-Iran fears of threats, intimidation, attack. None of the speakers on the energy portion of this discussion brought in or made reference to another country in the Middle East already having nuclear weapons. And when we call, or others call for a nuclear-free, nuclear weapons free Middle East environment, somehow the eastern end of the Mediterranean doesn’t come into focus as such. And to posit that, were Iran to obtain this capacity, despite our opposition and opposition of others, what would likely be the scenarios of other countries in the region feeling they had no choice but to do the same?
In other words, if your neighbor has obtained a shotgun and you don’t have one, would you be wise or unwise if you did not also obtain a shotgun? Perhaps Professor Sharp could have first whack at it and then Randa and Molly because when you worked on the energy questions, you had the nuclear file?
[Sharp] That’s a really hard question. There’s a wonderful book by Kissinger who talks about the fact that we are at a place in history where for the last 60 or so years, we have not used the weapon of maximum effect. And that we have refrained from doing that because of the balance of possession of that weapon.
If Iran gets nuclear weapons, then clearly that balance changes. You know Kissinger talks about lots of little nuclear wars. I think that’s why we are saying we do not want Iran to have nuclear weapons. We don’t mind nuclear technology. The UAE is developing it peacefully through an IAEA process. That’s fine. But we do not trust the Iranian regime.
So I think a scenario of Iran gaining a nuclear weapon will lead to a world very different than the one the day before they got it. And unlike maybe the restraint occurring in countries like the US, they’re probably going to try and use it somewhere. And then all bets are off.
[Hudome] This is a big issue. But on the IAEA issue, which I worked closely with when I was at the Department of Energy that was under the international portfolio. I think they’ve proven themselves to be a very legitimate international organization in not only monitoring this but being able to solve some of the crises as we’ve seen. If we believe what we hear, there is some sort of breakthrough in Iran.
Iran’s the most difficult nut to crack, but I do have to say this, I mean who gets to decide who has nuclear weapons or not? We do. Who’s we? The United States. Of course under the auspicious of agreement of the whole international community but we are the superpower.
Now, where we see this run into problems of course is when we enter and we bring Israel into the equation, which I think everybody knows has nuclear weapons. And you have Egypt next door who’s pushing the nonproliferation treaty, saying we’re going to sign it, why don’t they sign it? The whole, “If the neighbor has it, why don’t we have it?” You have some overriding issues in the region there but I think the ultimate question, India-Pakistan. Look at it. All across the region, North Korea, is the question of who gets it, why do they get it? And who gets to decide who gets it or not?
I do think there is a comprehensive agreement around the world that you cannot let nuclear weapons fall into the hands of people and leaders that are not stable ergo, the programs we’ve had to take weapons of mass destruction out of dictators hands. Iraq, Libya and others.
[Williamson] I think we’re talking about a very delicate and messy kind of situation. A great deal depends on how people view the intent to acquire nuclear expertise, sophistication, perhaps capability, perhaps even develop weapons grade material, perhaps even develop weapons, perhaps even develop delivery systems capable of putting those weapons on a target.
The analysis of intent is a very difficult challenge that every capital on the planet has to deal with. How do you know what you can trust in terms of what is stated by any capital? And if there is not trust, then there will be continuing deep suspicion as I think we’re seeing now globally with respect to Iranian intentions.
Iran claims it does not seek nuclear weapons and the world claims it does not want Iran to have nuclear weapons. So, the space to negotiate is how can the world be satisfied that Iranian stated claims are in fact their goal and their behavior? And how do you guard against the possibility that in simply saying it does not seek nuclear weapons, it is not in fact buying time in order to develop that same technology and capability. We’re playing with fire, they’re playing with fire. It’s a very, very dangerous time. And that has put an extra burden, an extra weight, on having the IAEA and its monitoring and inspection teams have access.
If in fact we have some greater access, that’s what’s going to be necessary to test that intention question. And it will not be something that can be done once and everybody goes away, but it has to be continued monitoring. And this means evermore intrusive access, that’s a difficult thing for many countries, not just Iran, to tolerate. And it’s very difficult for the rest of the world and in particular, its neighbors to say, “Oh well, OK, now we trust.”
That’s what’s at stake. It’s not easy, it’s not going to be easy, it’s maybe never going to be easy.
[Anthony] This question is for me, I believe. Why did this concept of pursuing greater union of and within the GCC occur at this time, and in Riyadh, and articulated by King Abdullah? My answer would be the following.
One, that the fact that it came forth from Riyadh makes it itself by definition more important than if it came from any other of the GCC capitals simply because of the weight of Saudi Arabia. Simply because Saudi Arabia is the one GCC member whose borders are adjacent to all the other five GCC members and none of the other GCC capitals have that particular position.
It’s also about the size of Saudi Arabia’s economy, the fact that it is a major regional power and has 13 borders. It has been a cofounder of more than a dozen regional, sub-regional international organizations. And that it came from King Abdullah perhaps merits the following as a consideration. Here’s an individual in terms of all of the sons of the late King Abdul-Aziz, the founder of the modern third Saudi Arabian state. His father married the widow of one of the most powerful chieftains in the kingdom that had opposed the Al Saud and so this one son of Abdul-Aziz knows more than any other the power of tribal and marital unification. Indeed marriage is the quintessential institution of unification.
Thirdly, that particular tribe of his mother had branches, has branches elsewhere outside of the kingdom. In Bahrain, in Kuwait, in Syria, in Jordan and Iraq, to a powerful extent that does not always go acknowledged by the media. Another aspect of it is that when the Caliphate of the Islamic world headed by the Ottomans came to an end in the 1920s, many Muslims worldwide where aghast that for the first time in nearly half a millennia, there would be no Caliphate. There were those who urged that his father give serious and favorable consideration to at least being a nominee or a candidate for the Caliphate. But his father wisely refused out of recognition that the duties of a Caliphate for what is now almost a quarter of humanity are enormous. And massive and pervasive as they were he realized that just administering Saudi Arabia itself and its expanded realm would almost be beyond any mortal’s reach. But now we’re in 2012, the world is profoundly different and the role of the king of Saudi Arabia being the Custodian of the Two Holy Places, which are the epicenter of prayer and pilgrimage of faith and spiritual devotion. So between a fifth and a quarter of humanity have placed upon the Custodian of the Two Holy Places greater opportunities and challenges and possibilities than ever before.
And related to that is that from 1962 onward, he knew every American Secretary of Defense from the Administration of John F. Kennedy, straight through to the present. And as the head of the Saudi Arabian National Guard which was melded on the backs of the country’s most prominent tribes, perhaps no one else in the Saudi Arabian government has personified what unification can do, can be, and entails. On top of which, there are the mounting problems of Syria, the mounting problems of Iraq. No Arab head of state has more deserved credentials of trust and confidence in Damascus and Baghdad than King Abdullah of Saudi Arabia.
To be sure, there are the ongoing problems between Kuwait and Iraq but Saudi Arabia’s support for Kuwait in those claims is of immense importance. To be sure, Yemen is the place of extended massive pervasive turmoil that Professor Sharp alluded to, but no country among the GCC countries has been more extensively and intensively involved in Yemen than Saudi Arabia. No other GCC head of state is fully aware of the implications of Yemen having 135,000 villages of fewer than 200 people. And when you have fewer than 200 people in a village you have no school, you have no electric power plant, you often do not have a water system or sewer system, and your roads are not exactly paved. So Saudi Arabia’s investment and involvement in Yemen exceeds that of all the others combined.
And with regard to the UAE, Saudi Arabia stands fast with its opposition to Iran’s ongoing occupation of three UAE islands. So there are all of these forces, factors, phenomena that came together in 2012 that give insight and perspective on why them, why Saudi Arabia, why Riyadh, why King Abdullah.
In terms of the last few minutes that we have, regarding the question of unemployment that was touched on by several speakers here, how does one approach even resolving if not resolving ameliorating, if not ameliorating then better managing this problem that does not apply to Kuwait or to the Emirates or to Qatar, but it does apply to Saudi Arabia and to Oman and to Bahrain, where you don’t have a system yet of the minimum wage, where you don’t have a regional labor exchange, a unit that lets Omanis know of jobs in Kuwait. And Saudi Arabians and Omanis and others have worked outside of their country in the past generation. How does one see this domestic stability, the youth bulge, the unemployment and the ongoing quest for security and stability, these being the keys to peace and prosperity unfolding? A last comment from each of you would be welcomed. Who would go first, Odeh?
[Aburdene] Just to go back to the idea of a GCC union, all you have to do is ask a Kuwaiti, “What happened when Saddam took over Kuwait?” If it wasn’t for the Saudis, if it wasn’t for King Fahd, if it wasn’t for Saudi bases, we as Americans could not have kicked Saddam out of Kuwait.
So it’s a lesson that many of the GCC countries realize that ultimately, in terms of their security, a close relationship with Saudi Arabia is necessary.
[Hudome] I would just say that these countries can benefit from something that we can benefit from here in the United States and that’s something called vocational training. You know we’re talking about we’re studying how young people today really aren’t getting great educations at colleges and universities and I kind of believe that. Where does anybody really get any good experience when it comes to employment? It’s in practical experiences. And so I think any kind of vocational type of training and actual practical experiences, internships if you will, can actually provide practical training for some of these youth in the areas in which they will hopefully and eventually work
[Williamson] I’d like to underscore Randa’s point there. I think it is essential that the world of industry have a strong voice in this matter. It has to be consulted. It’s going to be the employers. And when industry says, “We need this. We need the following 27 sets of skills that we’re short of here.” Those need to be acknowledged and met. And so I would call for a strong cooperative programs to be established with industry as partners so that they can have the skill sets that they’re looking for and that people who can get the training have jobs instead of merely the expectation that they can look for work.
[Sharp] I’d make two points and I would make those points directly at leadership. And I would say first of all share the wealth — locally, nationally and regionally because the differential between haves and have-nots is enormous. And secondly, lead, don’t rule. Create opportunity and enhance the human capital.
[Rabens] I’d just add again I think it’s the emerging markets, it’s early-higher Ed, it’s vocational training and then even, I think countries for the immediate term can artificially stimulate and deal with some of the unemployment issues. Figure out from a leadership standpoint, I mean we do this in the US. Where are our needs right now? Where do we want to reinvest? Is it in roads? Domestic infrastructure? Is it in particular sectors of the economy and then have the government help to supply the short term jobs or help incentivize your youth down particular paths and skill sets to help create those jobs for the future.
[Yaphe] There’s certainly overlapping competencies that can contribute to each other’s good. In Qatar, you have a lot of the mechanisms for developing good vocational programs like the Qatar Foundation. And Sheikha Moza’s efforts to work with consultancies from the West to develop those programs has been phenomenal. And in the United Arab Emirates you have a lot of creative thinking of how to get young people into training and into apprenticeship programs so there’s a lot of ways that these different countries have approached the problem and a lot of ways that they can contribute to each other’s solutions. And so I think there’s a wonderful opportunity there for them to work together
[Anthony] Thank you. In closing, one person slipped a note to ask that I remind the audience that among the other forces that compelled the GCC to come into existence when it did, were the Soviet invasion of Afghanistan, barely at an hour’s flight away from Muscat to Kabul, and of course the reaction and chaos and uncertainty and turmoil occasioned by the Iranian revolution when the Shah, so to speak, hit the fan in 1979. But also less noted were the functional individuals, the unsung, non-political leaders in the GCC region who sought to have a center place for the cooperation on standards, weights, measures, specifications, on electricity grids, on transportation issues, civil aviation, water issues, food processing, food and health issues. These too have been longing for a headquarters of some kind and they all came together then.
1979 was a year like no other year in the Middle East with the Iranian revolution, the hostage taking of Americans, the seizure of the Grand Mosque at Mecca, the quadrupling of the price of oil as the turmoil continued in Iran and also unrest in Yemen and the conclusion of the Camp David Treaty and those implications.
Here, you have all of those still, Afghanistan, and you have Yemen again but you have Egypt also and the unresolved issues of the Arab-Israeli conflict in terms of Jordan in terms of Palestinians first and foremost in terms of illegitimate needs, concerns, rights, and objectives.
This is the end of this session. I’ve learned a lot, I hope you have as well. Thank you for coming.