01/01/2011

Towards a GCC – EU Strategic Partnership Agreement

By Roger Bertozzi,
Expert on EU-GCC relations

Speech held the 26th of October 2010 before the European Parliament

Chair, Honorable Members of the European Parliament; I am grateful for the opportunity I was given to share with you some of my personal views on the EU-GCC relations. I would like to focus this short presentation on a few selected ideas and proposals.

 1.    The Strategic importance of the GCC and of Arab Gulf States:

 ·     The GCC is fast evolving and very much oriented towards Asia. Given growing competition from Asia, the EU cannot afford to see the GCC distancing itself from Europe because of fatigue and frustration. The EU must propose something new.

·     The GCC sees itself as a futuristic and highly creative hub. It is a social laboratory for composite citizenship and, in many of its achievements, an attractive model for other countries and regions. The EU perceptions about the GCC are conservative, limited and static.

·     GCC’s influence goes well beyond energy and security issues. It is a driver for growth and a major investor in the Middle East, Africa and Central Asia for example. It is a financial powerhouse and it ambitions a strong cultural role. It balances traditional values with multicultural openness, Islam and modernity.

·     The EU’s reluctance to see itself as a superpower, with both hard and soft power, does not project the kind of leadership dimension that would attract more attention and the desire for proactive engagement from CGG elites.

·     The gap between the strategic importance of the EU and of the CGG to each other and the low intensity of their global relationship is no longer sustainable without irreversible damage.

2.    The rationale for a GCC – EU Strategic Partnership Agreement:

·     20 years of FTA negotiations have been a black hole absorbing all the institutional energy that should have been invested massively on building up a comprehensive strategic framework.

·     The specificities of Gulf States and the functioning of the GCC should not be an excuse for a lack of pragmatism and of political creativity: if the GCC is an Organization of inter-governmental nature, then the EU must work more closely with the Governments of the Gulf, at both multilateral and bilateral levels jointly.

·     Given the nature of GCC leaderships and of its socio-political systems, and the deeply rooted cultural preeminence of personal contacts in this region, it would be advisable to have an annual EU-GCC Summit at the level of the Heads of the State and of Government in order to ensure effective guidance and implementation of decisions.

·     There is in my view the need to give a sense that a long and unproductive page is being turned and that both regions will enter into a new and promising era.

·     Therefore the EU should propose no less than a Strategic Partnership Agreement to the GCC countries, which would reflect their growing international role, their  interdependence and their enormous joint potential.

·     Louis XIV used to say: “The best way to make things happen is to believe that they are possible”. Therefore, instead of waiting that conditions become optimal, which is unlikely to happen without profound changes in the way Europe interacts with the Gulf, the EU should propose a very ambitious and stimulating vision to the GCC; institutionalize it, and then make it happen by organic growth through political, methodological and legal creativity. Movement will produce structures. Dynamism and confidence will enhance efficiency. Proactivity brings creativity, creativity foster change, change leads to achievements.

·     Establishing a GCC-EU Strategic Partnership Agreement, if welcomed by GCC States, would have a transformational effect on all the “layers” of this neglected but all important relationship.

3.    The importance of the initiative of the European Parliament:

·      The EP initiatives aiming at two Resolutions by March 2011 on Political and Trade relations with the GCC is timely, as the 20th EU-GCC Joint Council and Ministerial Meeting in Luxembourg seems to have revived a sense of momentum.

·     The EP can draft two more reports and vote two more Resolutions. But since 1988 the EU has not really proposed to its GCC partners a real vision, and much less a substantial political framework.

·     The true challenge for me is the level of ambition of the European Parliament. Once again I strongly believe that, because of its democratic legitimacy and considerable weight, the EP is ideally suited to encourage the Council, the Commission, the GCC Secretariat and Gulf States to engage seriously into the establishment of a Strategic Partnership Agreement. This Agreement would need the political impetus, the assistance, mechanisms and the financing commensurate with what is at stake for the two regions in the multipolar world and the multilateral system in the making.

·     By becoming the first EU Institution to propose the vision, architecture and means of such a GCC-EU Strategic Partnership, the European Parliament would in my view achieve the best possible advocacy for a stronger role of the EU in the Arab world as well as for the promotion of parliamentary evolutions in the Gulf and inter-parliamentary cooperation.

·     In any case, and irrespective of the final content of the Resolutions on EU-GCC Relations, and because these texts will be the first ones in decades to assess at such a high and comprehensive level the potential of this inter-regional cooperation and partnership, maximum visibility and advocacy leverage should be given to them.

·     For this, the EP could propose that the Resolutions be presented and debated in the Gulf at the fringes of the next Joint Council and Ministerial Meeting to be held in the United Arab Emirates in 2011. Such an event would be an incentive for the Joint Council to be attended by both sides at the highest level and it would send a powerful positive message. On the other hand, when it comes to giving visibility to the EP in the Gulf, and consequently to parliamentary values, it would be of considerable impact to have the EU present at the Joint Council in its institutional entirety: Parliament, Council, Commission.

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Additional remarks

A)    Intercultural and interfaith dialogue:

It is in my view too limitative to proeminently recall the “Christian roots” of European identity and values. It would be more appropriate and inspiring to stress – when it comes to spirituality and culture – the abrahamic heritages of Europe: Jewish traditions and Islam are deeply rooted as well in the history and heritages of Europe. Islam has been part of Europe since its early times. The Muslim population in Europe is forecasted to be as much as 38 million people by 2025, almost the equivalent of the entire GCC population today. It is time to fully recognize that Europe is also an Islamic continent.

B)    EU Delegation in Riyadh:

Totally undersized. Acute need for more budget and specialist staff for various sectoral issues. Special consideration should be given to a strong cultural department or Cultural Institute. The growing importance of developing EU-GCC relations at bilateral level increases the urgency to consider Delegations in all GCC countries. In terms of Cultural Diplomacy, we should establish EU Cultural Institutes in the Gulf (cf. China, which is opening Confucius Cultural Institutes almost every week worldwide!).

 C)    Sovereign Wealth Funds:

As well indicated by their names, these funds are strategic assets of sovereign powers. Attempts to increase the role of the IMF in view of widening commitments to the Santiago Principles and making them binding are likely to be met with resistance. It might be more productive to develop a cooperative approach in a plurilateral format. A benchmark could be the dialogue and cooperations between SWF’s taking place within OECD informal bodies. SWF’s must be welcomed as partners for growth and stability. They should be encouraged to diversify their portfolios in innovative businesses including technologies for climate change mitigation. The EU could try to form a Euro-Gulf sovereign fund permanent forum or platform to deepen dialogue, cooperation, expertise sharing, training for wealth managers and joint strategic planning on a permanent basis.

 D)    EU-GCC Free Trade Agreement:

On export duties the EU is rather isolated at the WTO. Job creation, growth and more prosperity for the private sector, especially SME’s, should not remain endlessly hostages of a few remaining difficulties. As advocated since many years by some constituencies and think-tanks such as the Bertelsmann Stiftung, it should be possible to sign either the FTA with a rendez-vous clause for the last pending issues, or an Interim Agreement with the provisional application of the trade preferences. It is time to stop seeking for the ideal FTA, and to start cashing on its benefits for both sides. To our best knowledge there is a legal basis for such a solution in the EC commercial policy, and it would be WTO consistent, especially as per the GATT Article XXIV provisions.

E)     GCC-EU Joint Action Programme 2010-2013:

This catalogue of initiatives (mainly events and cooperations) must be institutionalised, or it risks proving unable to deliver. This program needs a proper funding (much much higher than the symbolic amounts available through the Financing Instrument for Cooperation with Industrialised and other High Income Countries and Territories). The Joint Action Program should have a dedicated staff, offices in Brussels and in GCC countries. It should be visible: logo, global communication plan, impact assessment. Physical offices are necessary besides internet-based information tools. People must know where to go, who to contact, how to apply, how to get assistance, how to participate into / prepare pilot-projects. Possible benchmarks could be the EURO INFO CENTERS, and, for the structure, the Secretariat of the Union for the Mediterranean or the organization chart of IRENA. It should, in fact, become an Agency: the EU-GCC Cooperation Agency.

F)     Union for the Mediterranean / Barcelona Process:

The EU should not fear the implication of Gulf countries into the Mediterranean. If the GCC is increasingly seeing itself as a true strategic partner of the EU, the whole Mediterranean region would benefit from the combined influences and resources of the EU and of the GCC. I have always thought that the biggest mistake of the Barcelona Process from day one was not to have fully integrated the Arab Peninsula. I believe that a permanent seat of Deputy Secretary General of the Union for the Mediterranean should be attributed to a GCC country. GCC countries are among the biggest investors in Maghreb and Mashreck countries, they have privileged links with Mediterranean leaders and great means of influence in many fields. They are also very active in development and humanitarian aid. The synergies by far outpass the potential difficulties.

G)    REACH Regulation:

REACH is a time-bomb for EU-GCC relations as it can have disastrous consequences for companies in the Gulf in a wide range of sectors of export interest. There is no awareness, and much less preparations, to meet REACH requirements and deadlines in the GCC. A massive program of information and assistance should be implemented urgently. There should be the creation of “Reach Centrums” in GCC countries. GCC companies, especially SME’s, should be allowed to establish their REACH “single representative” near to them, and not through a EU-based legal entity, thus facing the following scenarii: either too costly (own EU-based representative) or too risky (choosing an importer as its single representative and suffering severe consequences if the importer fails to properly register the substances or if he undergoes with flaws the necessary procedures).

H)    GCC-EU Joint Research and High Technology Fund :

GCC countries have designed ambitious strategies for science, research and high-tech industries. They have virtually unlimited financial capabilities. The EU has failed to reach the 3% GDP objective of R&D investments. Bilateral initiatives should be complemented and supported with a major EU-GCC fund, in which SWF’s could play a key role. An additional advantage is that such an instrument would be a powerful incentive for seeing EU companies cooperating more, rather than just competing for deals. If GCC SWF’s start partnering preferably with emerging research and technology powerhouses such as China, India, Korea or Malaysia for example, the EU industrial base will be facing an existential competitive threat. Working together with SWF’s from the Gulf to finance the major technologies and businesses of the XXIst century seems to me a much better option for the EU than sticking to the posture of pushing for binding rules applying to SWF’s …

I)       Nuclear energy :

We like it or not, nuclear energy will remain a key element of the energy mix of the XXIst century and one of the most effective tools to foster development while dealing with climate change mitigation – in the transition period towards a low-carbon, cleaner and greener economy. Around 65 countries are considering civil nuclear energy programs. The potential market is huge. According to the OECD, by 2050, with currently available technologies, nuclear power could represent 25% of the world’s electricity output.

While there is an interest in associating Gulf States to the financing of Generation IV reactors and other advanced reactors (such as Thorium-based reactors), it is necessary for Europe to develop its commercial, export-driven offer of safe, lower cost reactors whose characteristics match the needs and purchasing means of developing countries (especially in the range of  1000 – 1300 MW). A Euro-Gulf Nuclear Consortium could be set-up as a strategic cooperation to develop, sell, operate and train skilled staff in this huge market; with, for example, the assistance of EURATOM, OECD’s NEA and the IAEA. The reactors which will be purchased by developing and emerging economies are the ones which will allow their operators to sell to consumers (SME’s, citizens, in particular) electricity at very affordable KWH prices.

J)       Aluminium :

Encouraged by the EU to increase industrial diversifications, the GCC has developed a top-quality, environment-friendly aluminium production sector, which has also set high standards for labour, safety at work, professional training, staff healthcare, innovation schemes, etc…

The GCC has invested tens of billions of euros to develop this industry, and most of the procurement and equipment purchases have been awarded to EU companies. The EU is a growing net importer of primary aluminium. It depends on imports for more than 63% of its needs (70% in a few years). 95% of the EU aluminium industry workforce is in downstream semi-fabrication, transformation and high added value product manufacturing, which consume primary aluminium. Duty-free supplies of high-quality alloyed primary aluminium will considerably support the global competitiveness of the EU aluminium system.