December 28, 2011

Oil Rich Gulf Co-operation Council Grows

Extreme extraction could prove to be the meaning of GCC membership for Morocco and Jordan

by Macdonald Stainsby

The Dominion - http://www.dominionpaper.ca

Development of shale oil and gas plays in the Middle East could mean a dramatic shift towards Israeli power and away from the traditional sources of oil in the region.

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AMMAN, Jordan—The Arab Spring sent shockwaves through the regimes of the Middle East and North Africa, and in the face of demands for popular accountability alongside bread and butter issues, states throughout the region have devised strategies to try and avert popular upheaval.

If one were asked to list the most powerful players from the Arab world, it is likely that neither Morocco nor Jordan would head that list. Both are relatively poor countries, and neither is classically known as being resource-rich. Morocco occupies the edge of Western Africa, geographically distant from richer Arab countries such as Kuwait or the United Arab Emirates. Jordan has high energy demands, and thus has long been reliant on imports. The steady backing of the United States, in exchange for Jordan's relative complicity in American policy, has also somewhat isolated Jordan in the Arab world.

Regardless of their outsider status, the kingdoms of Morocco and Jordan have recently been invited to join the Gulf Co-operation Council (GCC). On the surface, inviting in Jordan—and even more so the non-Gulf nation of Morocco—appears to be a puzzle.

Similarities between the newly-invited monarchies and other GCC countries are not completely lost, at least not with their reigning pro-American kings: Mohammed VI of Morocco, and King Abdullah II of Jordan. Despite some limited political reforms, both monarchs have spent a dozen years on their thrones with static regimes and unregulated, free market economies. Both reflect the deires of other regimes in the region to avoid the uprisings that have swept rulers from some Arab states in recent months. Jordan and Morocco also share in high unemployment and poverty rates, and both countries have seen street protests in recent months.

Recent promises from King Mohammed VI for "meaningful reform" included a recent referendum on constitutional amendments, to which it was reported that the general population of Morocco responded 98 per cent in favour. Moroccan protesters have since called the poll fraudulent and the newly-drafted constitution insufficient. Likewise, in an attempt to placate protests, King Abdullah has re-shuffled the Jordanian parliament. Critics, however, perceive the changes in both kingdoms to be little more than cosmetic.

The GCC, which is now courting Morocco and Jordan, was founded in 1981 by Saudi Arabia, Oman, Bahrain, Qatar, the United Arab Emirates and Kuwait. “It's not as far advanced as the European Union but in many ways is similar to the European Union regional integration project,” says Adam Hanieh of the School of Oriental and African Studies at the University of London.

“This was partly a security agreement that was established with the support of the United States, but then beyond that it has evolved in the last few decades—particularly the last ten or so years—to be focused very much on the economic integration of these six countries in the Gulf,” explains Hanieh.

“These countries all have strong oil and gas supplies, they have similar political structures and through economic integration they have been promoting common trade, free movement of capital and goods, pretty much across the borders, and also the movement of citizens,” he says.

During the Arab Spring, Jordan and Morocco experienced street protests in their capital cities, and elsewhere. Neither have had movements that called for the end of their respective monarchies or the establishment of republics. However, in terms of reshaping the economy and landscape, both nation states have been looking to convert oil shale rock into synthetic petroleum, which has implications for the GCC.

Within OPEC, GCC states have consistently called for production targets that are more in line with most Western countries like the U.S. and France—seeking to heighten targets and lower global market prices. Nation states such as Venezuela or Iran seek lower production targets as a way of generating higher prices for crude on the world market.

In recent years, the way that global petroleum reserves are measured by country has changed so as to be able to include bitumen from the Canadian tar sands. This is a result of Canada proving the “commercial viability” of its mock oil development, which has been expanding at a breathtaking pace. Similar dynamics could immediately take root in both Morocco and Jordan if their planned oil shale ventures go into production. Integrating these new huge reserves into the GCC would guarantee both investments and a market for mock crude from the new member states.

The terms of the invitation to the GCC have yet to be spelled out, but there is good reason to assume some conditions may apply.

“If countries like Jordan and Morocco were to join, I don't think they would join as full members or with the same type of integration as the existing GCC states have,” says Hanieh. “I don't think you would see for example, the ability of people to move freely to the GCC states from Jordan and Morocco.”

This may leave GCC membership for newcomers to look more like the North American Free Trade Agreement than the European Union: de-regulation and neoliberal re-regulation, freer movement of capital, no new movement (or rights) for labour.

“In all of the GCC countries, citizenship is restricted to a minority of the population,” says Hanieh. “The bulk of the people living in these countries are migrant workers who don't have citizenship rights.”

GCC countries, however, have long been the favoured states of Washington in the Arab world for other reasons as well. Even before the 2011 uprisings began, the GCC states were allied with many American ventures, such as the two wars of aggression against Iraq.

“They have become a close adjunct of the U.S. foreign policy in the region. The one thing about the GCC states—with the exception to a certain extent of Saudi Arabia as you saw in the case of Bahrain—is in general, their military capability is very weak and they act under a U.S. military umbrella,” explains Hanieh. Qatar in particular has been exposed recently, having aligned militarily with NATO countries in their air and ground war against the Qaddafi government in Libya.

The short and long term development of the large oil shale deposits in the Kingdoms of Morocco and Jordan have similar plots. Both countries are poor and reliant on imports for energy. Both have large oil shale potential despite serious water shortages, and both also have (among others) development plans that stem from a partnership between Brazil’s state-owned Petrobras and French energy giant Total to strip mine and convert kerogen rock into mock oil, perhaps allowing the integration into economic and trade matters for the rest of the GCC states.

Of course, there is also the issue of Israel.

While publicly critical of Israel, GCC states have accommodated Tel Aviv to varying degrees. Normalization with Jordan in 1994 allowed for Israeli-Jordanian trade. Jordan joining the GCC may provide another means of trade with Israel for Arab states that are still officially part of the general Israeli boycott.

“It's clear that over the last decade, the United States has really been pushing increased regional integration in the Middle East and particularly trying to break the boycott of Israel, and increase the normalization. This has had some success in the case of the GCC. For example, in the case of Qatar, there was a trade office that was opened for many years, I'm not sure if it still operates but it probably operates unofficially,” says Hanieh.

In Jordan, collaboration with Israel functions at an official capacity. However, if Jordan's industrial plans were to go ahead, closer ties between the two nations might emerge. Already on the table is a major nuclear facility within Jordan, and the so-called “Red-Dead” canal.

The Gulf Co-operation Council has set itself up as a localized combination of NATO and EU in terms of policy. There is little doubt that given the events of the Arab Spring so far the GCC has adjusted itself to a combination of counter-revolutionary politics, mixed together with a promotion of western (oil) interests, ranging from Saudi Arabia leading the occupation of Bahrain, to Qatar flying sorties and providing ground troops during the recolonization of Libya.

Jordan and Morocco both maintain Kingdoms that straddle the so-called fence. They choose to deal with Israel, align with the Saudis and other oil-producing monarchies, all the while adding their own plans to become extreme extractors. The Gulf Co-operation Council is the agent to integration of the same ideology, regardless of territorial ambiguity.

Jordan and Morocco both possess reserves of oil shale that, if counted by the International Energy Agency and OPEC as oil, would outstrip other members of the GCC. The spread and influence of pro-USA, pro-Israel, GCC politics into Morocco and Jordan could have an important social, political, and environmental impact on the entire region.

This article is the fourth in a four part series examining unconventional oil deposits in the Middle East and North Africa. The series was originally published by the Media Co-op. Questions? Comments? Drop us a line: info@mediacoop.ca.

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