Causeway to benefit both Qatar and Bahrain

Qatar and Bahrain are racing against time to integrate their economies. Last week, the two countries made substantial progress in their efforts to develop a causeway linking the northwestern region of Qatar with the south-eastern area of Bahrain.

Also, the two sides signed a memorandum of understanding to set up a joint insurance firm based on Islamic principles. Both the sides also agreed to strengthen cooperation in the tourism sector.

All these developments took place during the eighth session of the joint Bahraini- Qatari Supreme Co-operation Committee held in Bahrain. Crown princes of Bahrain and Qatar co-chair the committee.

Undoubtedly, the most important progress relates to the signing of an accord between the Qatar-Bahrain Causeway Foundation and Vinci Construction of France to construct the 40-kilometre causeway. The French firm leads a consortium of five companies mandated to construct the extraordinary project. To be sure, only a few details of the deal have emerged. The actual construction is likely to start towards year-end, with completion projected in 2013. Still, there are no hard facts regarding actual cost of the ambitious project.

Nevertheless, it is estimated that the price tag will hover around $3 billion. The link should bring economic benefits to both nations, particularly to smaller Bahrain. The benefits include invigorating local economies, strengthening trade relations and enhancing integration amongst the Gulf Cooperation Council countries.

To begin with, the economies of both the countries stand to benefit from spending on the project. Each country is scheduled to spend some $1.5 billion over a span of five years, the period needed to accomplish the scheme. Undoubtedly, the gross domestic product (GDP) of both the countries should benefit from this sizable amount, with funds finding their way to different contractors. Then, there is the multiplier effect. Traditionally, each spending dollar generates more than $3 in the economies of both Qatar and Bahrain.

With a GDP of about $16 billion, Bahrain's economy stands to benefit the most from the link (Qatar's GDP is three times that of Bahrain). The link would certainly assist in increasing the level of bilateral trade. At the moment, Bahrain enjoys a trade surplus with Qatar. In 2006 (the last year for which statistics are available), the value of Bahraini exports amounted to $133 million. This is a sizable amount, as it comprised more than five per cent of Bahrain's non-oil exports. Yet, the value of imports from Qatar amounted to merely $40 million.

The causeway would open up prospects for further trade by making it easy for enterprises to engage in trading activities. Already, there is talk of Qatar's industrial projects such as steel finding easier ways to reach the Bahraini market. For Bahrain, the causeway provides easy access to the region's fastest growing economy. Qatar's GDP has been growing by more than 10 per cent in real terms over the last few years.

Improved trade relations help in keeping some jobs while creating new ones. The link can provide a venue for Bahraini nationals exploring employment opportunities in Qatar. Unlike Qatar, Bahrain suffers from unemployment amongst its local workforce. The Qatari economy needs qualified workers, who in turn share local culture. Of all the GCC countries, the Qatari and Bahraini societies are linked by strong family ties.

The causeway link falls in line with the broader goal of achieving economic integration within the GCC. In turn, this necessitates granting unrestricted access to production factors of member states.

- The writer is a Member of Parliament in Bahrain.