Economic possibilities abound from renewed Doha-Riyadh ties

Economic ties between Saudi Arabia and Qatar are bound to strengthen in the years ahead following the signing of a series of bilateral agreements last week.

The Saudi capital of Riyadh hosted the first ever Saudi-Qatari Joint Coordination Council, thereby ending several years of animosity between the neighbouring countries.

Saudi Arabia withdrew its ambassador from Doha in 2002 while objecting to unfriendly reporting at Al Jazeera, a Qatari state-owned media conglomerate.

However, ties have since improved with the subsequent exchange of several high profile visits by leaders of both countries.

Aside from agreements on some outstanding political issues, notably delineation of borders, the two sides decided to explore fresh ways to boost commercial ties.

An ambitious project calls for setting up a joint commercial agency or an investment body in 2009 to explore business opportunities in both countries.

Still, there were the customary accords involving ministries of industry, trade and chambers of commerce calling for improving mutual relations.

To be sure, economic figures point to growing relations between Saudi Arabia and Qatar, with two-way trade increasing by three times in the past five years.

According to best available statistics, the value of bilateral trade has jumped from $726 million (Dh2,664.2 million) in 2005 to $935 million in 2006 and $1477 million in 2007.

Bilateral trade

Saudi Arabia holds the upper hand in trade relations, with its exports to Qatar amounting to more than 80 per cent the value of bilateral trade.

It exports numerous types of products to Qatar notably electrical materials, dairy products and fruits. The Qatari exports comprise chiefly of steel and other construction materials.

However, the improved business environment resulting from convening of the joint council provides Qatar opportunities to end the trade imbalance.

Saudi Arabia and Qatar have unique economic qualities by virtue of being the largest global exporters of crude oil and liquefied natural gas (LNG), respectively.

Saudi Arabia exports nearly 9 million barrels of crude oil per day. For its part, Qatar continues to expand its LNG capacity, likely to reach 77 million tonnes a year by 2012 from nearly 38 million tonnes a year at the moment.

Additionally, the two countries enjoy other exceptional attributes, especially those of having the largest economy and highest per capita income in the region.

According to the Economist, Saudi Arabia's gross domestic product amounts to $382 billion in market exchange but $555 billion in purchasing power parity rates. For its part, Qatar is ranked amongst top ten countries in the world with regard to per capita incomes.

The per capita income ranges from $53,000 to $72,000 depending on the source. The difference partly reflects absence of reliable statistics concerning foreign nationals residing in Qatar.

Certainly, Saudi businesses would welcome the arrival of Qatari visitors who enjoy relatively high disposable income.

The strengthening of political and economic ties between the two creates a positive environment for the upcoming summit of Gulf Cooperation Council (GCC) countries. Muscat hosts the 29th GCC summit between 29 and 30 December. The summit takes place amidst exceptional challenges resulting from the on-going global crisis.

Already, Saudi Arabia and Qatar have demonstrated their willingness to work together through reduction in oil output during the Opec meeting in Algeria last week.

- The writer is a Member of Parliament in Bahrain