“[Aqaba] is a small city that symbolizes the potential of bringing people together”

 

King Abdullah II,

Aqaba, 4 June 2003

Dear Reader,

On 4 June 2003 King Abdullah II of Jordan hosted a peace summit in Aqaba with Prime Ministers Mahmoud Abbas and Ariel Sharon and the US President as sponsor. Nine years earlier his father, the late King Hussein, signed a peace treaty with Israel also sponsored by the US Presidency. Both events share a number of things in common, not least of all the role played by trade in these peace talks. As part of the incentive package intended to secure Jordan’s acceptance of a peace treaty, the US offered to fund over sixty Qualified Industrial Zones (QIZs) in Jordan, which would enjoy special free trade status with the US market. These zones as well as a number of industrial estates that were also exempt from US import taxations helped stimulate the stagnating Jordanian economy and shoulder the political costs of peace with Israel.

The 4 June 2003 Aqaba summit aspired to inject fresh impetus in the peace process but ultimately failed to achieve anything concrete.

In 2003, trade was still a major incentive being offered in the peace package as well as to those supporters of it. The location of the summit, first of all, was of particular relevance. Rather than holding the summit at one of the Royal Courts in Amman or at the ritzy King Hussein bin Talal Conference Centre at the Dead Sea, Aqaba was the chosen destination. The summit took place a little more than two years after the Aqaba Special Economic Zone (ASEZ) was established and was seen as an ideal way to promote the zone and demonstrate its growing importance. The opportunity was also used to show the Palestinian and Israeli delegates a little more about the potential of joint enterprises and attempts were made to coerce them towards compromising on a peace deal with major joint projects like the Red-Dead Canal and trilateral industrial estates in the southern Dead Sea area. Unfortunately, peace between the Palestinians and the Israelis has not yet been realised, partly because the trade dividends were not perceived as being considerable enough to warrant the compromises needed.

In this issue of MENAAR we look more closely at trade regimes and how various trade policy issues have become a central focus in remedying many of the region’s socio-economic problems. Our Cover Story explores the ASEZ model with particular attention being paid to the interactions between it as a model for economic and political reform and international partners interested in the kingdom’s pursuit of reforms as well as its stability. In much the same way as Jordan has performed a ‘political bridge’ role in the MENA it is now playing an ‘economic bridge’ role which demonstrates the relevance of trade relations in the region today. In much the same vein, an article on the Jordanian textiles and clothing industries explores the growth of small sectors and the economic diversification capacity of free trade agreements (the Jordan-US FTA in this case). A further article on US Middle East policy that analyses the use of free trade as a tool in re-shaping regional politics as well as economics builds further on the applications of trade as a development mechanism.

By exploring Saudi Arabia’s WTO accession negotiations and the existing policies of economic reform already prevalent in the kingdom prior to its membership of the world body, we also provide research into a case of independent economic and trade reform initiatives and how this type of domestic policy relates to the global economic system. An article giving an overview of GCC perceptions on economic diversification also serves to offer insights into the development of economic liberalisations in the region. In both these articles the prevalence given to meeting the challenges of deeper integration with the international economy are evidenced.

A final article looks at developments in Libyan economic and foreign policy since the lifting of international sanctions on it in late 2003. The search for stable trade partners and trade relations in which domestic economic reforms can be sustained is found to be a major undercurrent and serves to explain much policy making. 

- Murad H. EL-Anis, Director - MENAAR