ORIENTAL MYSTERY

The controversy between the Arab states over Syria and the lack of confidence in the proper level of security have almost ruined the Fourth Economic Forum of the League of Arab States (LAS) held in Beirut on January 20.

Some heads of states refused to visit Beirut claiming Iran's strong influence on Lebanon including through funding of military-political organisations Hezbollah and Amal. Others changed their minds at the very last moment.

For several months before the event, Lebanese president Michel Aoun had put great efforts to persuade the LAS members to return Syria to the organisation after its membership was suspended in 2011 due to the ongoing civil war. Alas, Aoun's efforts proved unsuccessful, apparently due to lack of consensus on the return of Syria, even though some members of the League, such as UAE, Kuwait and Bahrain, have already restored diplomatic relations with Damascus.

Yet Beirut hoped for the participation of at least eight heads of state, who had agreed to visit Lebanon before. However, the chairman of the Lebanese parliament Nabih Berri, also known as the leader of the Shiite party Amal, stated that his organisation would not allow the Libyan delegation to land at the Beirut airport. As it happens, they protested against the abduction and murder in 1978 by the Gaddafi regime of the Lebanese Shiite leader Musa Sadr, the founder of the Amal party. According to Berri, the government of Libya refuses to assist in the investigation of the murder. To make things even worse, the Amal activists burned the Libyan flag replacing it with their own just a few hours before the start of the summit.

Thus, the Libyan leadership cancelled its participation and called on everyone to boycott the event. The summit was not cancelled, but incurred a damage to its high reputation. As a result, almost all Arab states were represented by prime ministers or foreign ministers. Only the Emir of Qatar, Tamim bin Hamad Al-Thani, and the President of Mauritania, Mohamed Ould Abdel Aziz, visited Lebanon to attend the opening ceremony of the summit.

So, the summit had delegations from twenty Arab countries, except Libya and Syria, around the negotiations table. Titled 'Prosperity As A Factor of Peace', the summit had a wide range of issues open for discussion, including the prospects for economic integration of regional communities, food security in the Arab world, fighting poverty and unemployment, enhancing the role of women in political and economic life of Arab countries, etc.

President of Lebanon expressed the hope that the summit would lead to the resumption of important projects that had been postponed due to military conflicts in the Middle East after the previous economic forum held in Riyadh in 2013.

Past determination

Back in 2013, the Arab leaders signed an investment agreement that, if ratified, would remove all obstacles to the movement of investment and capital between the LAS member states. According to the agreement, the member states were obliged to protect investors and did not need to change to national regulations, as it allowed Arab businessmen to invest in any of the member states within the framework of national legislation of each country.

Arab leaders promised to remove the obstacles impeding the establishment of free trade zones. "We emphasize our determination to complete all the prerequisites for the establishment of a free trade zone before the end of this year. Our countries are determined to remove obstacles to ensure the establishment of the Arab Customs Union by 2015," said Nabil al-Arabi, Chairman of LAS.

However, after six years, the decisions still remain on paper. One of the reasons is that many Arab countries have been involved in internal and external military conflicts during these years. However, the Arab world has long tried, albeit unsuccessfully, to use integration mechanisms to accelerate economic development.

Long story

Since 1945, the foundation year of the League of Arab States, several attempts have been made to promote regional political and economic integration, including the 1950 Agreement on Joint Defence and Economic Cooperation, the 1953 Convention on the Simplification and Regulation of Transit Trade, and so on.

In 1964, the Arab states signed a common market agreement bypassing the stages required for the establishment of a free trade zone and a customs union. Eventually, the agreement has not been implemented either.

The situation began to change in the 1990s, when most Arab countries entered into the General Agreement on Tariffs and Trade (World Trade Organization since 1995) and became actively involved in liberalisation of trade.

In February 1997, eighteen of the twenty-two LAS member states adopted the Declaration on the Establishment of the Greater Arab Free Trade Area (GAFTA). GAFTA is one of the most important economic achievements in the Arab world. In 2005, member states were able to achieve significant trade liberalisation by exempting goods from customs duties and fees. Inspired by the success, the LAS leaders announced plans to create a customs union by 2010, and the common Arab market by 2020.

However, the establishment of a full-fledged free trade zone remains open, since, despite the elimination of customs duties, many countries continue to implement non-tariff barriers in inter-Arab trade. It is also not possible to achieve success in the liberalisation of services and investment.

New attempts

Failures in intraregional projects contrast with quite successful integration projects with countries of other regions. Over the past fifteen years, agreements on a free trade zone have been signed with the EU, US, EFTA, Singapore, and Turkey.

Now the participants of the summit on economic and social development of LAS in Beirut again announced plans for creating a customs union and establishing an Arab free trade zone. In fact, Kuwait’s proposal to establish a $200 million Arab Investment Fund for the Development of Digital Economy suggests that something may change in this direction. Moreover, it is not just a declaration of intent. Kuwait and Qatar immediately declared their readiness to contribute $50 million to the fund.

Syrians must return home

The joint Beirut Declaration demonstrates the firm intention of member states to create a free trade zone and calls on the international community to support countries hosting refugees and displaced persons.

"We urge the international community to support the Arab countries hosting Syrian refugees and take steps to correct the economic consequences of the refugee crisis," the declaration says.

The flow of refugees in Arab countries is the most serious humanitarian problem since World War II, says the declaration. The crisis slows economic growth, increases spending and food shortages, puts a heavy burden on the public sector and infrastructure and creates risks for the stability of society.

According to Lebanese President Michel Aoun, refugees, mainly from Syria (more than a million) and Palestine (more than 200 thousand), now make up almost half of the country's population. Therefore, he initiated the creation of the Arab Bank for Reconstruction and Development, which will help restore the countries of the region torn by armed conflicts. Along with support to Syria, the summit participants discussed issues related to the reconstruction of Somalia and Yemen.

For the first time, Arab countries reached a consensus on encouraging Syrian refugees to return to their country, Lebanese Foreign Minister Gebran Bassil said at a press conference after the summit.

It is quite possible that the absence at the summit of the heads of Arab states played a positive role in reaching consensus on a number of difficult issues, including the fate of the Syrian refugees.

The Fifth Economic Summit of the Arab League will be held in the capital of Mauritania in January 2023. By that time, the situation will become clearer both with problem countries (Syria, Libya, Yemen and Somalia) and with the real desire of Arab countries to truly integrate into a single economic space.