Bahrain: Of reshuffles & FTAs
Bahrain: Of Reshuffles & FTAs
Oxford Business Group
05 October 2005
The new ministers installed in Bahrain’s latest cabinet reshuffle inherit positions in a country that is currently breaking Arab world records in a number of sectors. With the country ahead in attracting foreign investment, it is also moving forwards in signing foreign trade pacts, as debates in the US appeared to move Bahrain closer still to a Free Trade Agreement (FTA).
First though, the cabinet reshuffle. At the Sakhir Palace on September 29, in the presence of King Hamad bin Isa Al Khalifa, Prime Minister Sheikh Khalifa bin Sulman Al Khalifa and Crown Prince Sheikh Salman bin Hamad Al Khalifa, the new ministers were sworn in.
The new post holders included two deputy prime ministers - Sheikh Mohammed bin Mubarak Al Khalifa and Sheikh Ali bin Khalifa Al Khalifa, who also takes the post of minister of transportation - and Sheikh Khalid bin Ahmed bin Mohammed Al Khalifa, who takes the foreign ministry portfolio from Sheikh Mohammed. Sheikh Khalid has been Bahrain’s ambassador in London for the past two years, and is a US-educated career diplomat.
The other two new appointees were Minister of State and Chairman of the National Oil and Gas Authority (NOGA) Dr Abdulhussain Ali Mirza, and the new Minister of State for Cabinet Affairs and head of the Central Informatics System Sheikh Ahmed bin Attiyatallah Al Khalifa.
This was the second such reshuffle this year, coming after one back in January, with the prime minister expressing the hope that the new line up would enhance the country’s economic performance, as well as deepening its administrative openness.
The appointment of Abdulhussain - a former Bahrain Petroleum Company (Bapco) director-general - to the NOGA also marks the beginning of an independent oil and gas authority, and the end of the Oil Ministry.
The new body’s constitution indicates that it will be presided over by a chairman with the rank of minister, who also automatically becomes a member of the Economic Development Board (EDB). The NOGA will also include six other board members, who will be appointed later by royal decree.
The Oil Ministry’s staff will transfer to the new authority, retaining their previous rank, salary, allowances and privileges.
News of the new cabinet appointments was then quickly followed by some promising news on Bahrain’s international position.
The United Nations Conference on Trade and Development (UNCTAD) released its World Investment Report 2005 on September 29, placing Bahrain first among Arab states for foreign direct investment (FDI).
The report, which gave figures for last year and projections for this one, stated that FDI inflow in 2004 had been $865m, a figure some 41.1% higher than the $517m recorded in 2003.
On a global scale, Bahrain ranked 27th in the world for FDI rankings in 2004, accounting for just under a tenth of the total $10bn of FDI that went to the West Asia region, which includes the Gulf Cooperation Council (GCC) area.
Addressing the press, businessmen, experts and government officials at the presentation of the report in Manama, the chairman of the Economic Development Board (EDB), Sheikh Mohammed bin Isa Al Khalifa, said the country’s record inward FDI flow had come as a result of the kingdom’s decision to increase FDI flows by at least 10% per annum over a three year period.
At the same time, Sheikh Mohammed said, Bahrain’s outward investments crossed the $1bn mark in 2004, with this level expected to be even higher in 2005. UNCTAD also expected FDI flows to be higher, with Bahrain ranking third in the Arab world for potential FDI performance.
Such a latter ranking implies that the UN researchers thought the country was still not realising its full potential as an investment destination. Reaching toward this, advocates argue, should be considerably eased once the country finally nails down its FTA with the US.
This has recently been edging forward too, with a potential agreement under discussion in the US Congress late September.
Two-way trade between the US and Bahrain was around $900m in 2003, with an FTA expected to boost agricultural and manufactured goods exports from the US to Bahrain, while expanding opportunities for US banks and other service industry companies. The FTA has also been controversial within the Gulf, as Saudi Arabia had made objections to any such move, claiming that it contravenes GCC agreements.
Meanwhile, the current sticking point on the FTA in Washington is its requirement over labour laws, with US Democrats both praising the efforts Bahrain has made so far on this and calling for further changes. The chief American union federation, the AFL-CIO, has also urged Congress to reject the agreement, saying it does not adequately ensure workers’ rights are protected.
Yet the White House is clearly anxious to avoid any repetition of bruising past encounters over FTAs, such as those regarding Central America, and seems likely to come to some kind of arrangement with the Democrats to ensure the FTA receives Congressional approval. The Bush administration would very much like to see the FTA signed by the end of this year - as would the Bahrainis, who also see great benefits from such an arrangement.
