Thursday, March 03, 2011

How to stop a contagion?

Wall Street Journal:
Gulf officials are planning an economic aid package for Bahrain and Oman, a Bahraini official said Thursday, in an effort to support the two countries in the oil-rich region that have seen the largest anti-government protests.

Member states of the Gulf Cooperation Council, or GCC, are holding discussions on the exact structure of the aid package, according to Sheik Mohammed bin Essa Al Khalifa, the head of Bahrain's Economic Development Board.
...Jawad Fairooz, a Bahraini opposition lawmaker, said the preliminary amount agreed on for Bahrain stood at 4 billion Bahraini dinars ($10.61 billion).

The GCC groups together oil-rich Saudi Arabia, Kuwait, Qatar and the United Arab Emirates, as well as Bahrain and Oman, which are smaller oil exporters and less able to increase spending to calm anti-government protests.
My emphasis.

To put it in other terms, either (1) the protests are about government welfare spending, or (2) it is believed governments can avoid giving political freedoms by increasing the social safety net.

Foreign policy is self-interested. The oil-rich states believe there is a contagion effect. They want to put out the protests in neighboring states so their own people catch the protest fever.

Assuming the protestors in Oman and Bahrain the oil-rich states will follow through with these promises what's the rational thing to do? Be satisfied or demand more in foreign aid? It sounds to me like the incentives are protest more.

Gulf News titles its story GCC marshall-style aid package for Bahrain, Oman. It includes this unlikely statement:
The sources said that the labour markets in the other four GCC countries will be used to employ Bahrainis and Omanis who will be given employment priorities and benefits,
There is discontent in KSA and UAE surrounding unemployment of citizens. And I don't see Bahrainis and Omanis taking jobs in the oil-rich GCC that are done by high-skill expats or expats from Asia.



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