UAE Joins Support for Palestinians

Economic News

22 Jul 2010
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Always vociferous in its support for the Palestinian cause, the UAE has drawn the line at supporting an oil embargo, as proposed by Iraq in early April. However, the Arab Gulf states have been trying to bring other factors into play, such as pressure on the US and threats of a renewed boycott on companies perceived to have dealings with Israel. In early April a number of Gulf states encouraged their citizens to donate to the Palestinian cause, largely through telethons. UAE president Sheikh Zayed bin Sultan al Nahyan and his family led the way, donating almost $40m. In addition to this direct aid, the UAE government has promised to rebuild parts of the Jenin refugee camp and repair the Church of the Nativity in Bethlehem.

After his announcement in early April that Iraq would cut off oil supplies for a 30-day period or until Israel withdrew from the occupied territories, President Saddam Hussein renewed his call on Muslim oil-producing nations to cut their own oil supplies, but without much luck. Iraq's old foe, Iran, came the closest to heeding the call, but only on condition of unanimity, essentially an impossible request. Hussein's latest call for an embargo came on April 22nd, and served to remind oil markets that the regional conflict was by no means solved and that Iraq was still likely to be the subject of US attacks, both factors helping to keep the oil price high.

Arab and other major oil-producers have largely rejected Hussein's demands that they also cut their supplies to the US, and Saudi Arabia even offered to raise its production levels to make up for the shortfall should prices climb too high. This has not been the case and no Arab producer has significantly increased production despite idle capacity, especially in Saudi Arabia. Aside from not wanting to antagonise the US and its allies the Arab Gulf states are interested in keeping a steady oil price in order to sustain "reasonable" growth locally and globally.

As OPEC's share of global oil production has fallen over the last years, currently at around 40%, so has its ability to induce the economic hardship that many western countries suffered in 1973 when an oil embargo forced large price increases. The secretary general of the Gulf Co-operation Council (GCC) Abdul-Rahman al Attiya said on April 22nd that an oil embargo as a weapon in protest at Israeli action and US support was "outdated and not beneficial and we will be the losers". Although only four of the six GCC nations, Saudi Arabia, the UAE, Kuwait and Qatar are OPEC members, the other two GCC states Oman and Bahrain tend to fall in line with the prevailing opinion. The US would be the primary target of any embargo, but since 1973 Washington has expanded its strategic reserves allowing it to keep the effects of an embargo at bay for longer.

So with the "oil weapon" largely ruled out, apart from by countries that have little to lose anyhow, the wealthy Gulf states have turned to other forms of pressure. Prince Abdullah of Saudi Arabia was in the US in late April to impress on President George Bush the Arab point of view and the media in GCC countries has certainly not hesitated to condemn what is generally perceived as blatant US support for Israel's position. In the last week the Saudi Al Watan asked if Israel had joined the United Nations Security Council and had the power of veto and the UAE paper Al Bayan warned of "US bias towards the terrorist Israeli state".

Following a meeting in Damascus 19 Arab countries decided in early May to reintroduce a flagging 50-year old boycott of Israeli goods. This boycott was originally launched in 1951 but has slackened since the beginnings of a peace process in the early 1990s. The boycott does not include Egypt and Jordan but does not allow other Arab countries to deal with Israel directly, or with companies that have representation in Israel, or indirect links. Officials at the Central Office for the Boycott of Israel in Damascus believe that this will cost Israel some $3bn per year in lost earnings, although the statement from the meeting did not specify which companies would be on the blacklist, or how the sanctions would be enforced. In any case, Arabs have largely taken this into their own hands, boycotting US goods and brand names, such as McDonalds and Coke.

Other more direct measures by the richer Arab countries will probably be more effective in helping the Palestinian cause. A series of donations from throughout the Gulf raised large sums of money for Palestinians with individuals setting the trend. Prince Al Walid bin Talal of Saudi Arabia donated $27m and Sheikh Zayed of Abu Dhabi gave $10.89m. The figures were raised yet more through a series of telethons throughout the Gulf, with Abu Dhabi emirate raising $50m in just one day. Although donations have been going to the West Bank and Gaza from the Gulf since the beginning of the Intifadah in September 2000, only $67m had been raised in those 18 months.

Besides cash donations countries are trying to provide practical help. Sheikh Zayed is to build a $4m maternity hospital in the West Bank, and has promised to rebuild 800 fully equipped homes through UNWRA in the Jenin refugee camp, the scene of some of the worst fighting. He has also said that he will pay to repair the Church of the Nativity in Bethlehem, and has given the PLO a townhouse in Washington DC to use as its office in the US.

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