Foreign ministers from the six-member Gulf Cooperation Council pledged $20 billion in financial aid in Bahrain and Oman on Thursday, the Associated Press reports. Growing protests in Bahrain and Oman have shaken the other members of the GCC, raising concerns the political earthquake rocking the Middle East will affect key OPEC members. Global oil prices have already spiked due to unrest.
Bahrain and Oman have tried to assuage discontent in their countries through a variety of economic measures, but neither country has the economic muscle or oil wealth of the other GCC members: Saudi Arabia, the UAE, Qatar and Kuwait. According to the UAE foreign minister Sheikh Abdullah bin Zayed Al Nahyan, the two nations will share $10 billion in aid dollars over 10 years.
The pledges were made after a meeting in Riyadh, Saudi Arabia, where King Abdullah answered demands for democratic reform from his own Shiite community with a $36 billion dollar domestic aid package. Even as the GCC made its pledges, Saudi police opened fire to disperse a protest in the mainly Shiite east, leaving at least one man injured.
"This is a very important message sent to markets inside the region, and globally, that the GCC countries will be unified and will stick together to support those in need," said John Sfakianakis, chief economist with the Riyadh, Saudi Arabia-based Banque Saudi Fransi. "They have the commitment and the willingness to do so, and of course, the money."
In addition to discussing aid, the GCC issues a statement warning it would not allow foreign interference in their affairs.
The Saudi monarchy is concerned protests in the two small nations could open footholds for Iran and has accused Shiites from outside the county of acting as provocateurs inciting local protests.
Other Gulf states already have launched economic measures of their own to ease the potential for unrest. Separately, the United Arab Emirates' $1.55 billion cash infusion to upgrade its electrical grid and water connections in the seven-state federation's less-developed emirates north of Dubai.
While sheer size of the financial aid package will be a major boost for Bahrain and Oman's budgets, many foreign experts have expressed doubts over the long-term efficacy of paying for quiet. Madawi Al-Rasheed, a professor of Anthropology of Religion at King’s College London, criticized the Saudi initiative. “The monarchy is trying hard to absorb demands for political change and cast them as economic demands - political reform is an urgent matter.”