Gulf Arab States to Provide $20 Billion to Bahrain, Oman After Protests

By Vivian Salama, Alaa Shahine and Glen Carey - Mar 10, 2011 7:53 PM GMT+0200

Gulf states plan to provide Oman and Bahrain, which have faced popular protest movements, with $10 billion each over a decade.

U.A.E. Foreign Minister Sheikh Abdullah Bin Zayed Al Nahyan said the package showed Gulf support for the countries. The aid would be aimed at developing infrastructure and housing, Bahraini Foreign Minister Sheikh Khaled bin Ahmed Al-Khalifa said on his Twitter account. Ministers from the six-nation Gulf Cooperation Council met today in Riyadh, Saudi Arabia.

Protesters in Oman and Bahrain are calling for free elections, more housing and jobs, echoing popular movements that have swept the region in the past two months and unseated longtime rulers in Tunisia and Egypt. At least two people have been killed in clashes between demonstrators and security forces in the Omani city of Sohar, while in Bahrain, seven people have been killed in demonstrations.

“The regimes are capable and fully prepared to use ammunition on their own people and I am not sure that the aid packages can deflect from that,” said Christopher Davidson, who teaches politics at Durham University in the U.K.

The unrest has deterred investors and sent the Bloomberg GCC 200 Index (BGCC200) of Gulf shares down 6.6 percent so far this year, while oil rose to a 2 1/2-year high as protests in Libya, holder of Africa’s largest oil reserves, escalated into civil war.

Reports that the GCC was preparing an aid package helped the region’s stocks pare losses today, with Oman’s MSM30 Index rising 0.5 percent and Bahrain’s BB All Share Index adding 0.1 percent.

Fifth Fleet

The protests in Bahrain, home to the U.S. Navy’s Fifth Fleet, began on Feb. 14 and marked the spread of the unrest to the Persian Gulf, where most Middle Eastern oil is produced.

Shiite Muslims, who represent as much as 70 percent of Bahrain’s population, say they face discrimination over jobs and housing from the ruling Al Khalifa family, who are Sunnis, and their supporters. Omanis are demanding higher wages and are pressing Sultan Qaboos Bin Said to name a prime minister and give more power to the consultative council.

In both countries, hereditary rulers have taken measures aimed at placating the protesters. Bahrain yesterday announced plans to spend $6.6 billion on new homes to allay a shortage, and Crown Prince Salman bin Hamad Al Khalifa has invited the Shiite-led opposition to enter a “national dialogue.” The largest opposition group, al-Wefaq, said it wants “significant steps” from the government before agreeing to negotiate.

Increasing Employment

Oman’s Sultan Qaboos told the government to hire 50,000 Omanis and pay 150 rials ($390) a month to job-seekers.

Saudi Arabia, the largest GCC economy, has also taken steps to avert protests spreading to the kingdom, pledging more than $30 billion of spending to build homes, create jobs and increase social security payments. Saudi opposition supporters have called for a “Day of Rage” tomorrow.

In the United Arab Emirates, a petition has been circulated by academics and activists calling for elections to the legislative advisory body, the Federal National Council.

The GCC is comprised of Saudi Arabia, Kuwait, the U.A.E., Oman, Qatar and Bahrain.

To contact the reporter on this story: Vivian Salama in Abu Dhabi at vsalama@bloomberg.net Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.