This just in, from the mostly good news department, though it also includes negative developments in the UAE: "Bridging the Shia-Sunni Divide with Free Trade." See also good news from August about the Iran-Turkey pipeline deal below. Iran's neighbors, despite being US client states, are resisting US pressures to economically isolate Iran. High oil and gas prices help.
<http://ipsnews.net/news.asp?idnews=39213> MIDDLE EAST: Bridging the Shia-Sunni Divide With Free Trade By Meena Janardhan
Credit:Dubai Tourism
Dubai - Major Free Trade Hub
DUBAI, Sep 11 (IPS) - While Iran and the United States exchange aggressive statements, the Arab countries of the Gulf Cooperation Council (GCC) have been busy building trade relations with Tehran and charting an economic course with a potential of mending ties in a tough neighbourhood.
Following an official proposal by Iran, the GCC -- which groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates -- is considering negotiations that may lead to the creation of a free trade area.
''As long as there is a desire from the Iranian side, the GCC cannot but be positive in relation to such an issue,'' GCC secretary-general Abdul-Rahman Al-Attiya said on Sep. 2, after receiving a letter from Iranian foreign minister Manouchehr Mottaki expressing Iran's interest in trade talks.
Similar ideas have been floated in the past, including a ten-point plan proposed by Shiite Iran in April for establishing a security and cooperation organisation in the Gulf region, but this is the first time that Iran has presented an official letter.
The call for economic engagement comes in the background of a flurry of reciprocal visits by Iranian and GCC leaders over the last year. The effort to bridge the Sunni-Shiite divide, especially with a view to stabilise Iraq, has led the Arab League to call for high-level dialogue between the Arabs and Iran.
The schism in the religion goes back to succession struggles following the death of Islam's founder Prophet Mohammed in A.D. 632.
Today approximately 85 percent of all Muslims are Sunnis. But Iran is unique in the Islamic world for being overwhelmingly Shia and, in fact, has a constitution that is theocratically Shiite.
After the U.S. removed Saddam Hussein from power, Iraq became the first Arab country to become Shia-controlled. Historically, Iraq was Shia-dominated until 1533 when the Sunni Ottomans seized Baghdad.
But Sunni-Arab countries now see the need for a rapproachment with Iran and the Shiites. On Mar. 3, 2007 King Abdullah of Saudi Arabia invited Iranian President Mahmoud Ahmadinejad for a summit to discuss the issue and the two leaders declared that the divide only served the interests of foreign powers.
"Both Iran and Saudi Arabia are aware of the enemies' conspiracies. We decided to take measures to confront such plots. Hopefully, this will strengthen Muslim countries against oppressive pressure by the imperialist front,'' Ahmadinejad said on his return to Tehran from the summit. An official Saudi note said that ''the greatest danger presently threatening the Islamic nation is the attempt to fuel the fire of strife between Sunni and Shia Muslims''.
And now the GCC countries have responded positively to the Iranian proposal by setting up a committee to tap the economic potential and advance political cooperation with their large neighbour.
Though born out security concerns in 1981, following the outbreak of the Iran-Iraq war, the GCC has over the years evolved into a political and economic bloc.
Says Eckart Woertz an economist with the Gulf Research Centre in Dubai: ''Given the proximity of Iran and the GCC countries, a free trade agreement makes sense, although trade relations are not very diversified so far. Iran is mainly exporting oil-related products, while it receives machinery, spare parts and more sophisticated goods from the re-export hub, Dubai.''
Mohammad Amerah, an Abu Dhabi-based economist, said that a free trade agreement with Iran would be beneficial to all GCC countries. ''I think they will go about it gradually. Eventually, tariff barriers would be reduced to the minimal and there would be smooth trade transactions between the countries exporting and importing among themselves,'' he told the UAE's English language daily 'Gulf News' on Sep. 5.
At the political level, Qatar's minister of state for foreign affairs Ahmed bin Abdullah Al-Mahmoud asserted that relations with Iran are remarkable and that the two countries share many things in common besides bilateral ties.
In a statement to Qatar News Agency on Sep. 5, the minister said bilateral trade relations were good, especially since there is a joint commercial committee that meets regularly to discuss all avenues of cooperation. ''The Iran-GCC geographic proximity is an advantageous factor that helps the setting up of a free trade zone,'' he added.
Encouraged by high oil prices, developing and diversifying their economies have been high on the agenda of the GCC countries in recent years. The emphasis on economic integration led the bloc to establish a customs union in January 2003, with the transition period ending in December 2005. Further, the GCC countries also joined the Arab Free Trade Zone in January 2005.
The bilateral trade volume among the GCC members rose from six percent before the initiation of customs union to 21 percent after that -- from 18 billion US dollars in 2002 to over 31 billion dollars in 2005.
Though there are few signs of progress on a plan to adopt a single currency by 2010, especially after Oman said last year that it would not be able to meet the deadline, the GCC is expected to create a common market by the end of this decade.
However, economic expansion has coincided with security concerns over Iran's controversial nuclear programme, the likelihood of a military confrontation Between Iran and the U.S. and growing Shiite influence in Iraq and Lebanon.
Ahmadinejad claimed last week that his country has achieved a milestone and is now running 3,000 centrifuges to enrich uranium for its nuclear programme.
The GCC countries have publicly stated that they would not allow their territories to be used as a launch pad for any military attack on Iran. But they have very little room for manoeuvre if the U.S. decides in favour of a military adventure because it is the chief security guarantor for the six-member bloc.
The GCC is also considering a peaceful atomic programme of its own in partnership with the International Atomic Energy Agency and progress on these plans would be discussed at a conference in Qatar in November.
Even though the U.S. claims to be a proponent of free trade, it is unlikely to encourage the proposed GCC-Iran trade negotiations because it would boost the Iranian economy while giving GCC traders better access to Iran.
The Jebel Ali Free Zone in Dubai, one of the seven emirates in the UAE, is already the biggest source of commodities and consumer products to Iran.
On Sep. 1, the UAE issued a new law to control the export of military equipment or dual-use items, heeding to a U.S. warning that action would be taken if enough was not done to halt the flow of technology to Iran and Syria, especially which is used in improvised explosive devices.
As a follow-up the UAE also shut down on Sep. 9 about 40 international and local companies in a crackdown on money laundering and illegal dealing in dual-use equipment and materials banned under the nuclear non-proliferation treaty.
''Serious political contradictions exist in the case of the Iranian nuclear stand-off and the occupation of three UAE islands by Iran. The GCC countries perceive Iran increasingly as a threat and this could jeopardise any trade negotiations,'' economist Woertz told IPS.
''But on the other hand, political differences have not impeded thriving trade relations between the UAE and Iran so far,'' said Woertz, adding that there was a potential to scale it up to the GCC level.
(END/2007)
<http://www.economist.com/world/europe/displaystory.cfm?story_id=9687845> Turkey and Iran Too energetic a friendship
Aug 23rd 2007 | ANKARA
>From The Economist print edition
An attempt to bypass Russia annoys the United States
COCKING a snook at America seems an odd way to launch a second term in office for a government eager to prove its pro-Western credentials. Yet that is what Turkey's mildly Islamist Justice and Development party (AK) appears to be doing, just weeks after its landslide victory in the July 22nd parliamentary election.
Turkey's prime minister, Recep Tayyip Erdogan, dispatched his energy minister, Hilmi Guler, to Iran last week where he concluded a raft of deals. They include the establishment of a joint company to carry up to 35 billion cubic metres of Iranian natural gas via Turkey to Europe, and the construction of three thermal power plants by Turkish companies in Iran.
America swiftly complained. "If you ask our opinion, do we think it's the right moment to be making investments in the Iranian oil and gas sector, no we don't," sniffed a State Department spokesman. There were mutterings about possible sanctions. But Turkey insists it has the right to pursue its interests. And Iran is delighted. "Nobody can come between Iran and Turkey," Iran's president, Mahmoud Ahmadinejad, crowed recently.
Mr Erdogan's critics have seized on his dealings with Iran as proof that he is trying to steer Turkey away from the West. In fact, they have just the opposite aim: to boost Turkey's chances of joining the European Union by making it a vital energy corridor for oil and gas flowing between the energy-rich former Soviet states, the Middle East and Europe.
This is not as far-fetched as it sounds. EU countries import half their energy, with around a fifth of their oil and gas coming from Russia's state monopoly, Gazprom. The need to diversify sources was driven home in 2005 when Gazprom arbitrarily increased the price of gas it supplies to Ukraine by pipeline. Russia's use of its energy riches to flex its muscles on the world stage is one reason why America is lobbying so hard for the creation of an east-west energy corridor—a network of oil and gas pipelines running from former Soviet Central Asia and Azerbaijan via Turkey, and on to European markets.
The first big step towards weakening Russia's grip was the inauguration in 2005 of a multi-billion-dollar pipeline carrying Azerbaijani oil from offshore Caspian fields to the Turkish port of Ceyhan, in the southern Mediterranean. This provocation, from the Russian point of view, was compounded by the launch of a parallel line carrying natural gas from Azerbaijan (and eventually, Turkmenistan and Kazakhstan), which was completed last year. But Gazprom hit back by raising the price of the gas it sells to the Azerbaijanis, who rely on Russia for nearly half their supply.
This, in turn, forced them to use more of their own gas, leaving them unable to fill the Turkish pipeline, which lay idle until last month.
In a further blow, Gazprom announced a venture with Italy's Eni in June to build a line across the Black Sea from Russia to Bulgaria. All this makes it less likely that Turkey will, by 2011, achieve its dream of extending a recently completed pipeline to Greece as far as southern central Europe.
That is why Turkey has turned to Iran, according to Necdet Pamir, a veteran Turkish energy analyst. Iranian gas would not only help to fill the Nabucco pipeline, another mooted conduit from the Middle East or Central Asia, bypassing Russia, but would also reduce Turkey's own dependence on Russian supplies: over half of Turkey's natural-gas demand is met by Gazprom. Unlike the former Soviet producers, Iran controls several shipping lanes and borders Turkey. "The paradox for America is that Iran is the only country other than Iraq that can truly undermine Russia's [energy] supremacy," observes Mr Pamir.
-- Yoshie