Making itself open to private investment from foreign sources means growth because it means profit. Ranking high as a liberalised economy means being a good place to make profits. It may not be best for all Bahrainis. There is the tired old saw that privatisation will mean greater efficiency. It may in some cases but often it does not. It may bring efficiency at the cost of lower wages or cutting corners.
The prime minister is quite careful in speaking about Iran's nuclear programme and certainly refuses to jump on the US et al bandwagon. He is also obviously concerned about the unity of Iraq.
Bahrain’s Economic, Social and Political Growth the Ultimate Goal: Khalifa
Badea Abu Al-Naja, Arab News
MAKKAH, 3 July 2007 — “We have set economic, social and political growth as Bahrain’s ultimate goal. All the kingdom’s potentials are utilized with this goal focusing on its citizens’ welfare,” said Bahrain’s Prime Minister Sheikh Khalifa ibn Salman Al-Khalifa.
Sheikh Khalifa recently won the prestigious Habitat Scroll of Honor Award of the United Nations Human Settlements Program in recognition of his contributions in shelter provision, housing and improving the quality of urban life.
In an interview with Arab News, Sheikh Khalifa said that winning the award was a morale-boosting recognition of his services. He added that the event signified the success of Bahrain’s policies in finding effective solutions to its acute housing problem besides being a token of international appreciation of the country’s progression.
The United Nations Human Settlements Program launched the Habitat Scroll of Honor Award in 1989. The award aims to acknowledge outstanding contributions in shelter provision, highlighting the plight of the homeless, showing leadership in post-conflict reconstruction, and developing and improving human settlements and the quality of urban life. “The road to progress is long and arduous. It demands us to be hardworking and determined. Our perseverance in our struggle has, apparently, caught international attention. We will continue our efforts to preserve our current achievements and then to reach greater heights,” he said.
Replying to a question whether Bahrain, according to a UN study last year, is satisfied being ranked as the 25th most liberalized economy in the world and the first in the Middle East, Khalifa said his country gave top priority to achieving economic strength, which is the foundation for social development.
Bahrain has been successful in attracting huge foreign investments, particularly in the areas of downstream industries, which, while giving added value to the national economy, diversify the country’s economic basis and minimize dependence on crude oil as the major source of income.
Commenting on Bahrain’s privatization drive as part of its economic liberalization after it became the first Gulf country to accede to the World Trade Organization in 2005, Khalifa said it is unreasonable to retain governmental control on every economic activity at a time of rapid globalization and market economy. Bahrain’s government aims at strengthening the private sector by providing it a favorable environment to attract domestic and foreign investments, Khalifa said.
The award-winning premier said that the private sector would, in turn, create more employment opportunities, which would raise living standards besides offering more efficient services. It is, obviously, with that aim that the state has been withdrawing gradually from several economic activities leaving the field for private entrepreneurs. The move is also resulting in a reduction of the state’s budgetary burden.
The government’s policy has been to encourage domestic, Arab and foreign capital flow to the country’s private sector, he said.
Though he admitted the private sector’s ability to achieve higher profits with its advanced administrative and technical expertise, Khalifa affirmed that the state never gave up its supervisory role of vital economic activities.
“Our privatization strategy does not only entail the transfer of ownership of some public sector companies to the private sector, but a broader significance of encouraging the running of several important services, such as the public transport and telecommunication maintaining a very high standard,” he said.
The privatization policy, no doubt, leads to a better quality of service, Khalifa said. In the power generation sector, for instance, the state buys and distributes electricity generated by the private sector. The arrangement has proved to be more efficient in offering a satisfactory service to people on the one hand and on the other has reduced the burden on the state.
While discussing Bahrain’s success in attracting foreign investments, the premier said the country could attract 20 percent of all foreign investments in the region despite stiff competition from several other countries, largely by creating an investment-friendly environment with simplified rules such as the permission for 100 percent ownership of properties for foreign investors in the country. Bahrain has also opened giant projects, such as the Bahrain Financial Harbor eyeing the region’s oil money. Its bold steps in the direction of deregulation have enabled Bahrain to acquire advanced technology in manufacturing, which has helped boost exports and the diversification of the economic base. The country has also introduced a single window system to complete hassle-free formalities related to foreign investments, drastic cuts in license fees, a system of easy availability of land for industries and transparent trade regulations, Khalifa said.
The government’s investment-friendly moves have made Bahrain an international hub for investment projects and financing in the Middle East besides earning it the recognition as a location of transparent international trade. About the hectic activities of international banks and financial establishments in Bahrain, he said that there were 390 international banks and financial institutions currently operating in the country.
They have been attracted and encouraged by the deregulated financial system that increases confidence in economic activities in the country, he said. He also pointed out that the kingdom’s advanced telecommunication facility has been another major factor for the success of their free operations.
“We strive to attract huge financial institutions to establish their headquarters in Bahrain. We also aim at becoming a key location on the international financial map. The Bahrain Financial Harbor, at a cost of $3.1 billion, is perhaps an important step in this direction,” the premier said.
Khalifa added that his country has been welcoming and supporting Islamic banking institutions since their inception.
When asked about his views on the issue of a single Gulf currency, Khalifa said that the attempt to adopt common currency is part of the GCC’s attempt to achieve economic integration. “We have been supporting and will continue to support the project until it sees daylight. I am optimistic about the project though some obstacles have stood in its way of realization. Occurrences of such obstacles are quite natural with any project of this magnitude, which requires detailed studies with due consideration for the circumstances of every one of the council members,” the prime minister said.
He further stressed the role of the GCC in the development of the region in political, economic, social and educational fields since its inception in 1981. “We believe that the GCC’s contribution to the stability and prosperity of the region has been immense,” the premier said, adding that some of the accomplishments of the GCC to be realized soon are the GCC Customs Union, the single Gulf currency and the GCC power grid.
Rejecting the idea that the council was experiencing a decline, Khalifa said that it was quite normal for any similar organization to face obstacles in its march forward but it cannot be called a decline. A little time and effort would change the situation.
“Nobody would deny that the GCC has made great achievements on every plane, and the cooperation and coordination among member countries have reached an advanced level. Its achievements in political, economic and social fields could not be gauged on the basis of someone’s satisfaction or dissatisfaction. We should look at the GCC as an integrated strategic plan unfolding on the basis of a definite time-bound program.
“It shall have to pass through several stages until it makes a whole final picture and then only we can judge it as a whole. We believe that what the GCC has achieved until now has contributed in strengthening the stability and the prosperity of people in the region,” he said.
“We are currently witnessing a stage of rapid progress in the direction of increased integration such as the customs union, common currency and a common power grid,” he added.
On a question about the fate of “the Al-Jazeera Shield,” a joint defense program for the GCC, the premier said the project has not been abandoned, as some people believe. On the other hand “each country supervises its own share of the shield and keeps it ready to meet emergencies.”
He affirmed that coordination between the military establishments of member countries has achieved considerable progress and the shield force is just one of the manifestations of the integration of people in the region.
Commenting on the Arab peace initiative in the Middle East engineered by Custodian of the Two Holy Mosques King Abdullah and adopted by the Arab summit in Beirut in 2002 and endorsed in the latest Riyadh summit, Khalifa said the initiative is poised to be a great success provided Israel is sincere in its desire for a lasting and just peace.
“We are certain that King Abdullah’s initiative is a historical opportunity which should not be wasted. The initiative has the potential to achieve lasting peace in the Middle East by revitalizing negotiations between the Palestinians and Israelis for the establishment of an independent Palestinian state with Jerusalem as its capital,” he said.
When asked whether the worsening situation in Iraq has the potential of threatening not only the regional security in the Gulf, but also the security of the whole world, Khalifa said, “The stability of Iraq is a safety valve for the whole region. Therefore we should support every effort aimed at guaranteeing the security, stability, unity, identity and sovereignty of Iraq.” What is happening in Iraq shows that the security there is continuously on the decline, he said.
He warned that there are people who are striving to dismember Iraq. “We do not accept the idea of a divided Iraq. We want an undivided Iraq as it has existed all the time. The stability of Iraq is in part the stability of the region and it is very important to preserve the security and stability and territorial integrity of Iraq and helping it in its hour of trial.”
Commenting on Iran’s present nuclear activities, the prime minister said he believed that every country had the right to use nuclear energy for peaceful purposes. “We always emphasize the need to find a peaceful settlement for Iran’s nuclear issue through diplomatic channels and on the basis of the legitimate international resolutions while we hope to activate the Arab initiative for cleansing the Middle East of all weapons of mass destruction.”
He concluded the interview affirming that he was against the idea of a new war in the region, as the region could not afford to have any more of it. “Therefore everyone should strive to keep the conflicts away from the region and strengthen its security and stability by focusing all their energies on construction and growth,” he said.