GCC Rail Network to Help Economies Has Been a Dire Year for the Industry
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18 July 3, 2015 Economy Briefs Tunisian economy should withstand terror shock The assault on a Tunisian resort, which killed 38 people, sent holi- daymakers fleeing and dealt a major blow to the country’s tourism indus- try but the broader economy should be robust enough to withstand the shock. European tour operators evacu- ated thousands of tourists after the June 26th attack on a beach in Sousse and many foreigners are like- ly to shun Tunisia until they feel it is safe to return. Officials predicted terror-related losses of at least $515 million to the tourism industry. However, analysts say the econ- omy should avoid a repeat of the recession that followed the 2011 revolution. Inflation appears steady at less than 6%, tax collection is im- proving and authorities have started to rein in spending, which may off- GCC railway set a tourism slump. The turmoil unleashed by Tuni- sia’s 2011 revolution slashed foreign currency tourism receipts by one- third. By 2014 they had regained their pre-revolution level but 2015 GCC rail network to help economies has been a dire year for the industry. (Reuters) Krishna Kumar moting sustainable development. creasing their average speed and as much as to China, Europe or the “The Gulf rail project will entail safety.” US, where high-speed rail is very Oil hits 3-week significant investments across all The $15.4 billion project entail- high on the agenda,” Hill added. Dubai member-states, given the lowered ing the construction of a 2,177km The Gulf railway has gone be- lows as Greek oil price impacting revenues of oil regional network starts in Kuwait, yond design stage and work is he dramatic economic exports, but the benefits are plen- connecting it with Bahrain, via under way. Nonetheless, officials crisis worsens growth that Gulf Coop- ty,” said Salvador Zarate, of A.T. Dammam in the eastern province acknowledge it is unlikely that all eration Council (GCC) Kearney, a US-based global man- of Saudi Arabia. From Dammam, countries will meet the 2018 dead- Crude futures hit 3-week lows as countries have witnessed agement consulting firm. the railway would link the Saudi line. Greece shut its banks and imposed in the last four decades kingdom with Qatar through Salwa Among the six GCC states, Saudi capital controls, causing widespread Thas been paralleled by a surge in The GCC railway will border post and Bahrain with Qatar Arabia and the UAE have taken risk aversion, while Iran looked like- demand for a supportive infra- contribute to Gulf via a Qatar-Bahrain causeway. concrete steps to implement their ly to extend nuclear negotiations structure, including road, sea and countries’ efforts to Also from Saudi Arabia, the net- parts of the collective project. The with the West to export more of its air transport facilities. work would go south to Abu Dhabi two countries are on schedule to oil into an oversupplied market. But it is becoming more evident diversify their and Al Ain in the United Arab Emir- link their networks. Other states The dollar initially surged against that growth in metropolitan travel economies ates, via Al Batha border area, and are expected to join onto the main the euro on the Greek jitters but it and economic exchange cannot be end up in Oman across the coastal network when they are ready. later retreated, limiting the down- met by roads alone but necessitates “The GCC railway will contribute city of Sohar, to Muscat. In Saudi Arabia, design work for side for oil. a modern and effective railway net- to Gulf countries’ efforts to diversi- According to Julian Hill, regional the “land bridge project,” a 950km Brent crude futures settled down work. fy their economies by helping them managing director of Atkins, a lead- line for cargo and passengers that almost 2% at $62.01 a barrel, its The project to set up a Gulf rail- boost the competitiveness of their ing design, engineering and project will connect the kingdom’s Red Sea weakest finish since June 5th. US way linking all six GCC countries industries,” Zarate said in an inter- management consultancies in the and Gulf coasts, in addition to the crude closed down 2.2% at $58.33 was first approved at a GCC summit view with The Arab Weekly. region, who monitors railway de- links between existing Saudi lines a barrel, its lowest settlement since in 2009. A 2018 deadline to com- He said this will happen through velopments in the Middle East, the and the GCC network, is almost June 8th. plete the work was set at subse- the combination of several effects, network is a must for developing completed. Analysts said crude prices could quent meetings. including reduction in transporta- economies such as the GCC’s. weaken further as the Greek situa- tion costs and environmental pol- “Successful, prosperous and The impact on the tion will probably not be resolved The $15.4 billion lution as a result of switching from growing countries and cities need movement of people until a referendum on whether to road to rail, and improvement of high-quality modes of mass public accept conditions for a bailout. project entails the will also be construction of a the reliability of supply chains. transportation,” Hill told The Arab “This may be the time when we The impact on the movement Weekly. He said that in addition to significant break lower and into the $50s for 2,177km regional of people will also be significant, its immense economic and social Brent as we have a full week of un- network Zarate explained. “On the one benefits, “rail, as a mode of trans- In the UAE, the 1,200km national certainty,” said Bjarne Schieldrop, hand, the railway will take a sig- port, is cost-effective and environ- railway network, Etihad Rail, is un- head of commodity analysis at SEB Experts agree on the need for nificant market share in trips short- mentally sustainable”. der construction over three stages. in Oslo. Gulf countries to invest in rail de- er than 600 kilometres, such as “Advances in technology and It will link main population centres (Reuters) spite the financial and technologi- Dubai-Abu Dhabi or Riyadh-Dam- innovation will enable smart, in- and economic hubs and will form a cal challenges because rail offers mam.” he said. “On the other, the tegrated and personal rail travel vital part of the planned GCC rail- dividends on many fronts — eco- decrease in the number of trucks everywhere. This is a global trend way. Asian imports of nomic and social — as well as in pro- on GCC roads will contribute to in- and it applies to the Middle East In the meantime, Qatar is set to award the contract for the first Iran oil hit 2015 phase of the line that is to connect it to Saudi Arabia in mid-2016, with highs commercial service expected to be- gin by 2018. Asian imports of Iranian crude However, indications are that rose to the highest level of 2015 in Oman and Kuwait might miss May, although buyers may have the deadline because of delays in to curb further increases if nego- awarding contracts and finalising tiators fail to reach a final deal on design plans. Tehran’s nuclear programme. In Bahrain, preliminary studies A deal between Iran and six have been completed for the rail- world powers would resolve a 12- way and for a second causeway year standoff over the Islamic na- linking the country to Saudi Arabia tion’s nuclear work in exchange but bids are still to be determined for relief from sanctions, which for the design stage. could send millions of barrels Once the rail network is ready, flooding into an already saturated laws will be needed to regulate op- market. erations. Here, too, finalisation will Iran has as much as 40 mil- follow after the countries enact lion barrels of oil stored in tank- their own regulatory legislation. ers and aims to increase output The Gulf Rail Authority, which by 500,000 barrels per day (bpd) will be running the entity, will have within a month of sanctions be- to focus on three major areas: the ing lifted and up to 1 million bpd legal framework for interoperabil- within six or seven months. ity; technical harmonisation and Exports by Iran to China, India, standardisation; and safety. Japan and South Korea totalled That will ultimately pave the way 1.2 million bpd in May, down 1.9% for a smooth pan-GCC travel expe- from a year ago and the highest rience. since 1.21 million bpd in Decem- ber, government and tanker- Krishna Kumar is a Dubai-based tracking data showed. Linking all GCC countries contributor to The Arab Weekly. (Reuters).