- Associated Press - Thursday, March 3, 2011

CAIRO | Persian Gulf Arab oligarchs are preparing their own version of a Marshall Plan for Oman and Bahrain, seeking to quell the unrest that has come to their doorstep and presented them with their most serious challenge in decades.

The plan, to be discussed Saturday by the Gulf Cooperation Council finance ministers, will include measures to improve the economic and social conditions in the two countries. Oman and Bahrain are the poorest members of the six-nation regional bloc, according to GCC officials, who spoke on the condition of anonymity because they were not authorized to discuss details of the plan.

Key to the plan, inspired by the U.S. aid effort for Europe after World War II, will be the injection of several billion dollars into Oman’s and Bahrain’s economies, experts said.

“This is a test for the GCC union, and it’s important that they’re meeting,” said John Sfakianakis, chief economist for the Banque Saudi Fransi in Riyadh, the Saudi capital and site of the council meeting.

“It’s not going to be a meeting just to meet and greet. It’s going to be a meeting to discuss the dollars and cents and the actual programs.”

Much is at stake for the sheiks, emirs and kings of Saudi Arabia, Kuwait, Qatar and the United Arab Emirates.

They have watched with growing alarm the wave of protests sweeping through the Arab world. First Tunisia’s and Egypt’s presidents were ousted. Now, Yemen’s president is clutching at lifelines, and Libya’s longtime strongman is locked in a bitter fight for survival against rebels who have wrenched the country’s east from his control.

The protests in Bahrain and Oman are what have truly rattled the other Gulf royalty.

“Anything that happens in [Oman and Bahrain] will have a huge impact on the other Gulf states,” said Mustafa Alani, a regional analyst at the Gulf Research Center in Dubai.

The plan, which was outlined by the GCC officials, includes funding affordable housing and giving Bahraini and Omani citizens preference in securing jobs in other Gulf nations.

Even as they weigh support for the two countries, the rulers have not been idle at home.

Saudi King Abdullah last week ordered an injection of $37 billion - more than Bahrain’s total gross domestic product - into programs targeting the oil kingdom’s lower-income population. The United Arab Emirates also ordered a $1.55 billion cash infusion to upgrade the electrical grid and water connections in the seven-state federation’s less-developed emirates north of Dubai.

Turning their sights on Bahrain and Oman, however, highlights efforts to extinguish an economic spark that could ignite a regional political wildfire.

Oman and Bahrain are minor oil producers in a region of crude-oil titans. Their combined economies are less than a fifth of that of Saudi Arabia. While hardly impoverished as Egypt and Yemen are, they face major economic challenges.

Unemployment among youth is a key concern in Oman. In Bahrain, the government’s foreign debt stands at a staggering 139 percent of GDP, second only in the Arab world to Lebanon, according to London-based Capital Economics.

Dealing with the problems in Bahrain and Oman can be accomplished with “less resources than what you would need in a place like Saudi Arabia,” Mr. Sfakianakis said.

“In the case of Bahrain, you can really address the housing or quality-of-life issues by pumping in money,” he said.

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