March 2004 / No. 28

Landmark

4^th D-8 Summit Khatami Calls for

Closer Coordination  and a Common Market

Tehran was host to the 4th summit of the eight developing Islamic countries, dubbed D-8 or Developing 8. This year’s summit explored avenues for expansion of economic cooperation among the member states. It is the first time Iran chairs this summit that is held every other year. The D-8 summit embraces Iran, Bangladesh, Egypt, Indonesia, Malaysia, Nigeria, Pakistan and Turkey.

The one-day summit was held on 18 February 2004 following the 7^th meeting of D-8 Member States Council of Foreign Ministers, which was opened on February 16^th with the speech of Iran’s Foreign Minister Kamal Kharrazi, and the 15^th Meeting of the D-8 High Level Officials, which started on February 15^th, with the participation of representatives from D-8 member states.

D-8 was founded in 1997—upon the initiative of former Turkish Prime Minister Necmeddin Erbakan—to boost economic cooperation among the Muslim states, which have a combined population of more than 600 million. D-8 was formed to promote development cooperation, and also seeks to enhance the social and economic welfare of its member states.

The objectives of D-8 are to improve developing countries’ status in the world economy, diversify and create new opportunities in trade relations, enhance participation in decision-making at the international level, and provide better standards of living.

Creation of a Common Market: Iranian President Mohammad Khatami spoke twice at summit, addressing both the opening and closing ceremonies, where he referred to Islam as a strong bond among the group’s member states which encourages them to cooperate to create a common free market; and announced Iran’s readiness for all sorts of cooperation with other countries which would serve the country’s national and regional interests.

For overcoming the existing barriers and problems the group faces, he suggested the D-8 countries provide suitable environment and facilities for foreign investments and the activities of the private sector and also guarantee the global success of the group by collaborating and supporting identical views in international organizations.

The President believed that the most just and fair government is the one that devotes itself to fighting against injustice in order to provide people with equal opportunities. Iran was after scientific, economic and technological power but certainly wanted them for promoting equality rather than inequality, for achieving friendship, collaboration and development rather than invasion and aggression.

Today 80% of the total gross production of the world belongs to only one billion people living in developed countries, which is less than one sixth of the world’s entire population. As long as poverty and lack of scientific and technical knowledge prevails, nobody can expect lasting freedom and democracy in poorer countries.

The 4th D-8 Summit is being held at a time when despite all the monopoly and hindering efforts on the part of some countries to accumulate wealth, know-how and technology and to dictate their unfair policies through force and threat, it is still possible for the developing countries to achieve progress and improvement. Mutual cooperation and assistance among countries sharing similar backgrounds, threats, historical and geographical conditions and of course identical goals is required to fight against these destructive influences.

The D-8 countries make up over 15% of the world’s population and 13% of world’s oil and 28% of its gas resources and thus enjoy splendid potentialities. It is hoped that with a similar understanding and appreciation of the current international, regional and national crises and the appropriate methods of handling them, the presence of the developing countries in international circles would gain additional strength.

Iran has done a great deal to correct its economic structure to play a more important role in international markets and to assume a more satisfying cooperation with economic and regional groups such as ECO, D-8 and the OIC as well as other countries by taking various measures including omitting non-tariff obstacles and correcting commerce and trade regulations.

D-8 leaders have decided to boost the academic and scientific cooperation among them as a way to boost trade cooperation. Indonesia will hold the next D-8 Summit in 2006.

The President concluded his remarks by hoping that other D-8 members would also make a brighter future for themselves and other developing countries by eliminating the barriers on the way of mutual cooperation.

Closer D-8 Coordination: President Khatami later said that strengthening cooperation among D-8 members is “necessary” and “inevitable” and the speed of world developments and the need of each member country necessitate more attention to be paid to the issue. Hence we need not worry on embarking on changes within the framework and structure of the group in order to improve its performance.

Closer coordination between the members in all areas is a determining factor of the group’s future performance. Support for the private sector should be a priority within D-8 countries. As has been said repeatedly, the private sector’s activities are an engine of growth in the world economy and should not be given a lesser weight in national economies. Establishing a free-trade zone of D-8 countries is prudent and practical and the need for concluding preferential tariff agreements is needed to increase trade within the group. The collapse of the World Trade Organization (WTO) talks has created an opportunity for developing nations including the D-8 to strengthen their multilateral trade and investments activities.

Prudent and Practical Declaration: The heads of the D-8 group in the final declaration of the summit stressed the need for the expansion of the bilateral economic cooperation and adoption of measures to strengthen global peace and stability. The D-8 Summit called for the promotion of dialogue as a way of addressing the current world crises.

Due to the current challenges facing the globe and the wide gap between the developed and the developing countries, efforts should be made to prevent the isolation of states. The WTO should consider the challenges facing the developing countries and put their concerns on its agenda.

D-8 heads of states called on the WTO to set aside its discriminatory behaviors while deciding on the applications of the countries to accede to it. They stressed the need for measures to provide ways of making optimal use of recyclable energy resources and the new technologies such as water, solar and nuclear energy.

A decision has been made for the participating states to order the holding of ministerial level sessions in their countries to monitor the implementation of the decisions reached and to discuss the cooperation process among member states.

The leaders of the D-8 group have formulated a document that once signed by the members would facilitate the presence of investors in each other’s soil. Iran and Turkey have signed the document and other members are in the process of signing it.

Iran has announced a decision to build an eight-story building or the internet site of the D-8 group and each member state would have a floor to help expand the communication among them. Iran has announced it stands ready to send a staff member to the D-8 group secretariat in Turkey to help.

The D-8 leaders have decided to boost the academic and scientific cooperation among them as a way to boost trade cooperation. Indonesia has proposed to hold the next D-8 Summit in 2006.

Ankara looks in a positive light on transfer of gas from Iran to Europe and has carried out important discussion on the issue with European countries

Council of D-8 Ministers: The 7^th Meeting of the Council of Foreign Ministers of the D-8 Member States opened with Kharrazi’s remarks that for the D-8 to play its due role in the present world, the group must be transformed into an efficient and effective forum among selected developing economies. The mission to address the challenge of rapid change must continue and adaptation must be enhanced through the formulation of the necessary recommendations.

He also believed that member states had two important tasks before them namely to regularly and periodically coordinate their position on economic issues and also to create the necessary environment for private and public enterprises to engage in meaningful cooperation.

It is regrettable that the existing level of exchanges among member states is in no way in proportion to the group’s potentials and capacities, and statistics indicate that the total export of member countries stands at $247.7 billion against total imports of $229.9 billion. The overall trade exchanges of the group, amounts to $446.7 billion or 7.2% of the total world trade, of which $388.9 billion or roughly 80% belongs to the four countries of Iran, Malaysia, Indonesia and Turkey.

ICCIM Proposes Free Trade Agreement: Head of Iran’s Chamber of Commerce, Industries and Mines (ICCIM) Alinaqi Khamoushi called for the signing of a free trade agreement between D-8 members.

Khamoushi made his remarks at the Second Session of the Trade Assembly of Chambers of Commerce of the D-8, encouraging the signing agreements on customs, removal of double taxation, facilitating exchanges of businessmen, creating banking facilities and launching joint venture, which would promote economic relations between the member states.

He stressed the importance of dynamic and constructive cooperation between private and public sectors of member states to meet the existing needs. Iranian officials favor expansion of activities by the private sectors of the member states in an attempt to promote trade, economic and industrial cooperation. However, the private sectors would lack the necessary dynamism and effectiveness in case governments do not provide for the necessary facilities.

The ICCIM Head noted that trade and tourism are among important grounds for cooperation among D-8 members, saying the trade assembly, as the active member of private sector in trade, economic and industrial exchanges should identify fields for bilateral and multilateral cooperation and offer suitable strategies to this effect.

Tehran and Kuala Lumpur have cordial ties and the two will continue to elevate bilateral trade and conduct exchange of students and academics.

Speaking at the same meeting, Deputy Minister of Commerce for International Affairs Abdolhossein Vahaji declared Iran, as a D-8 member, is ready for all-out cooperation with other member states.

Trade cooperation among D-8 states is not as strong as desired. Undoubtedly, many D-8 members have rich energy resources, basic materials, mineral stones and precious metals and can meet each other’s needs to a large extent. D-8 group was formed to serve as a subsidiary of the Organization of the Islamic Conference (OIC) and forge convergence and prosperity of the member states. The group can turn into a powerful economic bloc worldwide and take constructive measures for further success of the OIC.

Gross domestic production (GDP) of the D-8 states stood at $740.3 billion in 2001, forming 2.38% of the world’s GDP. Annual GDP growth of the group on average was 2.38% in the 1990 to 2001 period, that is a little a bit less than the world’s GDP growth of 3.28% in that period.

Iran-Egypt Engage in D-8: The D-8 Summit has acted as a catalyst that has facilitated the nearing of Iran and Egypt after a quarter of century. During his meeting with Egyptian Foreign Minister Ahmad Maher, who was in Tehran to attend the summit, President Mohammad Khatami said that the common objectives and threats facing the Islamic countries require Iran and Egypt to cooperate to achieve progress and development by overlooking “certain minor issues”.

Khatami pointed to Egypt’s status in expansion of Islamic civilization and said, “The two countries’ closeness is important for the region and the Islamic World.” Intellectual and moderate Islamic belief is seen in Iran and Egypt more than anywhere else and the two nations’ anti-colonialism campaigns have stood shoulder-to-shoulder, and the nationalization of Iran’s oil industry and Suez Canal can be cited as examples.

“There are no obstacles in the way of mutual ties in scientific, technical and cultural fields. Iran and Egypt have close viewpoints regarding the fate of the Palestinian people, situation in Iraq and threats posed by extremists in the Islamic world as well as the influence of foreigners,” Khatami noted.

A decision has been made for the participating states for the holding of ministerial level sessions in their countries to monitor the implementation of the decisions reached and to discuss the cooperation process among member states.

Maher, for his part, said the public opinion in Iran and Egypt favor broad ties between the two major Islamic states. He stressed that solidarity and cooperation between Tehran and Cairo would lead to establishment of stability and security in the region.

Iran and Egypt are set to resume diplomatic ties and the manner of resumption of ties and the steps taken in this regard are to the satisfaction and have the support and backing of high-ranking officials on both sides.

The measures initiated are indicative of the two countries’ political will which is reckoned to result in the mending the broken diplomatic relations. The presence of Maher in Tehran (instead of Hosni Mubarak himself, who was officially invited by his Iranian counterpart) sets the tone for the two countries on how to proceed with the ‘reconstruction’ of their diplomatic ties.

Ties with Egypt are on the right track and things are moving ahead step by step. The question now is not “if” but “when”; and Iran’s Foreign Minister has recently said that “relations between Iran and Egypt are in the restoration phase and just need time. There should be a natural and definite course for relations to be resumed in the near future. What is important is that both sides have decided on this and are working towards it.”

Tehran and Cairo first broke the ice in June 2000 after President Khatami spoke on the phone with Mubarak in the first such conversation by the presidents of the two countries. Khatami and Mubarak met in Geneva in December 2003, on the sidelines of the United Nations World Summit on Information Society (WSIS). Iran said later it had invited the Egyptian president to attend the D-8 Summit in Tehran.

The Islamic Republic severed its ties with Egypt after its former President Anwar Sadat signed the Camp David peace accord with the Zionist regime and provided sanctuary to the defunct shah. Relations were particularly bad when Egypt supported Iraq during its 1980-1988 war against Iran. However in January 2004, Maher said that the Camp David accord “does not exist anymore and is merely a thing of the past. There have been many changes and I believe that this case between Iran and Egypt has already been closed...what matters now is the interest of Iran and Egypt to work with each other.” At the request of the Foreign Ministry, Tehran City Council then agreed to rename the Khaled Islambouli Street (the assassin of former Egyptian president Anwar Sadat) to Intifada (uprising of the Palestinians in the occupied territories).

These conciliatory gestures fuelled speculation that the two Middle Eastern giants may imminently renew full diplomatic ties. But, Egypt later assumed a half-hearted attitude, and Maher was cited as saying that the normalization of ties was a thing “for the future.”

But trade and other ties have been improving since the 1990s, as Iran sought to improve ties with a number of Arab nations. Egypt is the only Arab state with which Iran does not have normalized relations.

The thaw in Iran-Egypt relations is being examined closely by everyone, as the improvement in the ties between Tehran and Cairo will surely have far-reaching political, cultural, economic and religious repercussions and effects throughout the entire region. Iran and Egypt are two regional giants and the betterment of their ties would undeniably overshadow the regional developments.

Tehran-Cairo rapprochement would also strengthen the Islamic states in facing foreign threats. The rapprochement between the two Middle East giants would create a new atmosphere in the region that would be beneficial to all the Arab and Muslim countries and a balance of power would be established.