All aboard: Rail links will help connect the peninsula economically and socially

With just four years to go until the target date for the opening of a rail network carrying passengers and freight around the six countries of the GCC, its member states are looking forward to the economic and strategic benefits that this new connectivity will bring, but they also face some more immediate practical challenges in the short term.

By The Numbers

The GCC countries are united by language, religion, culture and geography and have all been able to use revenue from hydrocarbons to attract foreign labour. However, Saudi Arabia is by a considerable margin the largest economy in the sixcountry confederation. According to the World Bank’s ranking of countries by GDP for 2012, Saudi Arabia’s economy was only fractionally smaller than the combined GDPs of the other five countries. The Kingdom’s population of around 30m is larger than the combined population of the other five member states, and the total landmass of the other five member states adds up to less than 20% of Saudi Arabia’s area.

On Track

Each member state is responsible for constructing its own part of the new 6000-km, $100bn GCC rail infrastructure. The objectives of the individual countries are twofold: they are clearly trying to maximise the benefits domestically, as well as contribute to the wider network. Rail engineers in Saudi Arabia have already started construction of parts of the network of lines that will enable travellers to journey from Al Qurayyat near the Jordanian border in the north to Riyadh in the south, and from Jeddah on the Red Sea to Dammam on the Gulf. Pilgrims visiting the west coast will be able to travel at speed between Makkah and Medina via Jeddah and the King Abdullah Economic City.

The engineers have a lot of work ahead of them. The Saudi Railway Company’s network will consist of 2750 km of track, 148 bridges, 2900 culverts and more than 5m concrete sleepers. It is also part of a much bigger transport infrastructure master plan. Metro systems have been commissioned to provide public transport in Riyadh and Makkah, and freight terminals are being built to connect airports, phosphate and bauxite mines, and agricultural and industrial cargoes to processing and export facilities on the Red Sea at the port being built at Ras Al Khair. The North-South Line alone, running from the Jordanian border to Riyadh, is 1415 km long and will carry up to 2m passengers a year.

Beyond Saudi Arabia’s borders, the $15.5bn project will enable goods and passengers to travel from Kuwait in the north to Muscat in the south, and from the border with Yemen to the border with Jordan. The wider integrated GCC network, first agreed on by transport ministers of the six countries in 2008, will not only offer an alternative to air or sea journeys and avoid road blocks at border crossings, it will also open up the possibility of more porous borders for each country’s citizens.

Mega-Projects

Across the GCC region hydrocarbons wealth is being poured into mega-projects, with new airports, sea ports, industrial hubs, urban transit systems and skyscrapers being built to drive and accommodate more diversified economies and growing populations. The rail network is designed to speed up these advances and to allow the countries to share collective benefits.

“Saudi Arabia is a huge market in the GCC and investors will want to tap into it,” said Fahad Al Turki, the head of research at Jadwa Investment. “There is a demand for Saudi products, whether it be milk or petrochemicals, in the GCC, so greater integration will help to open up the market for these.”

There will also be benefits for other countries within the bloc. According to Dubai Customs, Saudi Arabia was the top destination for its re-exports in 2012. The rail network will also give GCC citizens an alternative route to events such as the World Expo 2020 in Dubai, which is expecting 25m visitors and will need 45,000 rooms to accommodate arrivals. Two years later the FIFA World Cup in Qatar will provide residents of the GCC with another attraction that will be within easy reach if the rail network is completed on schedule by 2018.

Efficient freight services linking the Red Sea with the Gulf along the Saudi Landbridge being built from Jeddah to Dammam will help shield the Saudi Arabian economy from any supply crises should any of the three seaway choke points of the Suez Canal, Bab El Mandeb or the Straits of Hormuz be threatened.

The GCC rail network will also enable Saudi goods to be imported and exported from the Port of Salalah in neighbouring Oman, the only facility between Singapore and Europe that can accommodate S-class container vessels. Shipping is the cheapest way to move freight, but rail will be faster as soon as the new network is up and running.

With just four years to go, only Saudi Arabia and the UAE have started building so far. Oman’s section of the network is set to be 2244 km long and it will go through some of the harshest terrain on the peninsula. It is still in the design stage as of 2014, with construction not due to start until 2015. An overarching authority to oversee the GCC project is due to be formed in 2014 and part of its role will be to ensure that member nations agree and adhere to a timeframe for completion.

Passports & Visas

Abdulla Al Nuaimi, the UAE’s minister of public works, told local press in January 2014 that a proposal has been made to allow passport-free travel across the network for all passengers, including both expatriates and locals. If the proposal is approved, it would mean that from 2018, when the tracks are due to be completed, passengers would be able to travel carrying their national identity cards rather than passports. “The idea of introducing the railway is to ease travel across the region,” Al Nuaimi told the local press. In the UAE, Al Nuaimi said that a new law was being passed in time for the launch of the service that would cover various legal aspects relating to travel, including fares, Customs, border crossings and passport control.

Customs & Currency

A Customs Union was first established by the GCC in 2003, creating a free trade area with common external tariffs, but there is an ongoing debate as to how to divide up the revenue from those tariffs across the bloc. The deadline for a solution is 2015, but before that happens trade policies across the bloc must be unified. Speaking to the local press after a May 2014 GCC meeting, Kuwait’s finance minister, Anas Al Saleh, said an agreement had been reached on the mechanism for distributing Customs revenues, although further studies needed to be carried out and would be reviewed at the meeting in September 2014.

The bloc is also working to fully implement the GCC Common Market, which was launched in 2008 to allow free movement of factors of production. Citizens might also find that a new sense of interconnection will enable them to look further afield for work. A 2011 study found that only 21,000 GCC nationals were employed in another member state.