The D-8 Organization for Economic Cooperation and the Creation of an Islamic Common Market

The 11th Summit of the Developing-8 (D-8) Organization for Economic Cooperation comprised of eight Muslim-majority developing countries took place in Cairo on Thursday December 19 2024 with the participation of the leaders of the eight member states and coinciding with the accession of a new member (Azerbaijan).

The 11th Summit of the Developing-8 (D-8) Organization for Economic Cooperation, comprised of eight Muslim-majority developing countries, took place in Cairo on Thursday, December 19, 2024, with the participation of the leaders of the eight member states and coinciding with the accession of a new member (Azerbaijan). Among the most important agreements of this summit, we can refer to the planning to increase the volume of intra-organizational trade to 500 billion dollars by 2030, strengthening small and medium-sized industries, investing in young people, and participating in shaping the future economy of the world; decisions that are a repetition of the statements of the 10 previous summits, especially in the field of trade.

The D-8, which was formed based on the statement of the first summit on June 15, 1997 in Istanbul, announced its main goals as reforming the position and strengthening the active presence of member countries in the global economy, strengthening participation in international decision-making, and providing better standards of living for the people of these countries. To achieve these goals, the members of the organization decided to expand their cooperation in various fields by maximizing trade between members and creating an Islamic common market, and to become an influential bloc in the global economy. With an area of approximately 7.6 million square kilometers, equivalent to more than 24% of the area of Islamic countries and about 2.5% of the total area of the world, the D-8 organization forms a developing crescent from Southeast Asia to West Africa. With 13.15% of the world's population and 60% of the population of Islamic countries, it is considered an economically powerful potential market for the development of trade exchanges in the Islamic world and the international economy. On the other hand, the proximity and access to the world's major waterways such as the Persian Gulf, the Indian Ocean, the Mediterranean Sea, and the Black Sea, the dominance over important international straits such as Hormuz, Bosphorus, Malacca, the Suez Canal, and the border with emerging economies, facilitate and accelerate the opportunities for expanding trade exchanges between these countries and trading partners outside the organization. Given these potential capacities, now, 28 years after the formation of this organization, the main question is whether the D-8 has been able to achieve the goals of convergence between members and the creation of an Islamic common market?

In a general overview and by examining the actions and activities carried out in the approximately three decades since the establishment of the organization, the D-8 has managed, after the initial formation period, to follow a forward trend and, by compiling documents and various cooperation plans, determining priorities, creating mechanisms and regulating important agreements, to provide the necessary frameworks and prerequisites for the movement of member countries on the path of convergence and economic integration. In practice, and looking at the available statistics, the D-8 is in the capacity of a powerful economic bloc that contains important elements of regional convergence. The organization has a gross domestic product equal to 4.4 trillion dollars, equivalent to 2.4% of the global economy and about 59% of the economy of Islamic countries. The total share of the region's trade from global commodity trade in 2023 was equal to 2 trillion dollars and equivalent to 6.45% globally. These capacities make the D-8 region worthy of playing an influential role in the global economy. But if we consider one of the important indicators for evaluating the success of convergence in a region to be the volume of intra-regional trade of its members, currently the share of intra-regional trade from the total foreign trade of the D-8 is only 8.4%, which is far from the target of 15 to 20% of the 2008-2018 and 2020-2030 roadmaps. Although intra-regional trade increased from 15 billion dollars at the time of the organization's establishment to 130 billion dollars in 2023, even this amount of increase in intra-regional trade should be attributed to the growth of bilateral relations between member countries, especially couples with geographical continuity such as Iran-Turkey and Indonesia-Malaysia.

The review of cooperation trends shows that member countries, despite the economic asymmetry and dissimilarity that prevents the establishment of beneficial trade relations, still have relatively suitable economic capacities and high political motivations for the continuation of cooperation, and have created almost all the necessary capacities and institutions for this cooperation. But the existence of obstacles and challenges such as the lack of economic complementarity in some important economic sectors such as energy and agriculture, the lack of a government-centered approach, the lack of territorial continuity, the lack of financial resources and the breadth of the scope of activities have caused cooperation in the organization to be more limited to holding meetings and issuing statements for non-implementation. On the other hand, although activities have been carried out in the field of establishing foreign cooperation, approving agreements, holding meetings and drawing a road map, these activities have not turned into practical and tangible cooperation and have not provided distributable achievements for the members.

For instance, the D-8 organization, despite the high political will and support of its members, suffers from delays in the implementation of agreements. This delay is evident both in the stages of their approval in legislative institutions and in the process of operationalizing the agreements and adapting them to domestic laws. A concrete example is the status of the implementation of the most important cooperation agreement, the Preferential Trade Agreement (PTA), which was signed in 2006. This agreement officially came into force between Iran, Malaysia, Nigeria, and Turkey on August 25, 2011, and for Indonesia and Pakistan by February 2012. Egypt and Bangladesh joined this agreement after a 10-year delay. The agreement's supervisory committee has held seven meetings since 2012, and the Trade Ministers' Council has held three meetings, each time setting a new date for the definitive implementation of the agreement and agreeing on it, but the implementation process is still facing ups and downs. Thus, the D-8 member countries, 18 years after the adoption of the Preferential Trade Agreement, are still unable to implement it among themselves. This has caused one of the main goals of the organization, which is the development of intra-regional trade, not to be achieved. On the other hand, two other important agreements of the organization, namely customs cooperation and visa facilitation for traders, have not yet been operationalized despite being in force, and this also acts as an obstacle in the path of facilitating trade and freedom of movement of goods and people between member countries.

The breadth of the areas of activity is another important challenge of the organization. Certainly, cooperation in important economic areas such as trade, transportation, agriculture, and tourism can strengthen cooperation and greater proximity between members, but due to the breadth of cooperation areas and their sub-branches, the main and priority sectors such as intra-regional trade have largely been marginalized. Relying on the principle of minimalism, the organization should, while re-prioritizing the areas of cooperation and stopping or removing half of the current activities from the agenda for the remaining 5-year period of the roadmap, focus on the definitive implementation of the priority items and use all national, regional, and international facilities and capacities, especially existing financial and development arrangements such as the BRICS Bank and Asian Infrastructure Development Bank, to ensure their success.

Another significant obstacle facing the D-8 is the lack of financial resources within the member states to support diverse cooperation projects. Establishing a new financial mechanism such as the D-8 Bank and expediting the formation of a project support fund could accelerate cooperation within this organization. Furthermore, seeking external financial resources to support the implementation of the organization's regional projects by approaching potential development partners such as China, the European Union, ASEAN Plus, and BRICS is of great importance. On the other hand, considering the undeniable importance of private sector participation in the development of D-8 cooperation, all obstacles to its participation must be removed by the member countries so that this sector can become the driving force of cooperation in the organization.

In any case, by evaluating the current state of cooperation in the D-8 and noting its failure to achieve the most important goals set, it becomes clear that the organization faces serious obstacles and challenges in its path, and as long as appropriate action is not taken by the member countries and the secretariat to remove these obstacles and overcome the challenges, there can be no hope for the progress of cooperation. It is time for the organization, instead of issuing repetitive statements, to take another look at its activities and agenda priorities, and while reviewing the priorities and limiting the scope of cooperation for a specific period, to adopt new solutions and initiatives to advance cooperation and ensure the achievement of the main goals and the creation of tangible and distributable achievements for the members. Only in this case can we hope for the success of cooperation in the D-8 and the realization of the goals set in the 2020-2030 roadmap, including increasing intra-regional trade and, as a result, the possibility of the organization influencing the rapid equations of the global economy.

Morteza Damanpak Jami, Senior Expert at the Center for Political and International Studies

 (The opinions expressed are those of the authors and do not purport to reflect the opinions or views of the IPIS)