Gulf Times

A People’s Agenda for Gulf Co-operation

The Gulf Co-operation Council’s (GCC) 33rd annual summit, held in Bahrain on December 24-25, 2012, was meant to address economic issues and further regional integration. In practice, however, these concerns were largely overshadowed by the other main agenda item – security.

While the summit managed to touch on banking co-operation and electricity and water linkage, the main headlines that emerged from Manama centred on a warning to Iran and the creation of a unified GCC military command. Participants, including Saudi Crown Prince Salman, expressed disappointment and frustration at the summit’s failure to make more progress on GCC integration and related issues. This is nothing new, however.

Since its founding in 1981, the GCC’s accomplishments have largely been realized in spite of diverging political visions, and security concerns have frequently crowded out non-security areas of co-operation that would realize more tangible benefits for Gulf citizens.

Amid a Middle East influx, it seems clear that Gulf leadership must now focus more seriously on meeting the needs of the region’s citizens and residents. The GCC’s founding came against a backdrop of regional chaos and upheaval, perhaps most notably the Iran-Iraq War and the threat posed by the Iranian revolution. The body has since suffered from a search for identity.

Aspirations to economic union by the end of the 1980’s have moved forward only haltingly, while Gulf security has in many ways continued to define the GCC.

Still, the reality is that the GCC’s six member states face a set of shared domestic challenges in addition to external threats. All suffer from a dependence on hydrocarbon-related activities, bloated public sectors, and a reliance on imports of labor and basic foodstuffs.

All are looking to diversify their economies and encourage private sector employment, both in anticipation of the depletion of regional energy reserves and to accommodate their booming populations – low unemployment figures conceal much higher rates of joblessness among young Gulf nationals, and adding more jobs to an already bloated public sector is not a realistic long-term solution.

Greater Gulf states co-operation could be a forum to help meet these needs. The GCC could offer practical advantages for Gulf residents in the fields of transportation, employment, communications, education, training and food and water security.

In recent years, it has been proven that regional groupings can have a genuine impact in these areas. With the relatively small regional population for which the GCC is responsible, forward-thinking and innovative measures fostering greater co-operation could have a quite dramatic effect.

Most Gulf citizens and residents aren’t looking for revolutions, and they don’t want to tear down their regimes. They are, however, increasingly finding their voice, especially through their embrace of social media. While some would say that reforms administered, in part, through the GCC would run counter to the region’s prevailing rentier-state social contract, they should be better understood as a modernisation of that contract.

In the medium to long term, the Gulf monarchies’ path to stability lies in recognising and better meeting their peoples’ demands. By showing that they are more sensitive to the changing needs of their publics and more capable at meeting those needs, including through greater regional co-operation, Gulf states can effect a more progressive relationship between rulers and ruled. It is an incremental step, but a crucially important one.

To date, the GCC’s accomplishments have been limited. In 2012, the Gulf states completed the last phase of a shared electricity power grid that will allow them to better meet domestic energy demand, and efforts are being made to further simplify already-streamlined procedures for GCC nationals’ travel between member states.

GCC members have largely stood together in support of shared positions on Syria and Libya – based on interests but also, arguably, on some degree of principle – and they have helped apply effective pressure within the Arab League and the UN.

On a much longer list of measures, however, the GCC has thus far fallen short. Stymied by intra-GCC divisions and a requirement that all decisions meet with the six-members’ consensus, targets for general economic integration have been repeatedly missed.

A Gulf customs union was first launched for a three-year transitional period in 2003; it was meant to impose a common single-entry tariff on goods entering the GCC and to lift all tariffs on goods moved within the GCC. Problems related to revenues and general protectionism delayed the union’s implementation, and it is now slated to go into effect in 2015.

At the GCC’s 2007 Doha summit, the organization resolved to establish a Gulf common market that would remove administrative and regulatory barriers to regional trade. As of today, though, this has yet to be fully implemented, and its attendant gains for regional business and entrepreneurship have gone unrealized.

A plan to establish a Gulf monetary union has stalled. Oman and the United Arab Emirates withdrew from a plan to adopt a shared currency in 2006 and 2009, respectively. Kuwait, meanwhile, dealt a blow to the region’s shared dollar peg when, under inflationary pressure, it shifted from a dollar linkage to a currency basket in 2007.

In 2009, the foreign ministers of Bahrain, Kuwait, Qatar, and Saudi Arabia signed the Monetary Union Agreement and the Basic Statute of the Monetary Council, a precursor to a GCC central bank. Since then, however, there has been little progress.

Changes that are arguably more mundane but that would make a real difference for Gulf residents have met similar fates. A railway project connecting the GCC member states was announced at the organisation’s 24th summit in 2003, but has been repeatedly delayed.

The rail line, which would run from Oman to Kuwait and would offer more choice for regional movement and trade, was meant to be completed in time for last week’s Bahrain summit. While Saudi Arabia’s recent decision to allow Qatar Airways and Gulf Air access to its airspace is a step in the right direction, protectionism and a lack of economic and political integration have stymied the sort of “open skies” policies that would drive down Gulf airfares.

Studies on European liberalization have shown increased competition cut European fares by a third and doubled the rate of growth in the market. Efforts to bring the Gulf’s relatively high mobile roaming charges in line with more developed markets, meanwhile, have only just started to show results.

Within the region, much of the discussion has revolved around the establishment of a “Gulf Union”. The Union likely would not entail the dissolution of any GCC member states or a common presidency or flag; rather, it would function as a confederation establishing common policy on economics, foreign relations, and defense.

Saudi Arabia, which announced plans for the Union at 2011’s summit in Riyadh, has been a vocal advocate of the plan, as has Bahrain.

It is seen as a means of ending Gulf reliance on a resource that is rapidly being depleted and on a Western security umbrella, particularly as the US becomes less reliant on the Gulf for its energy needs. Some in the Gulf are resistant, however, fearing that union would basically amount to Saudi Arabia swallowing its smaller neighbours. There are also concerns that a union would be premised entirely on immediate security concerns rather than broad popular support and meaningful reforms.

In the medium term, we may see a two-tiered GCC, in which there exists a union on a bi- or trilateral basis, but anything more substantial would require compromises and sacrifices from all GCC member states.

Ultimately, though, these discussions are degrees removed from the experience of the people of the Gulf. Issues of GCC consensus are not just theoretical; instead, they should centre on delivering concrete gains to Gulf states’ citizens and residents. Growth rates are high for the moment, but they are driven by strong global energy markets.

There is no guarantee that hydrocarbon revenues will continue to allow GCC members to escape economic realities, especially with youth unemployment high and some states are already or on the verge of running budget deficits. Looking forward, the GCC’s member states need to rethink the organization’s structures, especially its emphasis on inter-governmentalism and its crippling consensus decision-making.

The GCC needs a more viable model for benefiting the people of the Gulf. If the organization’s members can overcome past divisions, however, and co-ordinate on practical improvements to Gulf quality of life, then together they could be a powerful force for development in the region.