Ever closer cross-border convergence is a dream of the past
The GCC, founded in 1981, is an Arabian version of the EU, created originally by the Treaty of Rome 60 years ago last month. The Rome treaty was signed by six western European states, although it now has 28 members. The GCC still only comprises six states, but there has been speculation other Arab countries could join.
Like the GCC, the EU is an association of very different economies. Germanys GDP is 50 times greater than Luxembourgs. Bulgarias per capita GDP is less than a seventh of Swedens. About one-third of Romanias workforce is employed on farms, while in the Netherlands, this number is 2 per cent.
Europe was the cauldron in the 20th century for humanitys bloodiest wars. The divisions were overcome and the EUs economy today is almost as big as the US.
The differences among GCC states are smaller. The idea that Arabia should emulate the EU is appealing. About 20 years ago, it seemed inevitable. But it is an option that has been rejected. Britains decision on 30 March to begin the process of leaving the EU explains why.
Shoehorning economies that are so different into a single framework requires income transfers to poorer member states and a powerful governing body. The EUs common currency project is foundering. A common tariff on EU imports and restrictions on national governments interventionary powers denies them economic management instruments. The Common Agricultural Programme is bad for food importers. The free movement of people agreed in the EUs 1992 Maastricht Treaty is being challenged.
The biggest issue is politics. The EUs trade, industrial and monetary plans require sacrificing national sovereignty. You cannot prove EU membership was good for Britains economy. But it was scepticism about European unity that was decisive in the UKs referendum last June.
The GCC took 12 years to complete its custom union, agreed in 2003. Plans for a single GCC market for goods, services, capital and labour were confirmed in 2008. Progress has been glacial. A GCC currency union, one of the organisations objectives, is dead. Oman pulled out of the plan in 2006. The UAE dropped out in 2009, after Saudi Arabia insisted the GCC central bank should be in Riyadh. Kuwait abandoned the dollar peg, the planned anchor for the common currency, the same month.
Since then, the GCC has disagreed about Egypt, Iran and Yemen. Saudi Arabia fell out with Kuwait about Divided Zone oil production in 2015. GCC summits look increasingly pointless.
Brexit suggests the dream of ever closer cross-border convergence may be over in Europe. For Arabia, it is an idea whose time never came.
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