In one of the most remarkable weeks in modern Middle East history, the countries of the GCC have emerged as key figures that will shape world prospects in 2008 and beyond.
At Annapolis in 27 November, President Bush declared the start of peace negotiations designed to deliver a comprehensive settlement of the Arab-Israel conflict by the end of next year.
He posed for the cameras with Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas. But some of the people who matter most were not on camera.
The representatives of Qatar, Saudi Arabia and the UAE remained in the background, but their role at Annapolis had been pivotal. If they had not come, the chances of compromise would have been hopelessly compromised and the hopes of Palestinian and regional reconstruction dashed.
The previous night, Citibank announced that the Abu Dhabi Investment Authority (ADIA) planned to take a 4.9 per cent stake in America’s largest bank. It may have been coincidence, but it’s unlikely.
Abu Dhabi and the UAE were expressing in a tangible form their support for the US dollar, the troubled American banking system and the US as a whole. It was a sign of solidarity, a reward to President Bush for reviving peace talks and an incentive to Washington to do more.
The members of the GCC, 26 years after it was formed, are flexing their muscles in world affairs. Accounting for 40 per cent of world oil reserves and the majority of internationally-traded oil, they can make or break the oil market.
A campaign to drive the oil price down to $70 a barrel or lower is now in prospect. It will help the US economy and provide fresh GCC encouragement for President Bush to fulfill his promises and help create an independent Palestinian state.
In world finance, the GCC punches well above its economic weight. The combined GDP of the six states represents less than 2 per cent of world GDP and was probably worth less Mexico’s in 2007.
But no one has more savings. ADIA could control foreign assets worth up to $1,000,000 million. GCC governments together may now own twice that figure.
At a time when the US banking crisis is beginning to contaminate the rest of the world’s economy, GCC finance has never been so vital or had so many opportunities. It appears Citibank approached ADIA for help. This is not the first time the GCC has backed the West’s banking system. And it will not be the last.
In the Islamic world, Saudi Arabia is first among equals. Sharply reduced violence in Iraq is partly due to Riyadh which has influence among Sunni tribes.
After brokering in February the creation of a Palestinian unity government which was deposed by Hamas in Gaza fourth months later, Saudi Arabia has shifted its strategy to back Abbas and his allies. Saudi Arabia is at work promoting moderation in Egypt, Lebanon, Syria and the rest of the Arab world.
But it is the US that matters most. GCC leaders know American politicians are constrained by massive popular support for Israel. A Republican president with nothing to lose, Bush has room for manoeuvre in the Annapolis process, but not much.
Gulf states will have to help him out when the critical decisions about Palestine are reached by reaffirming their support for the US economy and America’s Middle East goals.
This has been made easier by Iran’s intransigence about its nuclear programme and interference in Iraq, Lebanon and Palestine. There are signs patience with Tehran is exhausted. Here too, the US and the GCC are in tune.
The GCC has never sought the global influence it now wields. But its oil reserves and financial clout entail a new burden of responsibility. It might be happening sooner than they wanted.
But the GCC is throwing itself behind an ambitious effort designed to bring peace to the Middle East, order to world finance and sense to energy markets.
The prizes are big and so are the risks. But everyone loses if it all goes wrong, again.