The past few years have created economic giants of the Gulf states, yet for all the market power endowed by $100-a-barrel oil prices, the six members of the Gulf Co-operation Council (GCC) are still regarded as political minnows.

In the long term, this could change. In early November, the GCC delivered an ambitious plan to Tehran to resolve the deadlock over Iran’s nuclear programme. Under the plan, the six GCC states would develop a uranium enrichment plant in a neutral state outside the region, which would supply the fuel to Middle East states seeking to use atomic energy.

The high stakes of Iran’s disagreements with the West and most of the region suggest the plan could struggle to make headway. The real significance of the diplomatic initiative lies in its rarity value. The GCC has seldom moved into the global arena with such vigour. For all the diplomatic influence of key states such as Saudi Arabia, whose former ambassador to the US Prince Bandar bin Sultan had privileged access to the Bush administration denied to even Washington’s closest allies, the six member states have until now failed to add up to the sum of their parts.

The GCC’s nuclear gambit demonstrated the kind of cohesive thinking that could allow the member states to punch above their collective weight. So far, member states have shown little inclination for strategic planning. The body has proved more reactive than proactive and still has a long way to go before it can begin to make a real impact on the inter-national stage.

Formed in 1981, the GCC was the fulfilment of the aspirations of many people in the region to establish a solid political and economic unit that would enhance their economic development. For much of the subsequent two-and-a-half decades, the GCC has struggled to shake off its image as a talking shop for the Gulf’s political elites. The GCC has its share of forceful political leaders but political differences, rivalries and tumultuous international geopolitical currents have combined to frustrate attempts to boost integration and give the six states greater political influence.

Some progress has been made. “The GCC came as a response to a series of challenges facing the region at the time,” secretary-general Abdul-Rahman al-Attiyah told the GCC meeting in the Netherlands in late October. “Over the past 26 years, the GCC has provided an effective framework through which co-operation in all fields has led to high levels of integration.”

That it took the threat posed by a nuclear Iran to fully engage the GCC’s diplomatic power suggests to some observers that the group is only able to act cohesively as a bloc when its most important strategic interests are at stake.

It has usually been the actions of its most dynamic leaders that have raised the Gulf’s head above the parapet. For example, the GCC’s pursuit of a common nuclear policy reflects the driving ambition of Saudi Arabia’s King Abdullah bin Abdulaziz al-Saud to reduce Iranian regional aggrandisement. At the GCC summit in Riyadh in December 2006, the GCC first announced the study on a joint nuclear programme – a direct challenge to the Iranians’ own nuclear programme.

Iran issue

Fear of Tehran’s intentions has pushed the member states closer together, even though some GCC member states have privately hinted they were not as keen as the Saudis on the nuclear initiative unveiled in early November. Iran is the big issue exercising regional minds. Concern has been growing for some time about the impact of tension between the US and Iran over the movement of shipping in the Gulf. In June 2006, the GCC announced the development of a contingency plan to minimise the impact of a closure of the Strait of Hormuz.

But the nuclear issue is top of the list of the GCC’s common concerns. Al-Attiyah visited the International Atomic Energy Agency (IAEA) in Vienna in February 2007 to discuss how the agency could provide technical assistance to the GCC for developing nuclear energy for peaceful purposes. “We have concluded in co-operating with the IAEA a preliminary study that will be presented to the heads of state summit in Doha in December,” said Attiyah.

In some ways, the GCC’s activism on this issue reflects global pressure to become more involved in the Iran issue. “The GCC is very critical of the Iranian nuclear programme, but is hesitant to be outspoken about it – it has let the West do the job,” says Eckhart Woertz, an analyst at the Gulf Research Centre in Dubai.

Since it was clear that Iran would be unlikely to take the GCC’s bait, there was little risk in the GCC offering up the proposal. The need for a common approach on key strategic issues has had other positive spin-offs. It has helped bring Qatar and Saudi Arabia together, agreeing to forget their differences to allow the GCC summit in Doha to proceed in December. However, this impromptu rapprochement has failed to mask the differences between member states.

Saudi anger at Oman and Bahrain’s nego-tiating of free trade agreements with the US in recent years has been marked. Under intense international pressure in the wake of the 9/11 attacks, Riyadh needed its GCC partners to remain united on centrepiece issues. But strong US pressure on GCC states to reach bilateral deals was a blow to a common GCC front on this key issue. Other differences have also arisen. Saudi Arabia attempted to undermine the Dolphin gas export project in 2006, demanding that Qatar and the UAE halt construction because the pipeline violated Saudi territorial waters. The UAE and Saudi Arabia have also allowed historical grievances over the disputed border between the two countries to resurface over the past few years.

Forging common positions on key economic issues, such as negotiating positions with the EU, should help restore unity to the six-member bloc. Much hope is being invested in the signing of a EU-GCC free trade pact, with a high probability it will get the go-ahead under the French presidency in the second half of 2008 (see feature, page 59). But at the foreign policy level, there is little evidence of greater coherence. However, intra-GCC rivalries can be overstated.

Saudi power

The overbearing power of Saudi Arabia and the smaller members’ desire to escape its tight grip help to explain the decision of some GCC states to break ranks in recent years. But the members’ long-term strategic interests will continue to tie them closely together.

“There are historical sensitivities in terms of the role of Saudi Arabia and some residual concerns over past disputes, but overall it is a positive relationship,” says Neil Partrick, a Gulf-based political analyst. “These are sensitivities rather than tensions.”

At the very least, there is now consensus that GCC states can only negotiate free-trade agreements at GCC level. For example, negotiations between Qatar and Australia that started at the bilateral level have recently shifted to the GCC.

But co-operation in areas that have an impact on political sovereignty – including economic decision-making – remains a problem for the Gulf states. The tortuous history of the EU’s efforts to build common economic and political institutions over a far longer timeframe indicates this is not an issue that only affects the Middle East.

“We are moving,” Saudi Foreign Affairs Minister Prince Saud al-Faisal tells MEED. “Perhaps some people will criticise for moving too slowly. But looking at other experiences, such as the EU, it took ages and still [they] don’t have one currency [for all members]. But we hope the next meeting will have a very good impact on the work of the GCC.”

The immaturity of most Gulf states – many of whose national institutions and legislative frameworks are barely more than 30 years old – has also obstructed faster progress on the creation of common institutions.

Political reform

This could be redressed as national institutions gain more experience. “There is political reform in the newly emerging countries trying to help political entities keep abreast of their economic development,” says Al-Attiyah.

“The process of political reform is undertaken through gradual procedures that seem to be slow yet have a cumulative impact, giving momentum to political action in these states.”
National-level political reform needs to gain traction before genuine cross-border supra-national institutions develop successfully. The current institutions lack strength, although the arrival of key institutions such as the proposed GCC central bank should slowly add impetus.

“They have the institutions that in theory could grow to have more powers in the way we are seeing in the EU, including apparatus that could eventually formulate core policies in areas of foreign relations and defence,” says Partrick.

Defence nonetheless represents a cornerstone of GCC co-operation. Yet the establishment of the Peninsula Shield Force in November 1982, with the first military force bedding into Saudi Arabia’s Hafr el-Baten region in 1985, failed to deter Saddam Hussein’s invasion of Kuwait in August 1990. It was US action that galvanised the Gulf states into decisive action, not the GCC.

The effects of the invasion of Kuwait are still being felt. The Common Gulf Defence Agreement signed in December 2000 sets out procedures to consolidate the position of any individual Gulf state facing aggression. In 2001, the GCC adopted the Co-operation Belt Project, seeking to link the command centres of air and defence forces. A secure communications project linking member states’ armed forces through fibre-optic cables has been in place since June 2001.

The GCC secretariat itself has yet to gain institutional weight. About 600 staff run its Riyadh headquarters, but the body cannot compare with the European Commission bureaucracy. There is no pretence that new cross-border institutions will be granted greater powers in the near future. A GCC council of ministers is not being planned, leaving the real decision-making firmly entrenched at the national level.

Nuclear co-operation

In the same way that formal institutions inside the member states are largely stripped of power – Gulf business and political culture dictating that decision-making is conducted in informal ways away from the public spotlight – cross-border institutions are always likely to remain weak by comparison. Centrepiece cross-border economic projects will be the cohesive factor that will bind the countries together. Nuclear co-operation, cross-border gas flows and the onset of the single market will all force the pace of political harmonisation. If the Gulf’s business community starts thinking in cross-border terms, the political leadership will surely have to follow.

Like the EU, the GCC also has to face up to the challenge of expansion. The GCC appears to accept Yemen in principle as a membership candidate. But in their underlying attitude towards Yemen, there is a clear difference between many of the small Gulf states, which are in no hurry to see a poor and populous new member state enter the GCC, and Riyadh, which recognises the need to integrate the country into the regional economy if the profound socio-economic problems that help sustain its Sunni militancy and the Houthi rebellion are to be solved.

There is no prospect of the GCC falling apart. But it is unlikely to unite meaningfully in political terms in the near term, despite the frequently pronounced public aspirations of Gulf unity. The nation state still has currency in the Gulf region. The younger leaderships that have assumed power in Qatar, Bahrain and the UAE in the past decade and a half are less willing than their predecessors to kowtow to traditional Gulf power relationships. As soon as sovereignty is threatened, cross-border initiatives lose traction. Integration is inevitable, but its speed will doubtless mimic the traditional Gulf two-step: slow, slow, quick, quick, slow.

GCC history

Comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, the GCC was formed in 1981 primarily with the aim of co-ordinating the Arab Gulf states’ economic policies, but also representing a wider aspiration towards regional unity.

The charter agreed on 26 May 1981 in Abu Dhabi resulted in the six states committing to “developing their relations, effect co-ordination and integration, deepen and strengthen the links and ties that exist between their peoples in various fields, establish joint projects and introduce similar regulations in all economic, cultural, information, social and legislative areas, so as to serve their interests and strengthen their capability to adhere to their doctrine and values”.

The GCC has evolved into the Middle East’s most important regional bloc. Since 1982, the countries have been linked in a common defence treaty. Economic links have strengthened over time. A customs union was implemented in 2003 and by 2008 a single market will be implemented. If the ambitious deadlines are reached, by 2010, the six member states (minus Oman) will have merged their currencies – though severe doubts have emerged over the likely timeframe.

Structurally, the GCC is dominated by the largest Gulf state, Saudi Arabia, whose GDP and population is much bigger than the others. Seen by some Gulf states as the GCC’s big brother, this is a continued source of tension between member states.

Yemen’s proposed entry is another contentious issue. Riyadh sees advantages in Sanaa’s entry, but the smaller Gulf societies may be concerned that the award of full GCC rights would stimulate mass migration from low-income Yemen to the affluent end of the Arabian peninsula. But the EU, with its phased entry conditions for former Eastern European countries, provides an example of how social migratory pressures can be managed.