Next May, the GCC will celebrate its 30th anniversary. What has it achieved?

The answer is less than some hoped but more than many think. In some areas, the GCC has done as much as the EU had at the same point in its development. A customs union was established in 2004. The GCC has launched initiatives to combat environmental challenges including ozone layer depletion. Anti-dumping measures have been in place since 2006 and action has been taken to standardise patent regulations. This might seem mundane. But much of the EU’s growth is due to similar, unglamorous and incremental steps.

There have been disappointments. Plans for a collective GCC security pact were quickly dropped. The GCC common currency has been deferred indefinitely.

In some areas, the GCC has done as much as the EU had at the same point in its development

The GCC’s problems are in part due to economics. The credit freeze and oil-price crash at the end of 2008 exposed the big differences between the region’s economies. Bahrain, which has effectively run out of oil, needs its neighbours’ help. The UAE, in contrast, was mainly preoccupied with the internal challenge caused by Dubai’s severe financial difficulties. GCC rulers focused on priorities. Further GCC integration was not among them.

But the loss of momentum was due to other factors. The GCC has had only four secretary generals since it was founded. Kuwait’s Abdullah Bishara held the position for the first 12 years and was replaced by the UAE’s Fahim al-Qasimi. When he stepped down after three years, Saudi Arabia’s Jameel al-Hejailan took over.

The first three secretary generals faced massive challenges. The Iran-Iraq war, which lasted until 1988, forced the six nations of the GCC to collaborate, but there were differences between Kuwait and Saudi Arabia, which openly backed Iraq, and Oman and Qatar, which tried to stay neutral.

Intra-GCC disputes occasionally turned violent. In 1982 and in 1986, there were clashes between Bahrain and Qatar over their maritime border, which had been in dispute since the 1930s. Both countries eventually agreed to international arbitration and a deal was signed in 2001.

Border clashes between Qatar and Saudi Arabia occurred in the 1990s. Tensions between Doha and Riyadh intensified following the deposition in 1995 of Qatar’s ruler Sheikh Khalifa Bin Hamad al-Khalifa by his son Sheikh Hamad.

A new era in Qatari-Saudi relations and the GCC started in April 2002, when it was decided that the GCC’s fourth secretary general should be Abdulrahman al-Attiyah, a Qatari. The acceleration in GCC economic integration is mainly due to Al-Attiyah, and his three-year term was extended twice.

It was agreed that Al-Attiyah would step down in April 2011 and that Bahrain should provide the next secretary general. The kingdom nominated Mohammad al-Mutawa, the former Bahraini Information Minister. Qatar was incensed that someone they regarded as fiercely hostile should be appointed to the post. It was suggested that Al-Attiyah would not go unless a more emollient candidate was appointed. The rest of the GCC stood firm behind Bahrain’s choice.

What followed only makes sense to those who understand how Arabian tensions can derail the best-laid plans. There have been a growing number of incidents in which Bahraini fishermen have crossed into Qatari territorial waters. They claim they are being forced to sail deeper into the Gulf because of coastal reclamation around Bahrain that has destroyed traditional fishing grounds. The issue became more serious in 2009, when the Qatar Navy rammed a Bahraini vessel and a fisherman drowned. The additional tensions surrounding Al-Mutawa caused a downward spiral in relations that bore bitter fruit earlier this summer.

In what appears to have been a comprehensive communication failure, on 8 May 2010 the Qatar Navy shot at a Bahraini fishing boat alleged to entered Qatari waters, seriously wounding a fisherman and detaining several others. Other Bahraini fishing boats attempted a rescue and their occupants in turn were arrested. The total number detained rose above 100. There were protests in Manama and the Qatar national flag was burned publicly. These events overtook an advisory GCC summit in Riyadh that was meant to deal with the secretary-generalship. It closed on 11 May without referring to the issue, which is likely to rumble on until the next GCC summit in Abu Dhabi in December.

The summit will also have to deal with the consequences of a border clash in March between Saudi Arabia and the UAE that involved the UAE Navy firing on and capturing a Saudi Arabian vessel. The incident highlighted the fact that there is no finally agreed border between the two countries and that the UAE has persistently questioned the validity of a border agreement signed in 1974 between the kingdom and Abu Dhabi.

No one thinks that either dispute will degenerate into all-out confrontation, but border clashes involving four of the six GCC states are more than simply a headache. Yet they pale into insignificance compared with the challenge presented by Iran.

The GCC is divided about how to deal with Iran’s refusal to buckle to international pressure about its nuclear plans. No Gulf state is comfortable with Tehran having the capacity to build nuclear weapons, but some are more worried about the prospect than others. Speaking at the Aspen Ideas Festival on 6 July, UAE ambassador to the US, Yousef al-Otaiba, said that he would be prepared to accept a unilateral attack on Iran if this stopped Tehran getting the bomb. The statement was not UAE policy and was more nuanced than has been generally reported. But it highlighted the gap between Abu Dhabi on the one hand and, on the other, Qatar, which is believed to be willing to accept a nuclear Iran in the context of a regional anti-proliferation agreement.

The result is that the GCC this summer is as divided as it has been in its entire history. Its credibility is at stake. Further drift could be fatal.

Some want the GCC to collapse. The administration of US President Bush pressured Bahrain into signing a free trade agreement that undermined the idea of a GCC common market and required Bahrain to open its markets to Israeli products. The Washington Institute for Near East Policy, an influential pro-Israel think-tank, has even called for the GCC to be broken up. A strong Arab regional unit would constitute a long-term threat to Israel’s strategic dominance in the Middle East. Egypt and Iran are not keen either.

The GCC has enemies and they will seek to hinder its development. But its member states should recognise that the main barrier to job creation and long-term sustainable GCC development are obstacles – physical, legal and political—to more intra-regional trade. Nothing will do more to lift its long-term growth prospects than greater GCC co-operation

The prize is an economy that could in real terms be as large as California’s in less than a generation and one that would act as a model for other parts of the Middle East to emulate. But this won’t happen unless the splits and jealousies stop.

The GCC is in trouble. It could fail. It needs a relaunch.