A Gulf Apart? Regional co-operation in the Middle East

The Gulf Cooperation Council 2014

The Gulf Cooperation Council 2014

The Gulf Co-operation Council’s Arabic language website is proud of its graphs. Population and GDP, both slowly annexing the white space above them. Saudi Arabia, Qatar, Bahrain, Kuwait, Oman and the United Arab Emirates’ statistics have certainly been impressive enough over the last 30 years on their own. The U.A.E. is believed to hold $900 billion in its various sovereign wealth funds, and the three major Gulf airlines, Emirates, Qatar Airways and Etihad, together placed orders for £100 billion worth of aircraft at the 2013 Dubai Airshow. There’s a hint to the GCC’s future in the way the Council’s name is shortened in Arabic in the graphs – ‘States of the council of co-operation’ – no mention of ‘Arab’, or the Gulf. With such concerns around identity, we are prompted to ask: what is the G.C.C., and what are the threats facing it?

The G.C.C. started life as a strategic military union but, like other notable regional co-operation blocs, its functions and mission have expanded in scope over time. There are three projects which give us an idea of what the GCC is, and what it is not, yet. The first is the Gulf Railway – this is planned to link all current member-states by 2018, offering more options for trade within the region than by road and air, at an initially estimated cost of $19 billion. It has gone smoothly so far – perhaps because the division of costs is in proportion to the length of track in each country, meaning Saudi Arabia and the U.A.E. are the main funders, and it provides something for everyone. It gives the airport hubs of the region, Dubai, Doha and Abu Dhabi, easy access to the huge domestic market of Saudi Arabia, the largest Arab economy, allowing them to maintain and expand their status as trade hubs. The project will create 50,000 jobs, which is particularly important for Saudi Arabia, who feel they need to place their youth in gainful employment. Paid for by those with deep pockets, and benefitting all – Gulf co-operation at its best.

The GCC’s combined military, the Peninsula Shield Force, has had a rather more mixed history. It enjoys support from all member states, possibly in part because it is relatively small, at around 7,000 men. This pales in comparison with the Saudi Arabian Army, at 150,000 men, and it is difficult to see precisely what significant foreign threat the Force would be sufficient to repel. Even in the smaller Gulf states, the Force tends not to be a cornerstone of defence policy, with Bahrain hosting the U.S. Fifth Fleet, and, in the coming years, a U.K. Naval base, to guarantee its otherwise precarious international security position. Bahrain, however, was the setting for the most controversial use of the Shield Force. On 14th March 2011, during extensive anti-government protests in Bahrain as part of the Arab Spring, troops from the Peninsula Shield Force entered Bahrain via the causeway from Saudi Arabia, at the request of the Bahraini government. Allegations were immediately levelled that Bahrain was using the GCC to protect the monarchy from their own subjects, but the commander of the Force stated in late March that their role was to ‘secure vital and strategically important military infrastructure from any foreign interference’, while Bahrain security forces are ‘preoccupied with internal security’ - A distinction that, to its critics, will be one without a difference.

Other projects have stalled. The proposed Gulf Monetary Union, designed to produce a single currency akin to the Euro, the Khaleeji, has faced serious difficulties. First proposed in 2000, it made a lot of sense on paper. The GCC economies were virtually in currency union already, as they were all pegged to the US dollar. They had, and have, low interest and inflation rates, huge foreign exchange reserves (in excess of $1 trillion), government budget surpluses and low government debt. The scheme fell afoul of politics, however, as the U.A.E. announced its withdrawal in 2009, in protest at the decision to locate the proposed central bank of the currency in Riyadh. The tension between Abu Dhabi and Riyadh has the potential to scupper future projects, as the Emiratis appear to be concerned that the GCC is being used simply to further Saudi political and economic hegemony in the region.

Going forward, one of the main tensions in the Council is likely to be that between the U.A.E. and Saudi Arabia economically, as the former diversifies while the latter does not, and Qatar and the others politically. Qatar’s regional political priorities, particularly since the Arab Spring, have broken with the rest of the GCC. Qatar was a major backer of Mohammed Morsi during his brief administration in Egypt, and its state news outlet, al-Jazeera, has recently crossed swords with the regime of Abdel Fattah el-Sisi. This is in contrast to the policy of Saudi Arabia and the U.A.E., which have financially supported Sisi, and who consider the Muslim Brotherhood’s democratic methods and revolutionary Islamism anathema to their own doctrines. There are also more long-term threats to the co-operation of the member states. Recent falling oil prices have left Oman harder hit than fellow member-states. The oil slump is likely to be short-term, but Oman’s oil is comparatively expensive to produce and ,perhaps more importantly, is running out. In December, through official newspapers the Omani government encouraged their people to save (government-subsidised) water and energy, and warned that Oman may even have to introduce an income tax. The ways in which member states deal with the decline of their oil reserves, and diversify into other industries, may well produce tensions within the bloc, as their economies grow less similar and their economic priorities diverge. This is already visible in the relative success of the U.A.E’s diversification as compares to the other gulf economies. With Oman’s monarch currently thought to be gravely ill and Saudi Arabia’s king recently deceased, dynastic uncertainty is another factor which could threaten the GCC in the future. Its political basis is the shared reactionary politics of the major Arab monarchies – were one or more of the member states to face a revolution such that it was no longer a reactionary monarchy, secession from  the GCC would almost certainly result. The question of precisely who the Peninsula Shield Force is protecting, monarchs or people, may well be asked again.