Gulf Cooperation Council

(GCC)

 Dr. Manzoor Ahmad Naazer,

 Assistant Professor, IIUI

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GCC REGIONAL MAP

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 GCC Stated Objectives and Rationales for Integration

 Stated Objectives
 In 1981 the members ratified a charter that called for the establishment for
the cooperation council for the Arab States

 The overall charter stipulates that the GCC is a political, economic and
regional organization and list four main objectives

 Rationales for the GCC regional integration

 The question is to what extent these stated objectives are dictated by
economic, political, regional security, or global imperatives

 Various rationales and theories have been advanced and include:

 Joint security given the instability of the region
 Collective external threats
 Economic rationale
 Geographical proximity
 Political, institutional, and cultural similarities
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 Collective Security Rationales
 The onset of Iranian Islamic Revolution of 1979

 The invasion of Kuwait by Iraq in 1990 with the subsequent first Gulf War

 The US invasion of Iraq in 2003 and the concern for instability to spillover to the
GCC countries

 Offshore Islands dispute between Iran and the UAE

 The massive presence of western military forces in the GCC countries

 Economic Rationales
 Endogenous optimum currency area (OCA) argument – increase in trade following
the adoption of fixed exchange rate

 Elimination of transaction costs and risks associated with flexible exchange rates

 Collective bargaining power on negotiating trade agreements with other regional

integrations and countries as a block

 Allow for easy capital movement and efficient resources allocations

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 BACKGROUND:
 After Iranian revolution, Iranian claims and
efforts to export its revolutionary ideas, threats
of internal subversion through foreign support,
Iraqi military power and Iran–Iraq war had
inflicted fears among Gulf countries which led
them to create GCC.
 The GCC countries share similar geographical
features, religious beliefs and cultural ties,
kinship, relationship among their citizens,
similar political systems and common political
and economic objectives.
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 All members are rich but heavily dependent on
the West particularly for defense and security.
 GCC countries had the conviction that they
their security was linked to each other and an
aggression against any one of them would be
an attack against all.
 Cooperation in military field was thought to be
vital.
 Their main purpose was to confront common
internal and external security threats
collectively.
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 COOPERATION COUNCIL FOR THE
ARAB STATES OF THE GULF
OR
GULF COOPERATION COUNCIL (GCC)

 The GCC was formed in an agreement

concluded on May 25, 1981 in Riyadh,
Saudi Arabia.
 Members: Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia and UAE.
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 GCC Charter
 Article-1,
 Name of the organization would be Cooperation
Council for the Arab States of the Gulf OR Gulf
Cooperation Council (GCC).
 Article 2,
 its headquarter will be in Riyadh, KSA.
 Article 3,
 GCC will hold its meeting in the state where it
has its headquarter, and may convene in any
members state. 8
 Article 4, sets its following objectives:
 1. To effect coordination, integration and inter-
connection between members states in all
fields in order to achieve unity between them.
 2. To deepen and strengthen relations links and
areas of cooperation now prevailing between
their people in various fields.
 3. To formulate similar regulations in various
fields including the following:
 Economic and financial affairs
 Commerce, customs and communications
 Education and culture 9
 To stimulate scientific and technological
progress in the fields of industry, mining,
agriculture, water and animal resources.
 To establish scientific research, joint ventures
and encourage cooperation by the private
sector for the good of their people.

 Article-V: Membership
 GCC will comprise of the states that
participated in the foreign minister meeting
held in Riyadh on February 4, 1981.
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 Article 4 Organizational Structure of GCC
 The GCC shall have the following main
organizational bodies:

 1. The supreme council to which shall be attached the

commission for settlement of disputes (CDS).
 2. The Ministerial Council
 3. The Secretariat General

 Each of these organizations may establish sub-

agencies as may be necessary.
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 Article-VII. The supreme Council:
 It is the highest authority / body of the GCC
comprising of the heads of the states of member
countries. Its presidency rotates among members in
an alphabetical order ( according to the names of
member states).
 It shall meet once a year.
 Its extraordinary session can be called at the request
of any member seconded by another member.
 It can hold meeting in the territories of member
states.
 It meeting shall be considered valid if attended by two
third of the member states.
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Article VIII Functions of the Supreme Council
 It shall endeavor to realize the objectives of the GCC particularly
the following ones:
 Review matters of interest to the member states.
 Lay own the higher policy for the GCC and the basic lines it should
follow.
 Review the recommendations, reports and joint ventures
submitted by the ministerial council for approval.
 Review reports and studies which the Secretary General is
charged to prepare.
 Approve dealing with other states and international organizations.
 Approve rules of procedure for the (CSD) and nominate its
members.
 Appoint the secretary General.
 Approves the council internal rules of procedure.
 Approve the budget of the Secretarial General. 13
 Article IX: Voting in the supreme council
 Each member shall have one vote
 Resolutions on substantive matters are carried out by
unanimous approval of the member states
participating in the voting. While on procedural maters
resonations would be carried out by majority vote.

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 Article X: Commission for the Settlement of Disputes

 The GCC shall have a commission to be called as “The

Commission for the Settlement of Disputes” (CSD)
attached to the supreme council.
 The supreme council would establish the composition
of CSD for every case on adhoc basis according to the
nature of the disputes.
 In case, a dispute is not resolved by the ministerial
and supreme council, than it would be submitted to
CSD, which shall submit its recommendations /
opinion to the supreme council for such action as the
SCD deems appropriate.

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 Article XI : The Ministerial Council
 Comprised of the Foreign Ministers other delegated
ministers.
 The presidency of the council will be hold by the
member presided over the last ordinary session of the
Supreme Council OR, if necessary, for the state which
is next to president it over.
 The MC shall convene it meetings every three months
and may hold extraordinary session at the invitation of
any member seconded by another member state.
 It may decides venue of its next meeting.
 The MC meeting shall be deemed valid if attended by
at least two–third of its members.
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 Article XII: Functions of the ministerial council:
 Propose policies, prepare recommendation,
studies and projects aimed at developing
cooperation and coordination between member
states in various fields and adopt the
resolutions or recommendations required.
 To encourage, develop and coordinate
activates existing among members states in all
fields.
 Submit recommendations to minister concerned
to formulate policies whereby the GCC
resolutions may be put into effect.
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 Encourage means of cooperation and coordination
between the various private sector activities.
 To refer any aspect of cooperation to one on more
technical or specialized committee for study and
recommendation
 Review any proposal related to the amendment in the
charter and submit recommendations to Supreme
Council.
 Appoint the Assistant Secretariat General, as
nominated by the Secretary General for a period of
three years.
 Make arrangements for the meeting of the Supreme
Council and prepare is agenda. 18
Article XIII: Voting in the Ministerial Council
 Voting in the Ministerial Council
 Every member has one vote.
 Resolutions / decisions on substantive matters
are made by unanimous vote of the member
present and participating in voting.
 In procedural matters, decisions are made on
the basis of majority vote.

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 Article XIV: The Secretariat General
 It is comprised of Secretary General, assisted by
Assistant Secretaries General and staff.
 The supreme council shall appoint a citizen of any
member state as Secretary General for a period of
three years renewable once only.
 The Secretary General would nominate the Assistant
Secretary General.

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 The Secretary General shall also appoint the
staff for the secretariat from among the citizens
of member states. He may not make the
exceptions without the approval of the
Ministerial Council.
 Secretary General would be responsible for the
work of secretariat general.
 He shall represent GCC with other parties
within the limits of the authority vested in him.

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 Article XV: Functions of the Secretariat General
 Prepare studies related to cooperation and

coordination and integrated plans and

programmes for actions.
 Prepare periodic reports on the work of GCC.

 Follow up the implementation by members of

resolution of Supreme Council & Ministerial

Council.
 Prepare reports and studies requested by

Supreme Council & Ministerial Council.

 Prepare budget and closing account of GCC.

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 Make preparations for meetings and agendas
and draft resolutions for the Ministerial Council.
 Recommend to the chairman of the ministerial
council the convening of the extraordinary
session of the council when necessary.
 Any other task assigned to it by ministerial
council.

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 Article XVI
 The Secretary General, Assistant Secretary
General and the Secretariat General staff shall
carry out their duties incomplete independence
and for the joint benefit of members.
 They shall refrain from any action or behavior
that is incompatible with their duties and from
divulging confidential matters related to their
appointment.

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 Cooperation in Defense / Security Field
 In a series of meetings among chiefs of staff
and defense minister they developed plans for
mutual defense and strived to form a joint
command and joint defense network and joint
military exercises etc.
 1984, the GCC defense minister had decided to
create a two brigade (10,000 men) peninsula
shied force stationed in KSA.
 In 1992, they agreed to establish a deterrence
force, together with Egypt and Syria but plans
did not materialize.
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 The GCC seek to build up their defense forces
and adopted a unified operational procedures,
training and military curricula.
 They also try to achieve compatibility of military
systems.
 Creation of Peninsula Shield Force and common
stand against Iraq in 1991 are the biggest
successes of GCC.
 Now, it is taking action against the rebels in
Yemen.

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 ECONOMIC COOPERATION
 The members agreed to cooperate in economic,
finance, trade, costumes, tourism, legislation, scientific
progress and foreign investment.
 GCC members endeavour to strengthen
cooperation in the fields of agriculture, industry
investment, security and trade.
 There is duty free trade (FTA) among its members
since 1983.
 In the 23rd session of the Gulf supreme council, (held
on 21–22 December 2002), the members agreed to
launch the customs unions of the GCC by January 1,
2003. They agreed on duty / custom free trade within
the region and also to adopt common external tariffs
@5% on all foreign goods. 27
 Common custom Law
 They also agreed on free movement of their
citizens / common citizenship.
 The GCC members also decided to a have a
common market although they already provide
for free movement of people and goods etc.
 They have also agreed to launch a Common
Currency.
 GCC had established the Gulf Standards
Organization in 1982, and Gulf
Investment Corporation in 1984.
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 • Implemented Steps and Agreed Objectives

1983 Established a free trade zone

1999 Agreement on custom union

2000 Agreement is concluded to adopt a common peg as a step toward

creating a unified currency in 2010
2001 Accord reached on a joint custom tariff of 5%

2002 US dollar is selected as intermediate peg to the six currencies*

2003 Joint custom tariff of 5% is implemented

2003 Formal adoption of the US dollar as intermediate peg

2004 Agree in “principle” on key convergence criteria: size of budget

deficit, inflation rate, interest rates, foreign reserves and ratio of
public debt to GDP
2007 Envisages a common market

2010 Projected implementation of a unified currency

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 High Oil Prices Effects on the GCC Economies

Massive Trade Surplus

Current Account Surplus

Windfall
Heavy Gov. Investment

Fuel Private Sector Demand

Higher
Oil Prices
Problems
Higher Inflation

Immediate
Second-Tier
Effects
Effects
Increase real
income
Higher Prices on Wages
Goods & Services Increases in Generate Extra Push Prices higher
Pub. Sector Demand 30
 Obstacles and Challenges towards GCC Integration

Economic Challenges

 Low factor mobility within GCC countries

 Low economic diversification
 Low intra - GCC trade
 Mixed macroeconomic convergence
 Some members economies are getting more diversified than others

Political and Institutional Challenges

 Political will to abdicate national sovereignty on economic policy responses to

shocks
 Harmonization of existing institutions before moving forward with GCC
integration
 Agree on the extent of powers of a supra GCC institution
 The role, influence, identity and power of the hegemon

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Intra – GCC Disputes

 A number of GCC countries such as Bahrain, Kuwait, Oman, and Qatar, and
the UAE have signed or are in the process of signing separate trade
agreements with the US at the dismay of Saudi Arabia

 Other disputes that challenge the GCC regional integration have to do with
border demarcations among the member states over areas rich in crude oil
and natural gas and they include:

 The UAE and Saudi Arabia

 Qatar and Saudi Arabia
 Kuwait and Saudi Arabia
 Oman and the UAE – Resolved
 Bahrain and Qatar – Resolved
 Oman and Saudi Arabia - Resolved

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Selected Quotes from GCC Regional Papers and Publications

“UAE firm on sovereignty over waters of Al Adeed ” (Khaleej Times July 1, 2005)
– Area of dispute with Saudi Arabia

“Riyadh protests Qatar-UAE bridge over Al Adeed waterway (Al – Jazeera, June
29, 2005)

“GCC integration --- more rhetorical than real (GRC Publication, May 27, 2005)

“ The Gulf Cooperation Council (GCC) was born to tackle political, security and
economic matters----Is it doing what it is supposed to do? No---Qatar is
currently exporting gas to Korea, but not to Kuwait awaiting the approval from
Saudi Arabia to allow the pipe line to cross through its territory” (Qatari
Foreign Minister quoted by GRC Publication, May 27, 2005)

“Saudi Crown Prince Abd Allah bin Abd al-Aziz will not attend the forthcoming
GCC summit in Bahrain amid growing intra-Gulf differences on free trade”
(Al-Jazeera, December 19, 2004)

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 Conclusion

 On regional integration as a whole some objectives are achievable and others

may not be

 Security agreements and alignment on foreign policies have been some what
successful

 Some steps towards full integration have been implemented and others have
not

 Lack of institutional convergence and the fear of losing sovereignty on

economic policies have hindered the progress towards the full integration

 A number of basic OCA criteria have yet to be met and convergence criteria
are yet to be met or implemented

 Regional disputes hinder the progress towards GCC MU

 Neither costs nor benefits are expected to be large for the GCC MU

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