GCC (Gulf Cooperation Council)

On May 26, 1981 an agreement was signed between the six monarchies of the Gulf (Saudi Arabia, Bahrain, United Arab Emirates, Kuwait, Oman and Qatar) to coordinate their economic, political, cultural and security policy, thus creating the Cooperation Council for the Arab States of the Gulf, better known by its acronym GCC.
Its creation was a response to a fourfold threat felt by these countries: fundamentalist Iran, Ba’athist Iraq, the two poor and overpopulated Yemens, plus Soviet intervention in Afghanistan which threatened involving the Gulf region in wider conflicts.

Structure

The Supreme Council, comprising the Heads of State of the member countries, is the highest body of the organisation and meets twice a year. The Supreme Council defines the overall policy. A Conciliation Committee is attached to the Council to serve as a mediator in case of disagreement between members. Decisions of the Conciliation Committee are binding as to interpretation of the rules. The Supreme Council, and the GCC as a whole, operates on the unanimity principle.

The Council of Ministers, made up of Foreign Ministers of the Member States, meets every month. Its main tasks are preparing the sessions of the Supreme Council, drafting recommendations and launching joint projects. It also supervises the work of the Secretariat General.

The only permanent body of the GCC, the General Secretariat has its offices in Riyadh, with Mr Abdulrahman bin Hamad Al-Atyah as Secretary General. His last predecessors were Mr Jamal al-Hejalan (1996-2001, Saudi Arabia) Mr Fahem bin Sultan al-Qassimi (1992-1996, United Arab Emirates) and Mr Abdullah Bishara (1981-1992, Kuwait). The Secretariat must ensure that Supreme Council and Council of Minister resolutions and recommendations are implemented, to report on a regular basis on GCC activity and to draft the budget.

There are also specific committees which deal with economic, social and cultural cooperation as well as both internal and external security.

GCC Common Market

During the first two decades, the GCC mainly focused on cooperation and coordination in the field of social, economic and political policy. This emphasis has shifted towards greater integration.

The GCC Free Trade Area was implanted in 1983. In the same year, GCC member states agreed on the range for the external tariffs 4-20%. In September 1998 the GCC member states accepted draft unified customs laws which were submitted to the WTO. The implementation of these laws was at the time scheduled for March 2001.

The Heads of State Summit of December 2001, decided to advance the introduction of the Customs Union by two years. This entered into force on the 1st of January 2003, with a transitional period of three years. Initially planned for 2005, the implementation of the customs union was delayed for another two years, finally coming into force in 2007.

The formula for a Common External Tariff was agreed to be 5%, except for the products which are duty free.

The opening of the GCC Common Market on the 1st of January 2008 aims to increase investment and cooperation within the region, as well as promoting the attractiveness and position of the GCC in international exchanges. The implementation of a common market requires the economic equality of all participants from the six member countries – these account for 60% of the total 35.1 million people living in the region (others are foreigners who are not included in the project).

The new economic agreement specifies 10 areas where complete equality must be achieved:

  • Movement and residence,
  • work in private and government sectors
  • social insurance and pension schemes,
  • education, health and social services,
  • exercise of all professions and crafts,
  • exercise of all economic, investment and service activities
  • real estate ownership,
  • movement of capital,
  • tax treatment,
  • incorporation and purchases and sale of shares.

Monetary Union

Talks about Monetary Union among the GGC countries began in the early 1990s. At the GCC summit in 2000, heads of state asked the ministers of finance to prepare a timetable for the establishment of a monetary union and a single currency. The timetable for the introduction of the single currency (no later than January 2010) was agreed in the following Summit (December 2001). The European Central Bank is closely cooperation with the GCC on this field.

The implementation of a common currency is set for 2010. Nevertheless, rising inflation on the global market and the fall of the dollar have rendered this project difficult. In addition, decisions by Oman and the United Arab Emirates to withdraw from the project have further jeopardized the future of this ambitious initiative.

Yemen and the GCC

Yemen has sought entry to the GCC since 1996 (it’s officially candidate since December 1999), but while Oman and Qatar sponsored its application, Saudi Arabia vetoed it. The main obstacle to its membership is still the difference between Yemen and the GCC members’ political and economical systems.

Yemen’s relations with the GCC countries improved considerably since 2002. In January of that year Yemen was accepted to partially join GCC affiliated non-political bodies and agencies (the Arab Education Bureau, Health Ministers’ Council, Labor and Social Affairs Ministers’ Council, and the Gulf Cup tournament) as a first step towards full accession to the GCC. In October 2002, Yemen and the GCC signed the protocol defining the relations between the two sides, considered to be the first step towards Yemen’s complete joining the GCC.

Yemen has yet to be awarded membership status in the GCC. This accession is confronted with fears amongst member states that its presence will destabilise the alliance. Nevertheless, while financial assistance is currently provided by the GCC for Yemen, the prospect of future membership has not yet been fully rulled out.

The GCC and the European Union

The GCC and the European Community (as it was called) concluded a Cooperation Agreement in 1988, the first such agreement between Europe and an Arab regional organisation. Since it came into force on 1 January 1990, the EU has been linked with the six countries of the GCC in a non-preferential agreement.

A Customs Union among GCC members was a prerequisite by the European Union, for signing the free trade agreement that will ensure open markets for Europe’s products and stable oil supplies in the long term. The EU-GCC Joint Council held in Granada (February 2002) decided to launch negotiations for the establishment of the Free Trade Area (by January 2004 already seven negotiations rounds have taken place). The 20th and latest EU-GCC Joint Council and Ministerial Meeting was held in Luxemburg on 14 June 2010; the next Council is set to be held in the United Arab Emirates in 2011.

The launch of the European “Strategic partnership with the Mediterranean and the Middle East” came as a positive development for EU-GCC relations. Much hope was placed in the French presidency of the EU in 2008, as greater integration with GCC states would effectively symbolize further success of Sarkozy’s Union of the Mediterranean.

There is a Permanent Mission of the GCC to the European institutions in Brussels since 1993 and the EU plans to open an EU Delegation to the GCC States in Riyadh, a decision which would boost ongoing negotiations for the conclusion of a Free Trade Area Negotiations.

EU-GCC Economic Relations

The GCC is the EU’s fifth largest export market, with a consistent surplus in the trade balance. On its turn, the EU is the GCC’s principal export market and its second supplier after Japan. In 2002, the EU exported for 35,8 Billion Euros worth to the GCC countries whereas imports amounted to 18,2 Billion Euros. Crude oil represents two thirds of EU imports from the GCC (12.6 Billion Euros in 2002). The main products exported by EU countries to the GCC are large machinery such as power generation plants, railway locomotives and aircrafts, electrical machinery items and mechanical appliances (1/3 of total).

As far as investment is concerned, the latest statistics show a recovery from the tendency in previous years (EU investments in the Gulf region in 2008 amounted to 2.5 billion Euros). GCC investments in the EU increased from about 0.6 billion Euros in 1999 to around 3.25 billion in 2005.

GCC imports from the European Union
1980: 13.4 Billion Euros
1990: 14.6 Billion Euros
1995: 20.5 Billion Euros
1998: 26.6 Billion Euros
2002: 35.8 Billion Euros
2004: 41.3 Billion Euros
2006: 54.7 Billion Euros
2008: 68.9 Billion Euros

GCC exports to the European Union
1980: 41.6 Billion Euros
1990: 12.3 Billion Euros
1995: 11.4 Billion Euros
1998: 11.4 Billion Euros
2002: 18.2 Billion Euros
2004: 25.5 Billion Euros
2006: 35.9 Billion Euros
2008: 36.5 Billion Euros

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