GCC debates Saudi king's call for tighter alliance

A one-day summit in Riyadh will focus on proposal to strengthen regional unity
GCC debates Saudi king's call for tighter alliance
Saudi Arabian monarch King Abdullah (AFP/Getty Images).
By Reuters
Mon 14 May 2012 09:28 AM

Gulf Cooperation Council leaders will debate today tightening the union that binds the six Arab nations, spurred by calls from Saudi Arabia’s King Abdullah for unity amid regional turmoil and rising tensions with Iran.

The GCC’s one-day summit in Riyadh will focus on Abdullah’s December proposal to strengthen their alliance into a unified entity, as well as policies needed to contain unrest in Syria and the group’s growing tensions with Iran. Bahrain’s Prime Minister Prince Khalifa bin Salman Al Khalifa said yesterday regional circumstance make unity “an imperative choice.”

GCC states that make up the world’s largest petroleum- exporting bloc have accused Shiite Muslim-led Iran of seeking to foment unrest among the Shiite communities in the region, including Bahrain, where Saudi Arabia and other members sent troops to help put down an uprising last year. Iran denies interference and accuses Sunni Arab rulers of discriminating against Shiites.

Driving the GCC unity push is Saudi Arabia’s desire to “organise Gulf foreign, defense and financial policies,” Khalid al-Dakhil, a professor of political science at King Saud University in Riyadh, said in a phone interview. “The region is entering a new phase, and the GCC has to adjust.”

The UAE this month recalled its ambassador from Tehran after Iranian President Mahmoud Ahmadinejad visited a Arabian Gulf island, Abu Musa, that’s claimed by both countries. Iran, controlled by a Shiite clerical leadership since 1979, has accused Bahrain’s Sunni leaders of discriminating against the Shiite majority in the island nation.

The popular movements that swept away leaders in Tunisia, Yemen, Egypt and Libya in the past 17 months have been a catalyst for the GCC to close ranks and hasten changes.

“No doubt, you all know we are targeted in our security and stability,” King Abdullah said during the December summit. Saudi’s Economy and Planning Minister Mohammed al-Jasser yesterday urged GCC leaders to seek “a path” to go from cooperation to union.

The alliance, established in 1981, has been slow to integrate its economies, delaying plans on customs union until at least 2015. The decision to locate a proposed regional central bank in Saudi Arabia prompted the UAE, the second- biggest Arab economy, to pull out of a planned currency union. Other obstacles to regional integration include a ban on banks opening more than one branch in another member country.

“The economic benefits of GCC integration haven’t materialized,” Jarmo Kotilaine, chief economist at Jeddah-based National Commercial Bank, said in a phone interview. “To get those benefits they don’t need official statements, they need to focus on implementation. Greater unity would bring greater trade and greater investments.”

An eventual agreement, which may be modeled on the European Union, could be started by two or three countries with the others joining after, AFP reported, citing Samira Rajab, Bahrain’s minister of state for information affairs.

The GCC said in May 2011 that it may admit the Arab monarchies of Jordan and Morocco to the group, which has held out against pro-democracy movements sweeping across the region. In March last year, the GCC agreed to provide Oman and Bahrain with US$10bn each over a ten-year period to help offset the costs of unrest.

The Saudi “effort is at the heart of preserving monarchies as political instability sweeps the region,” Theodore Karasik, director of research at the Dubai-based Institute for Near East and Gulf Military Analysis, said in a phone interview. “It is about pulling together resources and preserving monarchies.”

Economies in Middle East and North Africa countries with fewer oil and gas resources have suffered amid the political instability. Tunisia’s gross domestic product shrank 0.8 percent last year, the first drop since 1986, according to IMF data. Egypt’s economy also shrank an estimated 0.8 percent in 2011, according to London-based Capital Economics.

Egypt’s first presidential election since the ouster of Hosni Mubarak will start this month, with the winning candidate due to take office by the end of June. The country’s next ruler will inherit an economy saddled with the lowest growth rate and highest budget deficit among countries with traded external debt in the Middle East, International Monetary Fund data show.

In contrast, Qatar’s economy grew an annual 14.7 percent in the fourth quarter. Growth is forecast at 6.6 percent this year in Kuwait and 6 percent for Saudi Arabia and Qatar, according the IMF.

Still, not all members of the GCC may back the Saudi initiative as the rulers of Qatar, Kuwait, the UAE, and Oman try to remain independent from Riyadh, the New York-based Eurasia Group said in an e-mailed note.

“Gulf countries continue to be wary of Riyadh’s potential hegemony despite their common fears of Iranian influence,” Eurasia said.

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