In their Summit Meeting in Doha, Qatar, on December 3-4, the heads of the six member states of the Gulf Cooperation Council (GCC)--Saudi Arabia, Kuwait, the UAE, Bahrain, Oman and Qatar--launched the Gulf Common Market (GCM), effective January 1, 2008.
The Aim of the GCM
The aim in creating the GCM was to raise production efficiency and make optimal use of available resources. According to the summit’s final communiqué, issued on December 4: “The GCM aims at realizing one market, through which GCC nationals will benefit from greater opportunities in the Gulf economy and the opening of broader spheres for internal and foreign investment.” The CGM represents a gigantic expansion of the principles upon which the GCC itself was founded in 1981, namely to promote friendship, fraternity and brotherhood among the member states, besides functioning as an economic, trade and political coordination forum.
Strong Economic Platform
The GCM is founded on a solid financial platform with a combined gross domestic product of $715 billion [with oil revenues accounting for the major chunk] and with 40% of the world’s proven oil reserves. This is an impressive economic platform given that at its inception, the European Common Market, with its six original members, had a joint GDP valued at $14 billion, or that the 5 original-members of ASEAN (Association of South East Asian Nations) had a combined GDP of about $1 trillion when the association was formed.
Henceforth, the nationals of the six member countries are to be seen as equal whichever country they choose to live in. They will be able to work, buy real estate and companies, trade shares on the stock markets, establish new businesses, go to school, and receive medical treatment in all six states. And unlike the six original members of the European Common Market, the nationals of the GCM market speak only one language, not four.
Issues to be Resolved
The expectations from the GCM are considerable. But no less considerable are the issues that ought to be addressed and resolved if the GCM is to achieve the aspirations of its founding fathers. Let’s look at some of these issues:
Legal harmonization: While all six countries operate under the broad principles of a free market, they do have different laws and rules which govern their economic and trade policies. The GCM’s success in the future will be shaped by the speed with which these countries succeed in harmonizing their legal codes to allow their economies to function seamlessly. The fact that all the laws and rules are written in a common language will help the process of harmonization enormously.
Monetary Union: The member states of the Gulf Cooperation Council are on record favoring a common currency by 2010. All but Kuwait (since last May) have their currencies pegged to the dollar. The depreciation of the dollar has been a source of concern for the members of the GCC. Whether they will keep the dollar peg when a joint currency is fashioned remains to be seen. Judging by the experience of the European common market, a common currency is not a sine qua non for the success of the new initiative.
Immigration: The new common market is likely to encourage the movement of people to cities in member countries where the social restrictions on personal conduct are far more relaxed than elsewhere. There will also be a movement of population, including foreign labor, driven by economic considerations.
There are voices in the Gulf expressing concerns that unrestricted population movement may also abet the movement of terrorists. One such concern is the use of airports. Will there be similar security rules in all the airports? Otherwise, what could possibly prevent a terrorist from crossing the land border from one country, where airport security is very high, to another country where airport security is relaxed?
The biggest challengeof all facing these countries is keeping Iran from spreading its influence in the region. An article in the Financial Times of January 12 by the newspaper’s Middle Eastern correspondent Roula Khalaf discusses “Iran’s charm offensive” in the Gulf. So far, the Gulf countries have rejected the two key offers by President Ahmadinejad who, unexpectedly and without consultation with the other members of the GCC, was invited by the maverick leader of Qatar to attend the summit meeting. Ahmadinejad’s offers for economic collaboration and a GCC-Iran security arrangement have been turned down. The launching of the GCM in some haste and without much prior preparation may have been the GCC’s signal to the Iranian president that his initiatives are not welcome.
The timing of the launching of the GCM is also significant in another way. The GCC itself was launched as a precaution against the spread of Khomeini’s revolutionary rhetoric. The GCM may be seen as the answer to Ahmadenijad’s demagoguery.