GCC federation is the only way to meet economic challenges
Given the unprecedented political and economic challenges facing the Gulf Cooperation Council, member states have no choice but to move beyond cooperation and push for economic federation.
The GCC members — Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait and Oman — face similar challenges and difficulties, mainly caused by the irresponsible behavior of Tehran, which continues to back out of its commitments on its nuclear program and to interfere in the internal affairs of its neighbors, threatening regional peace and security.
The recently concluded 42nd GCC summit held in Riyadh emphasized deeper economic ties between the member states, as well as practical steps to transform cooperation into a strong union with a shared vision and economic goals.
Such a union requires serious efforts from all the stakeholders to revisit and implement the economic treaty signed in 1981 and revised in 2001 in both letter and spirit.
The treaty envisages economic integration among the member states. No doubt several steps have been taken to achieve the goal, but in the current geopolitical scenario, expediting that process is of paramount importance.
Achieving the desired economic integration among member states required a number of steps, starting with the establishment of a free-trade zone, followed by the establishment of the GCC Customs Union in 2003 and a common market in 2008. Hopefully, these efforts will culminate in further economic consolidation, ending with a single GCC currency.
As part of these efforts, the GCC adopted an economic agreement in 2001 that has shifted its joint action approach from coordination to integration, according to specific mechanisms and schemes.
The establishment of the Customs Union has boosted the value of trade between the six states from about $15 billion in 2002 to more than $88 billion in 2012, a rise of 487 percent.
Economic integration between GCC countries and a move from cooperation to a federation will support the Gulf region’s ambitious economic diversification plans as it seeks to shift away from total dependency on oil revenues.
This will also enhance the remarkable economic achievements of the GCC bloc, the 13th-largest economy globally, with a total gross domestic product exceeding $1.64 trillion — 4.1 percent of global GDP — and combined foreign reserves of $620.5 billion.
• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz