Gulf Co-operation Council
This chapter will seek to assess the rationale behind cooperation and the interests behind regional alliance formation in the age of globalisation, and will relate understandings of these relationships to the study of the Gulf Cooperation Council, or GCC. In essence, this analysis will attempt to highlight some of the common theoretical assumptions and approaches that are often used to explain the cooperative interests of states within the context of international discourse. Using these assumptions, the chapter will highlight potential motives, incentives, costs, and constraints that states may consider when determining the relative value of formally defined cooperative relationships with other states. It will be shown that factors relating to history, regime style, demography, economic resources, and geography, all determine the political character of both regime and state in shaping how they view themselves in relation to other regional neighbours or international powers. Thus, it will be argued that states will seek to formulate policies based upon these factors that will effectively prioritize their own interests and security on the basis of self-preservation and the maximization of prosperity to themselves within a global environment of competing states and regimes that essentially pursue the same objectives.
In this sense, the following chapters of this analysis will specifically be concerned with the rationale behind the inter-GCC relationship, how it is defined, why the member states choose to cooperate, and what keeps them together under the guise of the GCC. This will be beneficial in assessing the evolution of the cooperative relationship of the GCC, and would provide meaningful insight into the progress of the alliance, its growth, and productivity in affairs of mutual interests, or lack there of, and the role which this regional bloc may play in the globalisation era.
The analysis will seek to promote and substantiate the argument that the cooperative relationship of the GCC is essentially driven or motivated by security interests. In other words, the security, stability, legitimacy, and welfare of member states are the paramount interest of the regimes and frame their fundamental security ideals for the preservation and sustainability of their systems. Under these circumstances, it will be argued that the member states will choose to cooperate or not to cooperate based upon a cost-benefit analysis of the conditions that may warrant coordination, and whether the pursuit of cooperation will actually facilitate or compliment the political, defence, economic, and internal security of the states. As a conglomeration of monarchies, did they choose to establish an alliance based on their common regime systems? Or do they face a common or collective threat(s) against themselves or their systems and cooperate for security reasons out of a sense of vulnerability and necessity? If so, is the threat internal, external, political, ideological, or economical?
1.2 Interstate Cooperation and Perceived Threats
The first question that would need to be addressed is what is cooperation? Is it a general relationship between friendly states, a specific discretionary alliance, official agreement, or simply an unofficial understanding? This issue is of significance within the field of international relations simply because it serves as the framework by which states agree or disagree to relate to one another; yet its publicly simplistic appearance may prove to be deceptive for an overly complex behavioural trend, which can be difficult to explain due to the varying political motives that can be ascribed to them. For one thing, how are cooperative relationship identified? This will require an examination of definitions of cooperation to distinguish between various kinds of interstate relationships and actual interstate cooperation.
In essence, cooperation can be regarded as a form or type of relationship between two or more states. It can be argued that states will cooperate only to meet certain objectives and that motivations to cooperate are determined by certain circumstances or conditions that regimes or states may face based upon both internal and external factors, and covering a number of policy issues. In which case, cooperation is essentially pursued in order to help alleviate a given situation or environment and benefit the respective parties involved through the establishment of formally defined relationships. By situation or environment, this would be referring to the political or geographic circumstances facing various states or regimes that may oblige them to cooperate on grounds of mutual interest. To have a relationship with a state entity does not necessarily mean that cooperation exists between the two or more parties involved, yet cooperation can be defined as a type of political relationship.
Much of these interstate relations can be framed within the context of the rational actor model of behaviour in which state actors pursue 'logical' courses of action in seeking to maximize benefit to themselves at minimal cost or damage. If the mechanics of policy making were analyzed within the context of game theory and its approach to evaluating decisions and relationships, the theory would assume that the states and regimes will only pursue policies that are beneficial to their own individualistic ends and interests. This approach views the world as being in a situation of 'anarchy' with the primary interest of states being self-preservation or security maximization.
As a result, decision-making often takes place in an environment of uncertainty and distrust between states that must determine the best courses of action they must take in their international relations under a given set of options or alternatives. States pursue calculated tactical decisions based on an evaluation of certain underlying factors, such as: domestic and regional political, economic, social, and security conditions, availability of resources and leverage, impact of policy decisions on other states and their potential responses, as well as short and long-term implications of certain actions. In essence, the relative distrust which exists within the international community and between states force regimes to adopt measures of self-preservation since the intentions of other state actors may not always be evident, thus making cooperation a formal relationship in which each state will attempt to derive the greatest benefit from any alliance. For this reason, states are sceptical towards the intentions of others and will attempt to anticipate and calculate possible manoeuvres so as to avoid any 'damage' or cost derived from the policy decisions and actions of other states.
'Prisoner's Dilemma' represents a scenario that is often used to explain this relative distrust and the potential reasoning behind interstate relationships within a global climate of uncertainty. Imagine a setting where two actors or states are separated by this environment, in which both are unaware of the true intentions of the other. Within these constraints, the two players will naturally attempt to pursue a course of action that will maximize benefit to themselves at minimal cost. In this sense, if the two players choose to cooperate on arms control for example, then both will likely benefit from a situation of non-confrontation if they do not abide by the agreement where will produce nor sell arms, thereby maintaining a certain level of control and order within their environment to the security satisfaction of each other.
However, if one side chooses to cheat the arms control agreement by secretly or deceptively producing and selling arms, then this defector could gain an arms advantage over the other player to his clear benefit, so long as the other player does not know about it, thus making his own position more secure at the relative cost of the other. On the other hand, if the first state cooperates on the arms control agreement, and the second state chooses to cheat, then the first player will be vulnerable and less secure as a consequence due to the arms imbalance that would emerge between himself and the other player. But if both players choose to defy the arms control agreement, then the agreement achieved nothing and they are both worse off since they have not diminished the threat to themselves through the regulations of arms, nor gained a relative advantage over the other.
As a tool for studying the decision-making behaviour of states within the international system, game theoretical understandings can be regarded as valuable approaches to appreciating notions of realism. The concept of self-interest is especially important when attempting to discuss interstate relationships and how trust plays a significant role in international political discourse. Realism assists identify the rationale behind cooperation, or more specifically the political forces which determine the necessity of cooperation. Cooperation itself is not a mandatory function of political relationships between state actors, but is a negotiated means to achieving an end. Therefore, it can be described as a non-optimal preference of a state since it must attempt to compromise and enter into cooperative agreements out of necessity or under the assumption that cooperation may bring long-term benefits.
Keohane explains that states, which may theoretically exist in an idealistic environment of 'harmony', do not necessarily need to cooperate under preferred circumstances since there is no corresponding benefit or need to compromise national interests under formally defined agreements in such a non-threatening climate. , since the existence of harmony is considered an ideal, states need to evaluate the costs and benefits of such political relationship, due to the argument that states will only seek to cooperate with other states if the benefits of such cooperation outweigh the costs. This not only means that one should evaluate the costs and benefits of not cooperating, but also a similar calculation must be made to the consequences of the cooperation itself, and whether a relationship with another state may have indirect negative implications such as political, economic, or security domination. In this sense, realist approaches to understanding interstate cooperative behaviour assumes the useful notion of states led by 'rational actors', that take into consideration these various issues and contexts as a prerequisite to decision-making. Many social scientists, especially within the fields of political science and economics, assume that all individuals act as rational actors, but can be regarded as especially true for regimes. Presumably, all individuals seek to maximize their own benefits and seek to achieve an outcome in the most cost-effective means through the process of a cost-benefit calculation. By evaluating several alternative means to achieving and end, actors assess which action would provide the greatest productive outcome or the closest point to their optimal goal with the least cost to themselves, similar to the Prisoner's Dilemma calculation. Thereby, states will choose when and where to cooperate if it effectively meets the defined interests of the state under given conditions. This then implies that states will not seek to pursue any form of action if it does not meet their interests or will cause them some form of harm away from their optimal objectives, and thus means that other ideologically defined cooperation will be eclipsed by self-interest. Once again, this requires states to have well defined interests in order to evaluate which alternatives may best be perceived as their best 'rational' course of action for a situation.
Under the rational actor model it is important to emphasize that states will not seek self-destruction or pursue policies that will weaken the state in question. However, states may pursue policies that assist in maintaining a certain status quo which may be their optimal preference. Ambitious states such as hegemons will attempt to broaden their preferences through the projection of their relative influences by taking more risks in their decision making under the expectation or objective to achieve a greater good, which they have defined as their interest either in the short or long-run. As such, all rational actor states will not only seek to preserve themselves by avoiding self-inflicted harm, but also to avoid being harmed by others by taking into consideration the role of stronger states that may have the ability to punish or reward states based on their behaviour. This means that initiated conflict is conditional and is only favoured if the state in question expects to defeat the other side. In this sense, the highest priority of states within the realist rational actor model is self-preservation which means that states always seek to maintain their power, stability, and defence at all times in order to anticipate or offset potential aggression. Beyond these factors is a matter of defining states interests by elites within a government or society who may act on other politically defined motives. Therefore, it is unlikely that established state governments will challenge or deny the right of another state do defend itself under notions of territorial and governing sovereignty unless a state or regime is perceived to be illegitimate. This would be due to the common expectation that the sovereignty of all recognized states will be respected, and thus represents an issue of consensus and compromise between several state actors that will seek to benefit their own standing under such relative consensus.
The realist approach to interstate relationships is also useful to understanding the establishment of alliances amongst states. States or regimes may seek to develop alliances with others on various grounds of interest relating to political, economic, ideological, security, or military, but can just as well be isolated to a single realm of mutual interest. Yet, historically a great deal of direct cooperative relationships amongst past states and empires throughout the world have been on military grounds. This was due to the fact that past interstate relationships were primarily sought to protect and defend, and preserve or expand, the power of states within the international system based upon less complex definitions of security and more emphasis on sovereignty over territory. This would be somewhat different in the modern era, whereby the sovereignty of a state is defined in much broader terms to protect the security rights of states on multiple levels, such as; land or maritime borders, airspace, economic activity, information, as well as legal and governing systems, etc. Therefore, all other things being equal, notions of sovereignty are highly valued by state leaders as it protects the right of the state to exist and more importantly the right of its leaders or regimes to rule. Thus, states will attempt to guard or protect these rights by any means under the premise of national security.
It could be argued that rather than establishing alliances with other weaker states, it would be logical for states to become allies with stronger states as a means of gaining a relative advantage and access to more political, economic, and military leverage using the resources and capacities of the more influential state. Yet, in turn, these weaker states attempt to ensure that the stronger state will not then seek to take over or dominate the state and infringe upon its independent sovereign governing capacity. In this sense, it would be rational for states to want to side themselves with the perceived stronger state that can best ensure their survival. However, any relationship with a stronger entity with greater resources will inevitably highlight considerations of coercion in decisions to cooperate.
The scenario whereby weaker states ally themselves with a major international or regional power would be similar to notions of 'bandwagoning', which looks at the relationship between larger potentially threatening states and the threatened. Realists such as Stephen Walt, who are interested in the reasoning behind alliance formation, describe bandwagoning as an alignment with the source of danger or the stronger threat. He defines an alliance as "a formal or informal arrangement for security cooperation between two or more sovereign states." Bandwagoning indicates that states which wish to maintain their survival as viable political entities will seek to establish alliances with the state they may fear the most. By allying themselves with a stronger state, the smaller state will diminish the possibility of being threatened by the larger state and will be less likely to face a political, military, economic risk from the larger entity. In other words, by reluctantly rallying on the side of the stronger state, the smaller state will not be defined as a potential enemy or adversary, and may thus gain the protection of the larger state rather then be regarded as a target. Needless to say, such an approach to understanding the origins of cooperative alliances emphasizes upon the hegemonic foreign policy desires of larger states to facilitate the coercion and manipulation of smaller states as a means of forging alliances.
Robert Keohane reflects this notion by emphasizing that hegemons may attempt to take advantage of their strength and position to coerce other states to cooperate as a means of maintaining a stable global system. This certainly emphasizes the previous assertion that under optimal non-coerced conditions states may be reluctant to cooperate. As such, in order to force states to compromise and cooperate within this system, stronger states may manipulate their leverage with weaker ones to attain their objectives and enforce institutional or international rules that would enhance their own influence and capacities. This means that hegemons which are characterized as the dominant unchallenged actors in a region will attempt to achieve their self-interest by coercing other states to pursue agreements that best benefit themselves, or in other words agreements that present the most cost-effective solution to the hegemon under bandwagoning. Therefore, since cooperation does not mean agreement, it also cannot be characterized as a relationship which provides equal consideration to the interests of all the states involved. In this sense, cooperative agreements that favour hegemons do not necessarily mean that the weaker states will not cooperate since as mentioned earlier; cooperation is only maintained out of perceived or calculated necessity, and coercion in the case of a present hegemon.
References to colonialism and the Cold War could best describe possible instances of bandwagoning through the involvement of coercive 'super powers'. In these instances, especially with regards to the Cold War, major powers such as the United States and the Soviet Union had a vested interests in maintaining and expanding their relative spheres of influence, which would provide them with extended strategic geopolitical, ideological, and political resources in relation to their rival. Such a bipolar political order would highlight the direct impression that states would have to side with one 'super power' over the other, except in instances of non-aligned movements who may choose to avoid direct alliances with either side so as not to come under their dominating influence. In either case, smaller states could potentially be coerced by larger neighbours to side with them, and may therefore have no choice but to seek the protection of the stronger entity under certain circumstances. This is clear when one considers that hegemons often covertly attempt to threaten or destabilize political regimes that are less sympathetic to them in favour of other groups who are, as a means of maintaining an internal political balance that essentially benefits the power or side in question. However, it can be said that certain states may view the protection of a certain hegemon as strategically advantageous to their security interests in order to deter external threats from other smaller states and other powers, and may thus regard such relationships as less threatening than other security circumstances they face.
However, Walt explains that one of the primary risks of bandwagoning is that it requires smaller states to place considerable trust in the potentially threatening state with which they have sided. As Walt mentions, weaker states are the most likely to bandwagon primarily because they are defensively weak. Their limited capabilities would make it less feasible to join a military coalition in terms of a collective shield since they lack the resources to contribute effectively to the alliance or serve any beneficial deterrent role, unless it is a geopolitical strategic relationship. Therefore, such weak states are more likely to bandwagon when confronted by a larger entity such as a regional or global hegemon. Eastern European states during the Cold War could be considered possible examples of cases in which weaker states may have bandwagoned on the side of the Soviet Union as a means of deterring its potential political and military threats. However, these are matters for interpretation since bandwagoning itself is an alternative means by which one could evaluate the rationale behind the establishment of alliances, yet is consistent with realist views of self-interest and the existence of threats as important considerations to decision-making and state survival.
Beyond cases of small weak states siding with larger potentially threatening states, there are also instances in which alliances are established on the basis of deterrence or balance of power. This is usually explained under notions of 'Balancing', which Walt describes as circumstances where "states join alliances to protect themselves from states or coalitions whose superior resources could pose a threat" Balancing is a particularly practical approach to evaluating interstate alliances since it emphasizes the realist perspective that states are primarily interested in their own survival or viability in the international system, and will therefore seek to maintain their existence in the face of external threats. A means by which this is done is through the establishment of interstate coalitions that seek to collectively counter a potential threat posed by another large state, or coalition of states through a pooling of resources. Under bandwagoning, Walt explained that siding with a larger state may pose risks to the smaller state since it may eventually come under its control and direct influence. Arguably such as the case of Syria's dominance over Lebanon. However, by establishing a coalition or alliance with other states of similar strength to ones self could be considered a safer strategy to pursue in terms of self-preservation, and self-rule since the states would arguably be sharing specific resource interests with regards to their mutual defence or security.
The concept of collective security has similar considerations to those of balancing or deterrence. Although, the premise of both balancing and collective security is the existence of a potential aggressor, they can be described somewhat differently. Organski and Kugler describe balancing or the balance of power as situations in which states seek to maximize their power in relation to an adversary. Whilst, collective security is driven by the rationale to prevent aggression on the basis of defence and national security. In other words, the drive behind balancing is concentrated more towards power (political, economic, military, geographical, etc.) as it relates to a threat. To increase your power is to level your capabilities with that of an adversary as a means of deterring its potentially aggressive behaviour.
In this case study, balancing serves as an interesting and convincing realist approach to evaluating security or other coalitions within international relations, and is one that appears to explain behaviour and interests within the context of this analysis of the GCC. It appears logical that states with similar strengths or weaknesses may wish to establish a cooperative alliance as a means of balancing their collective strength with those of a foreign adversary. In this context, the Gulf states arguably chose to evaluate their options for maintaining their respective national securities and limit their vulnerabilities by joining a collective political alliance under a given identity. It will be argued that there was no single determinant leading to the establishment of the GCC, but instead, the decision was a result of a collective series of events, which compounded one another to evoke a sense of regional anxiety. In which case, it will be shown that the Iranian revolution of 1979 and the outbreak of the Iran-Iraq War only served to exacerbate the sense of regional insecurity felt by the Gulf states, and can therefore be regarded as triggering events. It is important to consider that balancing helps explain certain rationale behind the establishment of the GCC.
In essence, there are six relatively small states with the exception of Saudi Arabia facing significantly larger and potentially hostile neighbours with greater resources-Iran to the east and Iraq to the north. Although, one could argue that the Gulf states inclusion of geographically larger Saudi Arabia could serve as a case of bandwagoning, such an assessment would not necessarily be accurate since Saudi Arabia would probably not be regarded as a 'threatening' neighbour to the smaller states in the present period, but one which shared the same defined security interests based on regional circumstances. The fact that the Gulf states were significantly smaller entities with considerable vulnerabilities defined by stages of political, economic, military development in comparison to their larger neighbours can be a convincing rationale to balancing theory. Similarly, collective security may be considered a factor in the GCC relationship, yet the fact that the Gulf states have chosen to cooperate not only specifically in a military or security context, but also with regards to economic, political, and cultural areas indicates that there is a broader power security interest involved as will be shown in this analysis. Other such cases can easily be applied to regional organizations such as those of Association of South East Asian Nations (ASEAN) and the Arab League, which sought to promote a collective vision for regional and national unity.
Despite the view that balancing may appear to promote a clear solution to foreign threats in comparison to bandwagoning, the initiative to balance and strengthen regional influence equal or more to another neighbour, does not only require the availability of extensive political, economic, and military resources, but may result in unintended consequences. Mohammed Ayoob explains that the establishment of such organizations such as the GCC and ASEAN can in fact exacerbate regional tensions rather then diminish them. For example, the establishment of the GCC may have fuelled rhetorical political and ideological hostility emanating from Iran, similar to political tensions which grew from the eastern expansion of NATO, even following the collapse of the Soviet Union. By banding together under a new political umbrella the Gulf states would have inevitably been perceived to pose a potential counter threat to Iran, and even Iraq as a political-security bloc. The establishment of NATO including its subsequent expansion to the east served not only to enhance threat perceptions to the Soviet Union, but also encouraged the communist state to strengthen and expand its political and economic influence in the Eastern Bloc states.
While bandwagoning, balancing, and collective security have been the primary means by which most realists predict interstate alliances and cooperation, others, such as Steven David (David 1991), have attempted to expand upon these notions. David's primary approach to looking at alliances is within the balancing model, but chooses to emphasize not only the role of the state in determining alliances as with balancing, but also by looking at the role of elites within the state, similar to Organski and Kugler. David describes his new model, which he calls 'Omnibalancing', within the context of Third World alignment with super powers. He explains, "Omnibalancing argues that the most powerful determinant of Third World alignment behaviour is the calculation of Third World leaders as to which outside state is most likely to do what is necessary to keep them in power." Such an understanding or perspective on interstate behaviour emphasizes the will of elites or leadership to maintain their authority and security as opposed to the security of the state as a whole. Classical realism often considers state behaviour as being driven by the interests of the state as an entity rather than distinguishing or separating the notion of state interests with those of its leaders. David's approach introduces a new dynamic, which seeks to serve as an alternative to notions of balancing as described by Walt by essentially highlighting a distinction between elites and the state.
Nevertheless, in the context of this analysis, Omnibalancing is primarily useful in the case of alliances with 'superpowers', which David also emphasizes. Although one could attempt to justify the GCC alliance within the context of omnibalancing, this would assume that member states of the GCC have the ability, in political and military terms, to help maintain the stability and security of member regimes if need be. In this sense, the Gulf states may be regarded as influential regional actors relating to their collective economic and financial capacities, yet they are not superpowers or militarily strong states, which implies that they do not have the necessary resources to ensure the survival of fellow regimes, especially prior to the establishment of the GCC. Therefore, to ally with one another does not necessarily ensure or guarantee the survival of the regimes but it certainly helps enhance the strategic security of the states with the mutual backing of neighbouring states. Omnibalancing may however explain the Gulf states close relationship with the United States and other western regimes. This may assist in the understanding as to why the Gulf states have been slow to cooperate in areas of national defence due to perceived strategic value in alliances with foreign powers, and have been more successful in other areas such as internal security matters.
In essence, the Gulf states may view alliances with foreign military powers such as the United States, Britain, and France etc., that are more likely to have the capacities to help maintain the survival of the states, as more advantageous to their defences as opposed to depending on each other for national defence, which may be perceived as a risk in the short-term. An ideal example can be related to the Iraqi invasion of Kuwait in which the international coalition led by the U.S. managed not only to eject Iraqi forces from Kuwait, but also to make way for the return and restoration of the Kuwaiti government. Within the context of omnibalancing it can be assumed that the Kuwaiti regime allied itself with the U.S. in the post war period under the calculation that the U.S had the greater resources to help maintain the survival of the Kuwaiti establishment as was proven by the coalition liberation of the emirate. Therefore, omnibalancing could be used to argue Gulf relations with superpowers but may be difficult to apply to GCC cooperation itself, in addition to why it continued even after the Iraqi invasion.
Much of these approaches to evaluating the nature of interstate alliances and cooperation as discussed by some of the authors mentioned place their arguments within the context of developing, or Third World states. On one hand there are authors such as Keohane (1984) and Walt (1987) who look at the 'state(s)' as the primary decision makers in terms of their general behaviour. While others such as David argue that the internal political dimensions and influences of a state are relevant factors in determining the alignment of leaders or elites within the international system. In this context, the focus on developing states is useful for discussing the GCC. Yet, although the balancing understanding of state behaviour is preferred for its applicability to the GCC as described by Walt, David's look at internal considerations may be of additional benefit since the interests of a states and elites are also of relevance when examining the regime rationale behind GCC cooperation.
In essence this will mean looking at the needs of the leadership, and whether the interests of the leaders are compatible with the interests of the state, with each other, and with the GCC as an organization. Differentiating between the interests of the leadership and those of the state may be a complicated task when considering that the leadership within the GCC has managed to mould the identity of the state around themselves as a means of defining the political character of the state. However, it will be shown that the states essentially have general regional interests regarding economic, political, and regional stability, which fall under the guise of security and stability, and in turn reflect upon system and regime legitimacy.
The argument can be made that interstate cooperation occurs amongst developing nations primarily as a matter of concern for stability. Yet, Ayoob, for example, distinguishes between traditional western concepts of security versus today's Third World realities. Previous assumptions regarding security have been, "one, that most threats to a state's security arise from outside its borders and, two, that these threats are primarily, if not exclusively, military in nature and usually require a military response if the security of the target state is to be preserved." Third World notions of security differ, as he sees it, because it is placed within the context of political security as well as national security. Human activity, social behaviour, economic well-being, and ideological factors are considered integral to notions of security.
Ayoob explains, "security-insecurity is defined in relation to vulnerabilities-both internal and external-that threaten or have the potential to bring down or weaken state structures, both territorial and institutional, and governing regimes." It is important to mention Ayoob's argument as a pretext to this analysis of the GCC since it highlights Third World security interests and perceptions. In other words, impressions of threats and corresponding state behaviour as discussed in the context of views such as balancing, bandwagoning, omnibalancing, collective security, and realist perspectives of international anarchy must be corresponded not only with regards to external threats but internal ones as well.
Ayoob describes what he believes the major sources of interstate tension to be: 1) the intermeshing of domestic insecurities with interstate antagonisms, and 2) the autonomous dynamic of regional conflict, which is often cantered on the aspirations of preeminent regional powers. Using this he explains that the case of the Gulf serves to emphasize a political situation in which there exist multiple power centres, with exacerbated tensions due to differing or conflicting regional objectives or ideals, such as with the GCC, Iran, and Iraq. Therefore, regional insecurity reflects internal stability within developing states which can be of relevance to appreciating the nature of threats as they pertain to regimes. The GCC provides an ideal case of a situation in which the Gulf regimes who have faced challenges with regards to competing regional powers and ideologies have viewed cooperation as a means to achieving regional stability as Ayoob describes. This study will support this to show that since these states may arguably face common regional threats both internally and externally, they have seen it in their interest to cooperate on matters of internal security and regional economic well-being as preconditions to stability.
Cooperation in economic and security matters may be considered necessary to sustain regime stability as well as legitimacy within the rentier tradition, yet the role of regional organizations as it pertains to cooperation must then be considered. Evaluating the function of an institution itself can be regarded as an important component to assessing the role it plays in either hindering or promoting interstate cooperation. Not only does this assist in dissecting the role an organization plays, but is also useful in assessing as to whether the goals of the organization are in fact being met. For example, Inis Claude discusses the importance of legitimacy, and the recognition of legitimacy as important necessities within any political entity. He states, "the urge to posses and exercise power is usually qualified by concern about the justification of such possession and exercise." In other words, his assertion is that states may use regional or international organizations as a means by which they can acquire recognized political legitimacy. He describes this characteristic of political institutions as attempts to achieve collective legitimization with special regard to the political function of the United Nations.
Collective legitimization as an approach to evaluating the rationale behind certain political institutions such as the United Nations where states seek to cooperate with one another on the basis of a common need for legitimacy. In other words states join institutional 'clubs' such as the United Nations as means by which they can garner and support their own legitimacy. Claude explains, "The obverse of the legitimacy of power is the power of legitimacy; rulers seek legitimization not only to satisfy their consciences but also to buttress their positions." To a realist, such perspectives may appear convincingly self-serving from the understanding that states or regimes seek to use international organizations for recognition to maintain their own authority and credibility within the international system. Claude argues that regardless of the legal representations of political legitimacy and recognition based on international law, the process of collective legitimization has become inherently political, driven by political motives, to achieve political ends. In essence, one could argue, the application of collective legitimacy towards the GCC as being a case of political cooperation based on nothing more than the pursuit of a political identity aimed at achieving collective legitimacy and recognition as monarchical regimes.
Although this could be related to the GCC, the application of such concepts must be approached with caution since it could imply that a significant function of the GCC is to legitimize the rule of the monarchical regimes and systems by actively cooperating on the basis of this collective identity as opposed to other mutually defined interests such as security.
To imply that regimes cooperate based on a common ideological conviction or governing system as the principle motives represents a broad argument, and assumes the inherent willingness of states to cooperate, which contradicts the realties of the GCC as will be shown in this analysis. In fact, such an argument can be applied not only to authoritarian type regimes but democratic states as well. For example, according to analysts such as Karen Remmer, studies evaluating interstates relations within some states in the Mercosur region of Latin America provide limited support for notions which speculate that democracy fosters cooperation. In essence, the study indicates that democracies do not necessarily have to cooperate with other democracies simply because of the fact that they share a relative ideological conviction with regards to a regime type. This clearly contradicts others such as Larry Diamond, and Michael Mousseau who tend to support the notion that democracies are more likely to avoid conflict with other democracies and are therefore more likely to cooperate to achieve such an end. This approach to evaluating interstate cooperation has broad reaching implications, since it de-emphasizes the relative importance of state interests in favour of a more idealistic emphasis on ideological solidarity, which may be deceptive in appearance, and provide little substance to understanding the true nature of interstate relationships.
Despite the fact that the GCC states are not western style democracies, the understanding that common regime styles have little impact with regards to the cooperative nature of states highlight the realist emphasis on state self-interests and political survival. Although identities can be regarded as factors in a cooperative relationship, as noted by analysts like Stephen Walt (1987) and Edwin Fedder (1968), they cannot be considered the conclusive rationale behind cooperation. Therefore, ideology may be regarded as a component of interstate relationships. Authors such as Benedict Anderson, Amilcar Antonio Barreto, and Jonathan Mercer regard ideology as fluid socio-political constructs, and which is used to facilitate the broader realist understandings of cooperation such as balancing, collective security, legitimization, etc. In this regard, the GCC alliance exemplifies a clear case of cooperation pursued out of defined necessity and perceptions of common threats, which can be internal as well as external, but is commonly rhetorically portrayed by the respective leaderships in the context of Arab and Islamic solidarity. For this reason the presentation of prominent realist approaches and understandings provides broad incite into the rationale behind GCC cooperation and the possible applicability of theories such as bandwagoning, balancing, omnibalancing, and other game theoretical understandings.
1.3 Co-operation as Defined Relationships
Most of these theoretical approaches to cooperation explain means by which states may achieve their respective political ends or agendas by emphasizing a states relative need to compromise. As such, cooperation can be considered a favourable political relationship between two or more states that seek to fulfil their own needs by cooperating with others who share similar interests or concerns. Under such circumstances states will compromise certain values and practices in order to accommodate the coexisting valued relationship with another party. Keohane explains this in stating, "cooperation occurs when actors adjust their behaviour to the actual or anticipated preferences of others, through a process of policy coordination.''
Therefore, it must be argued that cooperation amongst states is a means to an end rather than and end to itself. This is clear, given that states must negotiate or compromise in order to reach a level of agreement that would be suitable or appropriate for all the parties involved. As previously mentioned, this would mean that the optimal or most appropriate decision for states under stable and non-threatening circumstances would be not to cooperate if it was not necessary to the vital or long term interests of the state, since they would not want to voluntarily compromise any of their interests unilaterally. Dougherty and Pfaltzgraff argue, "of central importance for a theory of cooperation is the extent to which the incentives for, or benefits from, cooperation can be seen to outweigh the incentives to act unilaterally." ). This may indicate that states may not always be willing to cooperate since it eventually will mean compromising some of the states interests through negotiations for purposes of cooperation.
Instances of overlapping memberships to regional or international organizations can make interstate interaction through indirect relationships inevitable. The Iraqi invasion of Kuwait in August of 1991 clearly severed the pre-existing relationship between the Gulf states and Iraq, especially since the invasion represented a clear threat with destabilizing regional security implications to the GCC. Following the expulsion of Iraqi military forces from its occupation of Kuwait in 1991, the GCC cut almost all relations with the Iraqi regime to protest the invasion and violation of territorial sovereignty of one of its fellow member states. Yet, despite the suspended and strained political relationship between the GCC regimes and Iraqi, these states still maintained indirect diplomatic or institutional relationships with one another. As members of organizations such as the Arab League, United Nations, and OPEC it is clear that these states could not avoid interacting with one another through the process of international discourse especially over matters of regional significance or concern to the parties involved. For example, both the GCC and Iraq support views and policies towards a Palestinian state, and thus may conform their regional political policy strategies to achieve this end. Yet, this clearly does not imply that the GCC and the Iraqi regimes are actively cooperating with one another, but only that they have common views that are shared by all members of the Arab League.
Furthermore, the argument can be made that states which share similar ideals or visions regarding an issue does not necessarily imply that they will consider cooperating with one another. For example, OPEC can be described as a conglomeration of oil-rich states that all seek to collectively benefit from promoting an appropriate oil production quota as a means of maximizing there own profit potential as well as to maintain some sense of stability within the oil market. Yet if these states have a collective interest to cooperate with one another then this does not explain cases where individual state entities may discretely or openly rebel from the organization's short term quota agreements. In other words, although the states have set forth an ideal production assessment of the oil market, individual states may not necessarily always conform to the expectations of the other states because of their own national interests and priorities which may conflict with the protocols of OPEC, and may thus be regarded as yet another manifestation of the Prisoner's Dilemma scenario.
In this regard, cooperation must be seen as an active form of exchange and compromise or negotiation between two or more parties. However, states may not always want to conform to the cooperative agreement, and therefore may unofficially or covertly disobey the political agreement or strategy and not cooperate for periods of time if it does not conform to the immediate interests of the state in question. Such circumstances may be more common for long-term agreements where individual states have essentially made long-term commitments but are confronted with immediate interests in which they must temporarily not conform to the tenets of a cooperative agreement. States sharing common ideals may not always want to cooperate unless it is in their immediate or long-term interests. These states must actively seek cooperation by negotiating agreements for the respective parties to follow. Therefore in conformance to Thomas Hobbes's interpretation of an anarchical international system, cooperation itself cannot be regarded as a mandatory expectation in international relations, and for that matter unrealistic to assume, yet relationships which may be direct or indirect are unavoidable in the modern world.
In which case, isolationist or pacifist arguments for state behaviour can be perceived as harder to present or effectively substantiate in the modern era, yet were very feasible options for states in the not too distant past. States may actively attempt to avoid cooperation or even be seen avoiding cooperation but will often interact with one another in some type of forum such as with the example of the GCC, or Iraq's participation in the Arab League and UN. As such it can also be said that even as the GCC and Iraqi regimes are actively seeking to avoid confrontation or direct cooperation with one another in the region, they still attempt to maintain notions of solidarity within the Arab League on political grounds for stability and unity amongst member states and therefore may be seen to the international community as a sign of cooperation even if it is not. This is exemplified when analyzing the issue of UN sanctions on the Iraqi state following the conclusion of the 1991 war.
Minimal effectiveness and the continued steadfast hold on power of the Iraqi regime, in combination with the socioeconomic suffering of the Iraqi people, had led to a significant decrease in support for UN sanctions which are increasingly being argued as ineffective by many in the region. Therefore, on political grounds for popular approval, the GCC regimes including to some extent Kuwait have been in favour of the removal of the current sanctions program in order to assist and alleviate the current economic condition of the Iraqi population. Of course, it could be argued that the Iraqi regime itself has actively been capitalizing on the suffering of the Iraqi population as grounds for proving the ineffectiveness of the sanctions and being characterized as counter productive which should support efforts for the immediate lifting of the sanctions from the state. While the member states of the Arab League, including the GCC, predominantly support the lifting of sanctions this in no means suggests that the GCC and the Iraqi regime are actively cooperating with one another. The Iraqi regime is still perceived as a clear threat to its Gulf neighbours. In essence, the objectives of the parties may be the same yet the reasoning behind the drive may be different.
The GCC and other members of the Arab League actively seek the lifting of the sanctions on political grounds based on the well-being of the Iraqi people, which is certainly not an indication of support for the Iraqi government. However, to the Iraqi leadership the reasoning behind the support for the commonly held objective is of no concern, only that they achieve the desired end through the exploitation and manipulation of the sympathy for the Iraqi population. To the international community this may promote the perception that Arab states are cooperating with and supporting the Iraqi regime. Thus, it is important to clarify and differentiate between notions of interstate relationships, cooperation, and ideology, as well as the manipulation of these relationships and identities by elites who act based on self-preservation, and may either seek to promote or discourage perceptions of cooperation for political purposes even if it does not exist in reality.
Section Three - Existing Understandings of the Gulf States and GCC
While these notions or references to the realist instincts of states within international relations clarifies the possible rationales behind state behaviour, they can be argued either way. The complexities that exist with regards to any analysis of the GCC only serve to enhance the varying perspectives in which political scientists may be able to assess the true motivations of the organization. This is certainly reflected when evaluating the literature that exists on the organization. To a large extent, the predominant approach to analyzing the GCC or the Gulf states have been in terms of historical or factual indicators rather than theoretical vantages. In looking at existing GCC literature, one will notice the lack of clear consensus regarding the true purpose and function of the GCC. Although, there are certain common understandings which are represented, many analysts of the region emphasize differing factors that motivate the relationship.
In general, most references to the region and GCC are placed in two principle areas of interest, which are security and economics. This should not be of any surprise to anyone familiar with the GCC or Gulf states since security and economic factors are the issues that are of most concern to these states. Authors such as Gregory Gause, Joseph Kechichian, Mazher Hameed, Anthony Cordesman, and others have analyzed and emphasized the true importance of the security aspect of Gulf states behaviour since it underlies their priorities, policies, and justifications. Whilst others such as Hossein Askari, Abbas Abdel Karim, Hazem Beblawi, and Khaldoun Al-Naqeeb, have tended to focus primarily upon the economic conditions and imperatives of the Gulf states as they pertain to economic viability and development.
These are complimented by literature devoted to political, social, religious, and identity influences in the states. However, many of these approaches consider the same factors as the above authors. In other words, when one attempts to analyze the security of the Gulf states, they must also emphasize the economic, political, and social nature of the states. Or when authors look at the economic factors they also tend to evaluate the political, security, and social considerations to these states. These interrelated areas substantiate the view that the Gulf states as a collective share numerous interest areas that have evolved based upon common experiences both from their economic strategies and the security circumstances of the region. In which case, common interests between the states stem from common challenges, thus creating linkages between one interest area and another. This analysis will support the argument that political stability cannot be achieved without economic growth, and economic stability cannot be achieved without political and regional security, and political security cannot be achieved without social harmony, and social harmony cannot be achieved without economic growth. These factors are of relevance to every state, yet the Gulf states portray a clear case in which domestic and regional priorities must be determined and policy interests balanced.
It will be shown that security and stability are the primary concerns of the Gulf regimes. However, it will be beneficial to elaborate upon the interpretation of security. Since the primary interest of the Gulf states is to maintain national security and long term regime viability, any issue area which may potentially undermine this survival can be considered a security risk. For example, economic growth and stability can be considered a security interest of the Gulf regimes due to its close correlation with social circumstances. This is especially true when one considers the rentier tradition of the Gulf states as supported by authors such as Beblawi who emphasize the relative social and economic dependency of the state on its oil-resources as service and benefit providers to their national populations.
Ayoob explains this development-security dynamic in oil-based economies such as those of the GCC by highlighting, "Those vested with political power in the oil-rentier states tend to forget that oil revenue will inevitably decline in due course, and aim simply at achieving temporary prosperity", which describes the paradox of these states as, "security over the medium term affords a period of grace during which the complex tasks of economic development may be carried out with enhanced means." Social stability can also be described as a security interest, since such a realm would inevitably include important considerations to ideological or religious forces in the region and their relative influences as they pertain to 'just' governance. This highlights, among others, Ayoob's, Gause's, Liesl Graz's considerations to internal social, and economic dynamics when evaluating security in third world states within the context of the Gulf, and how regimes approach domestic economic and political policies aimed at stabilizing and controlling social forces.
As such, many analysts have appropriately chosen to address many of these considerations as fundamental necessities to understanding the political security dynamics of the Gulf regimes. For that matter, what function does the Gulf Cooperation Council play in terms of fulfilling the interests of the Gulf states? The fact that the interests of the Gulf regimes have been very much linked with one another has led to a relative blurry perception of the role of the GCC. This issue has been of interest to authors like Ajay Jha (1986) who attempts to address the GCC in terms of discerning whether the organization is itself an economic grouping or in fact a security alliance. In fact, Simon Koppers highlights the fact that the Charter of the GCC indicates defined realms for cooperation in areas of economic and financial affairs, customs, legislation, industry, and agriculture, with little reference to security and no mention of defence at all. Therefore, although the GCC appears to be, at least officially, primarily an economic body, these initiatives are placed in the context of a broader security objective.
On the other hand, other authors have tended to focus on other issue areas as they pertain to the GCC. For example, there are a number of analysts such as Rosemarie Said Zahlan, who address the role of Saudi Arabia within the organization. For one thing, these authors and many others assess as to whether the GCC is in fact an organization established from Saudi Arabia's influence and possible hegemonic ambitions in the region as opposed to voluntary memberships out of perceived necessity and common security interests. If one were to use the premise that the GCC was in fact established by pressure from Saudi Arabia as a means of exerting its political influence over its smaller Gulf neighbours, such an approach would have clear theoretical implications. In other words, this may appear similar to notions of bandwagoning as discussed earlier in which the other smaller states may have joined the organization through the pressure of Saudi Arabia. However, such an argument would be difficult to make since it would imply reluctance on the part of the other states to join the organization when in fact it can arguably stated that the smaller Gulf regimes have more to gain from the GCC. Liesl Graz states, "The existence of the GCC is in itself reassuring to the smaller members. There they are fully-fledged members of an organization whose scale is such that their voices count and their influence is multiplied by the skeins of family and historical ties that criss-cross the Gulf'. He argues that it is unlikely Saudi Arabia has intended hegemonic ambitions over the organization and subsequently the other Gulf emirates since the kingdom has appeared to be reluctant to exert forceful pressure on the other regimes in order to accommodate its own needs.
As Graz emphasizes, one must make a distinction between influence and an attack on sovereignty (Graz 1990: 238). The Saudi's are clearly the more politically and economically powerful of the other GCC members, and its influence is almost expected not only due to its size but also because it is the only GCC state that borders every other member state thereby giving the kingdom a natural central leadership quality as it relates to the organization. However, despite this size, Saudi Arabia's policies have not been directed to coerce its neighbours. In addition, despite the fact that the headquarters of the GCC is based in the Saudi capital of Riyadh, all members of the GCC have equal membership within the organization, and furthermore the collective influence of the smaller states could offset that of Saudi Arabia within the organization (see Cooperation Council 1991). This would thereby make it easier to limit any suspected 'Saudi hegemony', but nevertheless remains an expected compromise of the relationship. It is clear that Saudi Arabia's membership in the GCC is of clear value and of significant interest to the kingdom since it allows other member states to serve as buffer entities, which contribute to the strategic security of Saudi Arabia, but essentially depends on the ability of the Saudi's to gain the confidence of the smaller states by acting as a partner. While on the other hand, the smaller emirates also gain by having a larger 'protector' state which enhances the strategic strength of the GCC as a whole, thereby making it of relative value to all members.
Many argue that the GCC was primarily established as a regional response to surrounding threats. Most have emphasized specific 'perceived' threats in the region such as those posed by the Iranian revolution and the subsequent Iran-Iraq War such as Joseph Kechichian, Mahnaz Zehra lspahan, and Anoushiravan Ehteshami. For example, Simon Koppers describes the foundations of the GCC as being a result of increasing political pressures derived from three fundamental events in the region, being; the 1979 Islamic revolution of Iran, the 1979 Soviet invasion of Afghanistan, and in 1980 the beginning of the Iran-Iraq War. Viewing the establishment of the GCC as a response to such events implies that the Gulf regimes came to a consensus identifying a common perceived 'threat' which posed a potential political security risk to the states. By identifying a common vulnerability, the regimes may have seen it necessary to counter the threat through collective political and security action. This argument implies that the GCC's primary incentive to cooperate was to maintain political and national security, as opposed to other ideological or idealistic factors for national unity-an argument similar to realists' notion of balancing.
Under such circumstances the Gulf regimes viewed their political establishments as being fundamentally vulnerable to the two principle regional powers of the Gulf, being Iran and Iraq. Therefore, in order to effectively deter or diminish this perceived vulnerability, the Gulf regimes sought to unify under a common political, economic, and security umbrella as a means of presenting a unified front against any potential external threat. Despite this, one of the primary functions of the GCC, as described by analysts such as Mansoor Kundi, has been to focus on internal security cooperation, which has been the unofficial guiding principle of the organization (Kundi 1989). In other words, GCC cooperation and the development of the organization as a political body has been defined in terms of security interests as they pertain to regime stability. As such, the GCC has arguably chosen not to cooperate simply to advance a pan-Arab or Gulf-Arab ideological cause, or invested in economic integration for the purpose of economic development per se. Instead, these factors have been correlated or tied to the broader interest of security, which implies that the pursuit of varying policy goals or objectives may be less appealing if they do not serve the security cause.
Others who have tended to focus on the social or cultural characteristics of the Gulf states, such as David Long, Jill Crystal, and Gause have also seen it necessary to discuss the political characteristics of each state. This generally includes the discussion of 'tribal' traditions and more recently religious identities within the region as they pertain to historical linkages and relations in the Gulf, in addition to understanding the domestic politics of Gulf regimes. This involves an elaboration of the various historical tribal and religious differences which have existed along the peninsula which have determined the political nature of relations today.
Although tribalism as an important factor with regards to traditional insights in the regions political culture, this is not to suggest that tribalism defines a specific behavioural pattern. In fact, to understand tribalism as it has existed in the Gulf is to understand classical realism, since it epitomizes notions of survival based on perceptions of threats, and that reactions may lead to either cooperation or conflict. Understanding tribalism as a factor in the region and not as a behaviour is to appreciate the complexities of inter-Gulf cooperation and relationships, in addition to the political constraints of individual regimes who must effectively manage tribal and sectarian differences within their respective territories. This would be an important consideration to address since it highlights the importance of domestic political considerations as they pertain to regime security and stability.
Although tribalism is a factor in the history of the Gulf, it is important not to over emphasize the impact of tribal differences in modern assessments of the region, since it can arguably be stated that Gulf societies, including their regimes, have essentially developed into urbanized entities with less tribal characteristics than in the past, and are more concerned with religious or nationalist identities. After all, many of the modern difficulties and complexities which the Gulf regimes have faced as they pertain to legitimacy, security, and stability have been from external ideological sources. As mentioned earlier, these are primarily represented by Pan-Arab nationalism, Cold-War cleavages, and the Islamic revolutionary ideals of Iran. Fundamentally, many of these ideals have had wide scale social implications in Gulf and Arab societies in general. As such, the manipulation of these ideological factors in relation to domestic grievances have been a challenge to Gulf regimes who must attempt to balance their support for certain political stances as a means of maintaining legitimacy and security.
1.3 Implications of Analysis
Discerning the motivations behind GCC cooperation from a realist understanding allows for a clearer interpretation of GCC collective behaviour, but also provides a better vantage to assessing potential successes or failures of the organization within the context of its ideals or goals. As such, in arguing the security motives of the member states, this will help explain why cooperation is pursued in some areas and why it is not in others. Despite the fact that the Gulf states may appear to be interested in economic cooperation, pan-Arab nationalism, Islamic solidarity, and the support of a Gulf identity, such ideals can be regarded as decorative justifications to a security relationship. This is not to suggest that the GCC regimes are not really interested in economic development or Islamic and Arab ideals, but that these factors are defined and pursued within the context of security.
Realist views of authors such as Keohane (1984), Walt (1987), David (1991), and many others help dissect the 'true intent' of policy decisions in terms of state or regime behaviour. By understanding this perspective, a logical assessment can be promoted to discern as to whether the GCC has itself met its own needs and objectives, or, if the behaviour of GCC members can be regarded as rational in their search for security. Arguably, this can highlight the strengths and weaknesses of the organization through the identification of the role it plays in the Gulf region. For example, there are authors or analysts like Abd Al-Hadi Khalaf, who basically view GCC collective security and cooperation as somewhat of a failure due to a sceptical relationship amongst member states fueling a relative degree of distrust. This would be in addition to a lack of solidarity in terms of foreign policy, especially with regards to regional issues, and festering territorial disputes among member states, which have hindered cooperative progress.
Others such as Koppers view the GCC not as a failure, but as a model for successful cooperation, by focusing on the same issues as Khalaf but using a different approach. For example, he states that demographic and cultural considerations allow for a relatively easier integration of Gulf state interests, especially in terms of economic and social coordination. He argues that the GCC has served as a stabilizing factor in the region because of the member states ability to pursue similar although not identical foreign policies. Koppers also describes the organizations moderate persona and established mechanisms which seek to resolve disputes rather than promote conflict, and that in general, GCC members have tended to cooperate more during periods of conflict.
Both perceptions of the GCC can arguably be regarded as somewhat accurate despite their differing approaches, yet the fundamental similarity is that they both view security and stability as underlying factors driving or hindering GCC cooperation. For Khalaf to suggest the existence of distrust among member regimes only serves to emphasize realist notions of survival, in which states exist within an anarchical environment with no guarantees to security. The fact that territorial disputes may be regarded as issues which hinder GCC cooperation highlights the perception that the states themselves act on the basis of national self-interest as opposed to collective action under the GCC. On the other hand, Koppers perspective, that the GCC states have been willing to compromise policy decisions as a means of bolstering cooperation exemplifies the linkage between cooperation and stability, in so far as the GCC representing a stabilizing organization within an unstable and unpredictable region which requires the states to portray a certain amount of flexibility and solidarity.
In addition, if the Gulf states have tended to cooperate or become closer during periods of tension and conflict, as Koppers suggests, then this serves to indicate that the true driving force behind the GCC is in fact security, and is responding to perceived threats. Such an understanding is important using the realist lens, since it indicates that theoretically the GCC is successful in achieving a certain level of security despite the fact that it may not be totally self-sufficient as a collective entity. This is especially true when GCC security cooperation has been most effective so far on internal matters as indicative of their maintenance of relative stability within the states rather than defence considerations as indicated by the Iraqi invasion of Kuwait, which highlighted strategic external vulnerabilities.
Therefore, evaluating the interests of GCC members as they pertain to the organization itself will involve discussions of interest compatibility. In other words, if GCC cooperation was originally triggered as a response to perceived threats or is driven by security interests, then how can one justify the continuation of the GCC itself in the eventual absence of those threats? It needs to be emphasised here that GCC members cooperate when there is a consensus among member states concerning responses to threats and whether cooperative initiatives bolster or compliment the security of the member states. Arab nationalism, Iranian revolutionary rhetoric, and Iraqi ambitions over the Gulf are no longer the concerning threats they once were, yet the growing relevance of Islamist movements and the politics of defensive reliance on the west in the Gulf, especially following the 1991 war, and the 2003 U.S. invasion of Kuwait will continue to be a security concern to the GCC.
Due to the interrelatedness of foreign and internal security issues, reliance on the role, availability, and deterrent capacities of foreign powers have arguably developed to become a security liabilities to the states rather than security guarantees from a domestic stand point, and undermining the effectiveness of the regimes to secure domestic political confidence in state foreign policy decisions, which in turn have certain implications upon legitimacy. As such, this analysis will show that rather than suggesting that threats have diminished or increased in the Gulf over time, it would be more accurate to argue that threats and their corresponding security dimensions have evolved. In this sense, justifications for GCC cooperation have comprised of numerous interest areas that have security implications to them beyond those of traditionally defined security needs. In the past regime survival has been maintained through the control of predominantly external ideological opposition influences within the states societies, however, the Gulf regimes have determined it necessary in the long-term interest of their states to achieve domestic legitimacy through further economic, social and political developments. This then highlights the evolution of the GCC states from a political and economic standpoint, and how the regimes have either chosen to accommodate reform given the evolving nature of issues in the region, or to maintain a certain status quo as a means of prioritizing traditionally held notions of security.
Chapter 2 - Overview of the GCC states
Generally, when one refers to the word ‘Gulf’ they usually mean the six oil monarchies only. These are the Kingdom of Saudi Arabia, Bahrain, Kuwait, Qatar, the Sultanate of Oman and the United Arab Emirates. Many international bodies and governments mistake the word gulf by including and considering other countries in the region as part of the gulf, this is probably because these other countries share borders and are intimate neighbours of these six countries, such as Yemen, Iraq, and Jordan and to a lesser extent Iran.
The media also plays a huge role in this confusion by for example, using the word ‘gulf’ in Gulf Wars when referring to the war that involved Iraq and Iran as well as the recent wars involving Iraq, the US and US allies, amongst other examples. Locally, the majority understand that when we use the word Gulf countries we mean the six monarchies mentioned above
As trading blocks develop across the globe, it is hardly surprising that groups of similar countries with similar political and economic interests should consider cooperating. Ideally given the problems faced by the Gulf states, any economic bloc should have the aim of developing market coherence by establishing mutually acceptable trade and tariff barriers (where necessary), encouraging regional trade, development and diversification, and providing the necessary bureaucratic infrastructure to further technical, military, educational and health cooperation. However, these aims are far from being realised, mainly because the impetus for the creation of the GCC was narrowly political, rather than economic.
The Cooperation Council for the Arab States of the Gulf, universally known as the Gulf Cooperation Council (GCC) ostensibly grew out of Saudi fears of instability following the insurrection at Mecca in 1979, and the beginning of the Iran-Iraq conflict which promised further to destabilise the region. The GCC was founded in Abu Dhabi on May 25, 1981 when the Heads of State of the Kingdom of Saudi Arabia, Bahrain, Kuwait, Qatar, the Sultanate of Oman and the United Arab Emirates signed the new organization’s constitution with the aims of effecting “coordination, integration and cooperation ... in all fields” and thus “serve the higher goals of the Arab nation”. There is also the general aim of “closer relations and stronger bonds” with all Arab states. The overall aim, as stated in Article Four of the founding document, was the coordination of laws and operation in all fields of state activity overseen by a “supreme council” where each member state has a single vote. The underlying aims of the foundation of the GCC were settling irredentist disputes, co-ordinating internal security and arms procurement. (Economic aims, although stated clearly in Article Four, have not figured highly in the GCC’s operations until very recently but still at a fairly low level.
Few of these aims seem to have been realised by 2005/2006 (there are disputes on territory between Oman and the UAE for example, and between Saudi Arabia and Qatar which erupted into the 1992 crisis; and there is only the beginning of a true customs union). Joint military exercises (such as the one conducted in October 1994) have not inspired confidence: in one incident, Omani officers refused to carry out the orders of Saudi commanders. The Rapid Deployment Force (the armed wing of the GCC) was used in the Kuwait War, but not impressively. Following domestic social habits, the GCC preferred to fund Egyptian and Syrian troop deployments.
The major mover behind the GCC is the US that wants to see a stable economic and political structure overseeing such a strategically vital region. In other words the political motivation for the GCC has not been entirely domestic and therefore has not the political or social urgency which, say, a structure such as the EU has acquired.
Despite many similarities there remain rivalries between the member states, exacerbated by a lack of national identity, and tied to little economic specialisation from state to state: each produces much the same goods in much the same way and sends its produce to the same markets. This is a recipe for competition not cooperation. “While there is no question that the Gulf States have a common Arab and religious identity, their economic identity is tied largely to trade with developed oil importing states outside the Arab world.” 85% of imports into the GCC are from outside the Arab world (mostly from the US and EU) and 80% of investment is in those same western markets. (See tables 1.1, 1.2 and 1.3.)
Although it might be thought that a lack of national identity would smoothen the transition towards a unified GCC, equally it fails to provide the mature political and social structures that promote the development of a new inter-governmental body. At present, disintegrative factors may well be stronger than integrative ones: there is no end to irredentist disputes, no coordinated foreign policy, and significant divergence of views in global bodies such as the UN where some GCC countries vote differently form others) “GCC interstate relations are characterized by a division between the desire to strengthen cooperation to enhance their roles in a changing world and the desire to assert their national independence.”
It is plainly unfortunate that the GCC was founded while many of its crucial members were still nation building. This puts stresses between internal and external coordination, and between those nations which have already reached a significant level of national identity (such as Oman) and those still finding that identity. Although most of the Gulf States have experienced a similar historical development (with the involvement of the British until the 1960s or early 1970s and then their replacement by the US) this is not necessarily an important aspect of shared Gulf identity. Elites need to assert what is not taken for granted by years of clear policy and international activity, and this is the emotional disintegrative factor acting against more rational, economic integrative considerations.
Most importantly, the history of the Gulf has been and continues to be defined by its single most important export – oil. This changed the lives of the majority in the GCC states, in some cases radically. People moved from being Bedouin “pastoralists” to being urban consumers in a single generation; towns held together with mud and almost no infrastructure became overnight significant centres of urban domestic, commercial and industrial development. Vast numbers of guest workers were sucked in to do the jobs local people could not or rather would not do. And, for the first time, the region had a voice internationally which larger more developed states had to listen to.
A Regional Analysis
On the face of it, at least, there seem to be many reasons why the Gulf states of the Arabian Peninsula should form some kind of regional bloc. They face similar threats or potential threats (and the chances of large potential markets) from the two largest states to their north, Iran and Iraq. Furthermore, an added benefit of the formation of these regional blocks is that the current allies and protectors of the region may no longer play a similar role once and if the geo-political and economic interest shifts. These states also enjoy similar strategic geographies and are therefore all likely to benefit from proximity to growing shipping lanes. The most important local markets are within the Middle East and North Africa (MENA) region (especially Egypt which is an important trading partner, the largest of the Arab world, Sudan and Iran), then the Indian sub-continent and Asia. The most crucial non-regional markets are the EU (first) and then the US and Japan.
All Gulf States have a similar hierarchy and social structure, where society has basically five levels. At the top is the decision-making elite (for the most part linked to the local ruling family). This elite is itself very similar between Gulf states, with an inner circle or council advising the head of state, a secondary council of ministers and a third administrative level. Below this lies an upper social stratum of those directly linked to the predominant economic wealth-creation (most frequently oil and its rents). Often these two groups can be said to have more in common with Western elites than with their own populations. Below these relatively small groups is the growing middle class. Although many in this group may also be driven by rent-seeking activities, some will also be involved in sectors indirectly linked to oil (such as service or infrastructural sectors) or be working in sectors which enjoy no links whatever to the oil economy. A significant percentage will also be state bureaucrats, many of whom are motivated by rent-seeking activities – and many of whom will resist changes such as privatisation. This group is the most difficult, potentially, to convince of the need for change. Below this burgeoning middle class lie the indigenous lower classes: blue collar and agricultural workers. Often the young from these groups find themselves poorly educated and either underemployed or unemployed. This leaves them open to disaffection and the attractive philosophies of extreme religious and / or political groups.
There are common economic and demographic forces at work throughout the GCC: 20% of those currently under 15 years will be ready to leave their family over the next 2-3 years. What will these people do? What jobs are there? Even for those with an education there may be underemployment. “No Gulf state has any prospect of creating more than a third of the real jobs required to employ its youth and correct the level of disguised unemployment that already exists.” There is a very real danger of political unrest when previous generations’ expectations are disappointed in the context of the new, maturing (and less acquiescent or politically naive) generations.
The lowest social stratum of all (certainly in terms of power and political, social and cultural influence) is made up of the non-indigenous guest workers. Although many of these may actually appear to be enjoying a wealthy and affluent lifestyle and therefore belong to the middle class, there are few if any social or political connections between them and their host society. For that reason they should not be considered part of the indigenous hierarchy. Pay will frequently be repatriated, and there may be a sense of insecurity. Many of these workers come from the Indian subcontinent, though also from the Philippines, Indonesia, Egypt, Palestine, and Russia, the EU and US.
Most Southern Gulf states have institutionalised another economic problem that threatens their social cohesion and cultural identity. All are ... heavily dependent on foreign labour. All have failed to develop a work ethic and employment patterns that make adequate use of native talent.
Such dependency on guest workers is an institutional weakness, and one which has been and is still being addressed currently in Oman’s “Omanization” programme.
Plainly the most important level of this hierarchy – at least potentially – is the burgeoning middle class. One only has to look at European development or indeed the instability in Turkey in the 1950s to understand that the middle classes have held the keys to important (and often violent) changes. While education is the vital component for endogenous growth, it can also have ideological and thus political consequences. No educated, financially comfortable group is ever content with merely being comfortable and educated.
The development of a “comprador” element among the middle class is in both economic and social terms a destructive aspect of this social structure. Instead of internal investment activities (which either are few or difficult to negotiate due to financial and bureaucratic inadequacies – or simply a lack of local investment opportunities) local bourgeoisie either expatriate their capital to investments overseas (especially the US and EU) or concentrate on import-led activities (one of the symptoms of Dutch Disease). This has led to very little growth of indigenous capital projects and, vitally, the orientation of a middle class away from any native identity. Due to Globalization, the easy availability and accessibility of modern global media in all its forms has made this worse, creating (especially for the large group under 15) a set of identities which are not particularly regional, Arab or Muslim. In turn this will not encourage future generations of the Gulf middle classes to develop and build social, political and economic links within their own societies.
The final social similarity between GCC states expressed hierarchically is the way decisions are passed down with little or no consultation with NGOs, private institutions, pressure groups, religious groups or private enterprise. The Gulf States’ polity runs on lines of patrimony rather than participation – with the exception, that is, of Oman and Bahrain, where participation is actively being encouraged.
All the Gulf States have a large bureaucracy in common, so that when the choice comes whether to strengthen the political system of the state or simply tinker with the bureaucracy, it often seems easier (and maybe better) to do the latter.
The development of bureaucracy in GCC countries reflects the shift in the role of government from maintaining order and security to producing a wide variety of social welfare services and economic development within a very short time. This has led to comprehensive differentiation and specialisation in the government organs ... [and] the authoritarian style has invited authoritarianism and centralism and further increased the lack of control.
Such bureaucracies are not efficient employers. “At least two and sometimes four native males are unemployed in each government job for every male that is needed to perform a real job. In most cases, there is also growing direct unemployment of native males.”
There are two phenomena taking place here: the first is that bureaucratic administration has taken on too wide a range of activities, and this has led to a huge bureaucracy often fulfilling tasks that would be done by the private sector in other states. Secondly, instead of acting as a brake to the legislature (as is the case in Western states) the bureaucracy has become detached from it, and previous habits of authoritarianism and centralism have been exacerbated. This is not a good starting-point for the development of inter-state relations. Instead of a civil service considering the minutiae of government and correcting its inadequacies, and then helping the formation of a new GCC civil service, the core of government power works unfettered and with less sensitivity to more complex issues than those with which it is qualified to deal. Inter-state politics is therefore more likely to develop into issues of personality or tribal differences.
Unfortunately for the development of the GCC authoritarian centralism characterise all of the states involved (though most gulf countries are attempting to change this by creating structures such as the Majlis (consultative council) widening the franchise, and promoting private enterprise). It must be remembered that these are all new states one aspect of defining a state in its early years (and ensuring that it functions adequately) is to create and expand a bureaucracy. Unfortunately, such nascent bureaucracies suffer from being enlarged as a means of creating national identity. Secondly, with no history of civil service or state structure, and little education to provide the necessary raw material, the quality of those drafted into the bureaucracies is not adequate to the tasks with which they are presented. In service training is almost unknown, and so promotion may be linked to corrupt rent-seeking activities or simply be the result of random shuffling of employees. Most importantly, such institutions cannot hope to work alongside let alone compete with efficient private sector companies especially transnational corporations: the qualified and well-informed personnel of such groups will not be impressed by the lack of professionalism evinced by Gulf bureaucrats.
Apart from oil, but almost certainly because of it, this would seem to be the most significant similarity between the Gulf States, and produces similar political (and thus economic) deficits.
It should not be surprising that, economically, the states of the GCC are very similar, with a variation in economic freedom in 2006 between the most open (Bahrain – the first post oil GCC state and therefore the state which has done most to develop its post oil economy) to the least open (Qatar), as Table 1.1 indicates. This convergence is a positive economic fact for the GCC – but of course more needs to be done to increase the favourable conditions for economic diversification and remove some of the damaging rent-seeking mentalities that have automatically lowered the economic freedom ratings.
One can observe that in most areas there is little difference between the GCC states. The structural problems facing Gulf economies are thus very similar. Abassund (1979) has pointed out the considerable deficits in government structure that persist, and suggests there is a top-heavy approach that needs to be changed. The reliance on oil and its rents may slow this change, since much crucial decision-making is politicised by its presence. Further, apart from the government’s monolithic structure, there are no counter-weights to offset or control centralised policy-making. And there remains, throughout the Gulf, a shortage of highly-trained, well-motivated people; people who will not be rent-seekers for short-term gain, but who might be more efficient and critical. Accountability for micro-economic decisions needs to be felt at every level, not shrugged off as the realm of an upper echelon of ministers and junior-ministers.
Education policies play a large role in changing attitudes. Also, as in Oman, processes whereby native workers are chosen for jobs instead of guest workers (Omanization) might allow the development of a more mature attitude to employment, Qatar has also developed a similar process and called it (Qatarization) but only in the energy and industry sector. However, the most important change in the Gulf at this time, and one now in train since the mid-1990s, is privatisation. The affect of globalization has created recently a considerable commitment to privatisation and this is needed for there to be any significant movement of the GCC from oil dependency toward a more diversified, integrated regional economic structure. It can help reduce overweight public sectors and streamline them by removing unnecessary government involvement in the economy. Increasing the role of the private sector itself can stimulate favourable structural changes for example developing a better, more transparent regulatory environment. This in turn means the more efficient use of scarce resources (such as minerals, agricultural land or fisheries and most importantly water which is very scarce in the GCC countries) while reducing the government’s budgetary burden. Privatisation can create a property owning structure where people are no longer caught within a rent-seeking cycle. And importantly privatisation creates the favourable conditions that attract FDI, which will lead the GCC states to become a more active member in the global club.
This is the key to the way the GCC will develop from oil wealth into sustainability. Saudi, Omani and Kuwaiti governments announced privatisation plans in 1994. Oman’s is particularly interesting: government would divest itself of holdings in key industries (Oman Cement and Oman Telecom for example) allowing these to be floated on the newly emerging stock market in August 1994.
The reason there were such large public sectors in Gulf States was basically the displacement effect of the oil sector, and the swift rate at which the economies of the Gulf developed. This left the private sectors weak and unattractive to many potential employees and investors. Further, governments still retained the old idea that they should act as the distributors of the oil wealth (a kind of reverse taxation) rather than seek out new ways of financing public spending. Basically Gulf governments were, and still are, too closely involved in the markets. Market forces are distorted and there is a distinct lack of market discipline.
Privatisation can be one route (and only one) towards developing accountability at all levels, and creating an atmosphere that may encourage investment. It goes alongside the development of more transparent methods of raising, distributing and handling funds (a transparency which can encourage investors, free up more funds for investment and the attraction of FDI). Transparency in the disclosure of important economic and social indicators is also vital to development and diversification.
Although privatisation is no cure-all, there are some clear reasons why the GCC states need to move further along this route. The two most important are to create greater efficiency (rather than the state-orientated monoliths that tended to emphasise rent-seeking activities), and to end capital flight. “The Bank of International Settlement (BIS) estimated that Gulf States had deposits of over US$120bn internationally.” These finances should be used to help development and diversification, rather than merely create another rentier environment for a select few. This would help boost the still relatively small private sectors in the Gulf, which in turn could generate greater efficiency in the use of scarce resources.
Of course there is a danger if privatisation is carried out without properly trained managers (due to the same restrictions on foreign ownership), and if newly-privatised companies are still too close to the state.
In such cases, privatisation will not reduce the burden on the state treasury and may lead to the abuse of the monopoly granted. The fear is that privatisation may create
a private sector which depends mainly on monopolies and subsidies, which may retard the efficiency and development of this sector.
The GCC should take note of the poor privatisation records of the former Soviet states. The slow development of the GCC can be seen in for example, in January 2002 Saudi Arabia and Qatar have started the implementation of an earlier decision taken by the GCC on the 22nd GCC summit held in Muscat in 2001 , establishing a “customs federation” staring form January 2003. It seems strange that the GCC has taken nearly twenty years to arrive at this basic step, where tariffs on non-Gulf goods (and other agreements with regards to non-Gulf trading partners) were planned to be standardised and in place from March, 2005. Why is there no customs federation among the GCC member states? Despite all the rhetoric, establishing a united market with collectively made decisions on international matters and proper guidelines is still difficult to achieve. H.E. Abdul Rahman Al Attiyah, GCC Secretary General said in early march 2006 that The Gulf states are all set to have a common market by 2007 and this decision was taken during the 24th summit in December 2003.
Bahrain was the first state to reduce its customs tariffs on all GCC commodities, in January 2001, following the decision of the GCC council at its 20th session held in 1999. Plainly this is an important decision by Bahrain, but the time lag between economic decision-making at the level of the GCC council, and the implementation by a single state of nearly two years, in an area of great importance to GCC development is symptomatic of the GCC’s slow progress on important issues.
Economically the GCC’s most important trading partners are the EU, the US and Japan. The EU exports more to the GCC than any other country, while the US and then Japan remain the largest importers. The relationship with the EU has been marred during the first two quarters of 2001 by the GCC’s complaint that the EU’s tariff barriers are too high, and that it should restructure its protectionist quotas. Plainly, the EU is the biggest beneficiary of trade between the two blocs,
The GCC is the fifth largest market for the EU exports. In 1999 trade between the two blocs was €47.7bn. The EU’s surplus trade balance with the GCC amounted to €15.5bn. GCC imports from the EU make up approximately 38% of its total imports. The EU depends on the GCC for 23% of its crude oil, representing nearly 75% of total GCC exports.
The EU is also the single most important foreign investor in the GCC. The US and Japan come second and third. In 1988 the EU and GCC concluded a cooperation agreement; however, this agreement has not reduced EU taxes on GCC oil exports, which amount to approximately 14% annually. This is a cause of some discontent between the two blocs (as is the tax on aluminium exports to the EU, set at 6%). The 1988 agreement provides for cooperation in areas as diverse as financial and industrial, agricultural, energy, and scientific sectors, but the GCC feels the EU could be more accommodating. Perhaps there is a reason here for the GCC to have a more persuasive single voice.
Plans to conclude a free trade agreement (FTA) with the European Union are in the final states of negotiation at the moment. Talks for an FTA deal with the EU have been on for the past 17 years, said Al Attiyah.
The GCC member countries hope to conclude a series of free trade agreements with a number of countries, including India, China and Turkey, over the next two years. Talking to reporters after addressing the conference on democracy and free trade at the Doha Sheraton in Qatar on the 13th of April 2006, Al Attiyah said, "We are working towards setting up a common market by the 2007 deadline and confident of achieving the goal without delay." However, the GCC’s relationship with the US may be slightly more important in political terms – at least for the time being. The US imports approximately 1.8 million barrels of Gulf crude per day are from the GCC. Between 1995 and 2000 between 76% and 86% exports to the US from the GCC has been oil or oil products. As the value of oil increased, so has the value of US imports from the GCC, from US$11.1bn in 1999 to US$20.4bn in 2000. As US domestic oil production has decreased this has sucked in more GCC-produced oil. Exports to the GCC include everything from cars and machinery to military ordinance and computer software; however this trade has seen a slow decrease over the past two years.
Importantly, the Iranian market in now developing and there has been a significant increase in trade between Iran and the GCC (specifically the UAE which has long maintained contacts with Iran).
Since the mid-1990s, GCC trade statistics indicate incremental growth in intra-regional trade, which increased from US$130.3bn in 1996 to US$143bn in 1997 (an 8.5% increase). This growth has continued over the 1997-2005 period (though at slightly lower rates) suggesting a positive result to efforts at economic integration. However development among GCC states is still highly dependant on foreign markets. There need to be efforts directed at activating intra-regional trade. These need firstly to include the abolition of custom duties which prevent the achievement of a single market in any meaningful sense. All traffic between GCC states should be freed up from local bureaucratic hindrances – such as the need of a local agent. There must also be a GCC-wide infrastructural project management: roads and other transport links must be harmonised to facilitate trade. Further, enhancing entrepreneurial activity throughout the region must mean allowing all citizens of GCC states to engage lawfully in business throughout the region on an equal basis: CGG citizens need to be allowed to own property in other member states and trade without restrictions.
The development of the GCC’s trading function faces major challenges as member states approach the establishment of a full custom union in 2007.
The next 15-20 years are by no means certain for the GCC. The fact that depletion dates for the big producers (Saudi Arabia, the UAE and Kuwait) have grown closer will put added political and social pressure on them. This pressure may not increase collaboration. After all, little if any real political and social (let alone economic) collaboration is going on now: often, quite the opposite. Gulf rivalries are frequently expressed in the way sets of media, financed by different states, spar against each other. Oman has seen little point to this, but the big players (Kuwait and Saudi Arabia especially) use their media in belligerent ways. “Almost all the GCC states finance or bribe, in one way or another, the Arabic tabloid papers published in London and Paris in an attempt to buy their allegiance and use them against each other.” These papers do not pursue national political programmes so much as localised vendettas. There is no debate, as there is in the European press, pro or anti GCC integration. Nor do these papers seem to express any unique local attributes. In a way they indicate a deficit of political development. Again, the lack of national identity for some of these states may hinder rather than promote the GCC.
The stability of some Gulf States may also be in question (in this Oman is very different from its neighbours). Saudi Arabia has seen political discontent expressed through religious institutions not only at Mecca in 1979 (the incident which prompted Saudi Arabia towards seeking local state cooperation as a way of offsetting internal problems) but also in the Nejd, the political power-base of the Al-Saud family.
The challenge may well be for many GCC states to follow Oman’s example in moving away from autocracy towards some form of representative government, or at least a government which allows and encourages the debate which is so important for the establishment of an effective economy, and an economy which encourages privatisation and the social and political changes which follow. However, this may not be easy. These are new states, whose authoritarian governments and vast bureaucracies have simply overwritten older allegiances to local groups. It would not take much stress at a national level (economic stress, for example) for a breakdown in the imposed social order and a return to a more “natural” pre-existing system (Faud Abdullah Al-Omar, 199-205). There is simply a lack of social consensus in these societies, and there is little that speaks of a “Gulf” identity.
This is not encouraged by the Gulf’s continued dependence on the West for its military capability and security. Al Alkim comments that the situation is a simple one of enforced dependency, where since 1990 “as part of a subordinate system, the GCC states’ foreign policy undertakings have become mainly reaction rather than action”. Ordinance is supplied by Western (mostly US, British and French) suppliers; the operation, maintenance and updating of that ordinance requires continuous significant (and costly) help from the west; since the Gulf War there has been a large contingent of US and British troops stationed in the Gulf, and all satellite early warning systems and navigation systems are run by Western military intelligence. The costs of such dependency are huge: Joffe assessed that if the military budgets of the Gulf were simply rationalised and reduced to an average level for small-to-medium states there would be an extra $30bn a year (at 1991 prices) for development. Unfortunately this dependence is encouraged by the west, and is unlikely to decrease in the short or medium term; the decrease in oil revenues may well suck in finance from the west for new industrial projects; infrastructure improvements may need loans from Western banks.
Another problem building for the future is that of demography: a still-increasing population, 50% or thereabouts under 15, for whom jobs may be difficult to find and who might translate their concomitant frustration either into political activity or personal flight. Either would be bad for Gulf economic development. Whatever happens in terms of diversification and market harmonisation, the post-oil period will not be easy.
Bahrain may be the first post-oil economy in the Gulf, but virtually all Gulf economies face a future where oil and gas cannot provide the present level of prosperity, and where no amount of diversification can provide a level of economic growth that can both sustain the present level of per capita wealth and the present level of dependence on foreign labour.
Thus the future may not be one of an easy transition from oil dependency towards greater diversification and integration of the GCC economies. Unemployment will become a very real (rather than disguised) fact. Indeed, in the short term there may be decreases in living standards, and this could well be blamed on any GCC economic innovation.Get help with your essay from our expert essay writers...
As we saw earlier with regard to the position of Egypt, there are important regional linkages that need to be developed further. For example, not only does Egypt enjoy a high volume of trade with the GCC, there is also a considerable tourist trade between the two areas. Egypt is an important tourist destination of choice for GCC nationals – the second most important after Jordan. Each year the Egyptian economy benefits from between 300,000 and 350,000 visitors from the GCC, and their spending is estimated at about US$350m a year. Importantly, Egyptian expatriate labour in the GCC exceeds 1.2 million, of which about 900,000 live and work in Saudi Arabia. The question this begs (and Egypt is only one example of an important local trading partner for the GCC) is whether expansion of the GCC to include other regional states does not make considerable economic sense.
However there are areas that need to be addressed. The amount of inter-regional investment is low. Saudi Arabia has a total capital of foreign-owned companies estimated at only US$22m. There is little investment by other regional states – for example, in the Jabel Ali Free Zone, out of 1,600 foreign investing companies, only nine are Egyptian.
The GCC needs to address the usefulness of geographical proximity and common language, which should, naturally, boost the ease and speed of intra-regional investment.
This deficit is now being addressed. The GCC is relaxing controls on all foreign investment and the foreign ownership of business and property. Old quotas are being re-drawn or abandoned altogether. Since the mid-1990s it can be said that the GCC has initiated policies to help foreign investment. This is especially important in both Oman and the UAE which now permit foreigner investors to enjoy property leases (for example) of up to 99 years; Bahrain has designated zones where foreigners may invest in property and even Saudi Arabia is considering this change.
What is required now is faster dismantling of trade barriers, greater transparency of regulations, better economic and business statistics, and probably most importantly, effective marketing and promotion of business opportunities in the GCC and, for example, Egypt and moreover, the ever globalizing world may assist the GCC in this quest. With a combined domestic market of nearly 100 million people and an aggregate Gross Domestic Product of over US$ 300 billion, it is possible to imagine the benefit to greater regional and international cooperation.
There are certain steps that all Gulf States must take in order to allow positive economic changes to take place, and to offset any social and political problems which may arise. One must certainly be the reduction in the number of guest workers. Oman has already introduced measures to do this, but other GCC states must follow suit. This will have a shock-effect in the short term as native workers adjust to the need to do jobs they never thought they would be called on to do; there may be considerable political consequences from a middle class used to employing non-Gulf citizens (and preferring to do so – fellow citizens are too aware of their rights, and are unlikely to accept unsocial hours or low pay). Positively money that had been repatriated to guest workers’ home states will now remain in the Gulf economies – money which can be used via banks and investment funds to help boost diversification. The loss of considerable numbers of guest workers will also allow the growth of national identities as more people are working (understanding a real link between effort and living standards) and paying tax.
Although this will cause a temporary deficit in terms of willing workers, there may still be too large an increase in Gulf populations. I have already mentioned that Oman’s annual population increase is currently running at 1.84%, and other GCC states also have impressive population increases. This needs to be controlled. Not only so there should not be a surplus of unemployed and the strain of educating and caring for large numbers of unproductive young people, but also because lowering birth rates will help free up more women for the non-domestic work force (part of the key to future economic prosperity). Education of these young people should also reflect economics – in other words there needs to be an effort to focus education on training people for the jobs that exist or will exist (for example, training for the burgeoning tourist trade in Oman, Dubai and Yemen).
If this means creating a sense of fairness and involvement in the state for those in the middle and at the lower end of the social spectrum, it should also suggest that these same people should see changes at the top. Elites should no longer be seen as untaxable beneficiaries of oil rents. The upper echelons of the bureaucracies should be accountable, as indeed should all government activity. Bureaucracies themselves should be leaner and more efficient, and government should end its distorting involvement in markets.
Utilities should no longer be subsidised, and the market price should reflect real costs. There need to be incentives for people (and companies) to invest locally rather than send their money out of the country. And, finally, and most importantly, the GCC should act in some areas in a more planned and unified fashion: military procurement and activities should be harmonised to save money; agricultural production should be varied to maximise trade between GCC states; there need to be certain selected tariff barriers to encourage local production; and of course a region-wide policy on diversification.
The GCC is slowly realising it needs to address issues of economic and political harmonization: if it does not, there is a real likelihood of the bloc breaking apart as rival countries seek to develop their relative advantages at home and with neighbouring markets.
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