The Gulf Cooperation Council (GCC) was established in 1981 to facilitate economic and political affairs between its members. The bloc brought together Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Qatar, Bahrain and Oman, all of which were concerned about the consequences of the Islamic revolution in neighbouring Iran. Thirty-seven years later, the future of the GCC looks far from certain.
Qatar is a major point of contention. On 5 June 2017, Saudi Arabia, the UAE and Bahrain cut diplomatic ties with the tiny emirate. Egypt, not part of the GCC, also joined the Saudi-led blockade. Saudi Arabia justified the move by claiming that Qatar was supporting extremist groups such as al-Qaeda and Iranian-sponsored militias in the region.
At the time, the real reasons for cutting diplomatic ties were unclear, wrote Jordan Abu-Sirrya in Foreign Policy Journal. Although Qatar does support the Muslim Brotherhood, which has angered Saudi Arabia, the UAE and Egypt, it appears that Saudi Arabia was not willing to allow Qatar to adopt an independent foreign policy.
However, a recent investigation by The New York Times Magazine suggested that it was Qatar’s ransom payment to Iraqi Shia militants, in exchange for Qatari nationals, which was the final straw. The Saudi-led blockade, according to the magazine, was imposed shortly after.
Yet rather than cede sovereignty and operate as a satellite state, Qatar quickly turned to Turkey and Iran to fly in vital imports. In August 2017, the emirate also restored diplomatic relations with Iran, with whom it had cut ties in 2016 after two Saudi diplomats were attacked there.
Despite Iranian and Turkish help, weathering the storm has come at a considerable cost for Qatar. By October 2017, The Economist reported that Qatar had injected $39 billion into the economy from its $340 billion in foreign reserves. Tourists from other Gulf countries also declined by more than 70 per cent and trade plummeted.
The same Economist article revealed that the blockade on Qatar is also hurting the countries enforcing it, which analysts say is weakening the GCC as a whole. Dubai, part of the UAE, stands to lose the most revenue in trade. Qatari firms in the UAE all hire local staff. One public relations executive said that their company will have to lay people off after losing a Qatari contract. Dubai’s property market will also suffer a blow as Qataris bought more than $500 million worth of real estate in Dubai in 2017 alone.
In November 2017, the International Monetary Fund confirmed that the ongoing feud could weaken the GCC’s economic growth, which used to allow for the free trade of goods and people across all its borders.
‘A protracted rift could slow progress toward greater GCC integration, and cause a broader erosion of confidence, reducing investment and growth and increasing funding costs in Qatar and possibly the rest of the GCC,’ the IMF wrote in its Regional Economic Outlook.
As the feud continues, Kuwait and Oman have assumed a mediating role. Varsha Koduvayur, a GCC research analyst with the Foundation for Defense of Democracies (FDD), told Fanack Chronicle that both countries have chosen to retain their historic role as brokers and peacemakers.
“Kuwait and Oman pride themselves on taking neutral and middle-ground stances, and that’s been the position they carved out historically in the GCC,” she said. “And while Saudi Arabia and the UAE are totally against Qatar, Oman and Kuwait are smaller states that see the benefit of maintaining the GCC by taking a more middle ground.”
While that may be so, other members of the GCC favour new alliances. On 5 December 2017, Saudi Arabia and the UAE announced that they were forming a new political and military partnership, separate from the GCC.
Both countries boast the strongest militaries in the GCC, making them a formidable duo to take a more aggressive stance against Iran – a country whose proxies are undermining Saudi and UAE attempts at hegemony in Yemen, Lebanon and Iraq.
Koduvayur said that even before the Saudis and Emiratis announced their new alliance, a closeness characterized the relationship between both countries. Considering the political divisions within the GCC, Koduvayur notes that the Saudis and Emiratis have long cooperated with the intention of becoming the new centre of Gulf affairs. But that does not mean that the GCC is irrelevant.
“I don’t think the Saudis or Emiratis want to risk alienating the Kuwaitis and Omanis by getting rid of the GCC,” she said. “Part of the reason has to do with the economic zone they share. But Oman and Kuwait are also very important to counter Iran and ensure GCC security.”
The shared economic zone appears to be an important factor. On 12 March 2018, Bloomberg reported that the GCC had agreed to establish a company that could facilitate direct money transfers to all six member states. Qatar was included in the plan despite its ongoing spat with the Emiratis and Saudis.
“[This move] is a way of showing there are still areas for cooperation on the economic side even if the [GCC] can’t agree on the political issues,” Jason Tuvey, a London-based economist at Capital Economics, told Bloomberg.
“It does seem odd they can agree to what they claim will be a deep move when at the end of the day there is still this blockade in place that has damaged Qatar’s economy. It does feel a bit like ignoring the elephant in the room,” he added.
Nevertheless, there are some signs that the blockade could be eased in some areas. The Saudis and Emiratis are considering easing restrictions on civilian movement between the three countries, which would be a major step forward to resolving the dispute.
Koduvayur notes that economic integration has always come first in the GCC, while political cooperation has tended to be shaky. This is because there has often been a general concern among the members about ceding sovereignty in favour of adopting a more homogenous foreign policy. Despite the political differences, the GCC is still seeking ways to cooperate.
“The way I look at it is that there would be less incentive for the GCC to cooperate if members knew it was going to collapse,” she told Fanack Chronicle. “The countries that don’t benefit from disunity in the GCC are the GCC members themselves.”