Gulf Cooperation Council.
The Gulf Cooperation Council (GCC) is an organization of six oil-exporting countries of the Persian Gulf that is also known as the Cooperation Council for the Arab States of the Gulf. The cooperative council formed in 1981 to foster economic, scientific, and business cooperation. The GCC’s headquarters is in Riyadh, the capital of Saudi Arabia, its largest member. In 1984 the group formed a military arm called the Peninsular Shield Force to respond to military aggression against members.
The members as of Dec. 2020 were Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. These Middle East countries share the common faith of Islam and Arabian culture. They also share an economic interest distinct from their OPEC membership. These countries seek to diversify their growing economies away from oil.
On a per-capita basis, they are among the wealthiest countries in the world. Together, they supply one-third of U.S. oil and own at least $273 billion of U.S. debt.
Arguably the most important article of the GCC charter is Article 4, which states that the alliance was formed to strengthen relations among its member countries and to promote cooperation among the countries’ citizens. The GCC also has a defense planning council that coordinates military cooperation between member countries. The highest decision-making entity of the GCC is the Supreme Council, which meets on an annual basis and consists of GCC heads of state. Decisions of the Supreme Council are adopted by unanimous approval. The Ministerial Council, made up of foreign ministers or other government officials, meets every three months to implement the decisions of the Supreme Council and to propose new policy. The administrative arm of the alliance is the office of the Secretariat-General, which monitors policy implementation and arranges meetings.
GCC agreements typically focus on either security or economic coordination. In terms of security coordination, policies have included the creation of the Peninsula Shield Force in 1984, a joint military venture based in Saudi Arabia, and the signing of an intelligence-sharing pact in 2004. The first significant deployment of the Peninsula Shield Force was in 2011 in Bahrain to guard government infrastructure against an uprising there during the Arab Spring protests. Economic coordination included attempts at economic union, though integrative agreements were often lacklustre in comparison with policy coordination. An agreement to launch a single regional currency similar to the euro by 2010 saw little movement apart from the establishment of a monetary council in 2009. Coordination in tax policy proved fruitful, however: a customs union was implemented in 2015, and the member states began rolling out a value-added tax of 5 percent in 2018. Saudi Arabia and the United Arab Emirates have tended to lead policy coordination. They were the first countries to send troops to Bahrain in 2011 and the first countries to levy the value-added tax.
While membership of the GCC remained consistent throughout its first several decades, changes in regional relationships sometimes led to speculation on changes in membership. Expansion appeared possible when the interests of Gulf countries aligned with those of other Arab states. Jordan and Morocco, two other Arab monarchies, were invited to join the GCC in 2011, in the midst of the Arab Spring uprisings. Morocco declined, while Jordan’s application remained delayed because of internal GCC disagreements. Conflicting interests at times led to rifts. Egypt and fellow GCC members Saudi Arabia, the United Arab Emirates, and Bahrain instated a blockade against Qatar in 2017. In December 2018 Qatar’s emir skipped the GCC’s annual summit and sent an envoy instead, though he sent his prime minister in 2019 as tensions seemed to thaw. The blockade was lifted during the following annual summit, held in January 2021, with Qatar’s emir in attendance.
List of GCC Countries.
The GCC has six member states:
1. United Arab Emirates.
Its 6 million people enjoy a per capita GDP of $68,00. That’s thanks to a diversifying economy that includes Dubai and the world’s tallest building, the Burj Dubai Khalifa. Dubai is the second-largest of the seven city-states in the UAE. Abu Dhabi is the largest. The UAE has 97.8 million barrels of proven oil reserves.
2. The Kingdom of Bahrain.
Its 1.4 million people enjoy a GDP per capita of $51,800. Its economy grew by 2.5% in 2017. It has 124.5 million barrels of proven oil reserves.
3. The Kingdom of Saudi Arabia .
The largest of the GCC countries with 28.5 million people. It has 16% of the world’s proven oil reserves. That’s 266.5 million barrels. Its GDP per capita is $55,300.
4. The Sultanate of Oman .
Its oil reserves are only 5.4 million barrels. It is shifting to tourism to improve the lifestyle of its 3.4 million residents. Its GDP per capita is $45,500.
5. Qatar .
The second richest country in the world, with a GDP per capita of $124,900 for each of its 2.3 million residents. It has 25.2 billion barrels of proven oil reserves and 13% of the world’s natural gas reserves.
6. Kuwait .
Its 2.9 million residents enjoy the 11th highest standard of living in the world. Its GDP per capita is $69,700. The country holds 6% of the world’s oil reserves. That’s 101.5 million barrels.
What Happens If GCC Members Drop the Dollar Peg.
The GCC countries have reasons to drop their peg to the dollar. But the GCC official policy is that members will keep it until the Council has created a monetary union, like the European Union.
The peg fixes the exchange rate of each countries currency to the dollar. When the dollar fell 40% between 2002 and 2014, it created an inflation rate of 10% in these countries. It forced the price of oil and other commodities to increase. If they removed the peg to the dollar, they would not need to buy so many Treasuries to stabilize their exchange rate. That would cause the dollar to decline, causing inflation in the United States.
It would also mean that oil is no longer priced in dollars. That could result in lower oil prices. But nothing will happen quickly since potential implications need to be studied further.
“Gulf Cooperation Council”, www.britannica.com
Secretariat General of the Gulf Cooperation Council. “Member States.” Accessed Dec. 3, 2020.
KIMBERLY AMADEO (18-12-2018), “Gulf Cooperation Council Countries”، www.thebalance.com