All eyes are fixed on the 33rd summit of the Gulf Cooperation Council (GCC) countries due to be held in Bahrain this week. It is hoped that GCC leaders will not overlook economic issues whilst discussing outstanding socio-political challenges in the region and beyond.
At stake is addressing issues related to primary integrating economic projects, namely the customs union, Gulf Common Market (GCM) and Gulf Monetary Union (GMU). Certainly, a considerable amount of detail and challenges go into ensuring implementation of putting these projects, thereby the possible slow pace of completion.
Launched in 2003, the customs union scheme failed repetitive deadlines. The original plan called for full implementation in a span of two years. Nevertheless, the GCC is now committed for ensuring across the board and categorical implementation of the project by 2015.
Happily, the expanded scheme would be a comprehensive one. Amongst others, this would require standardised tariffs, no exceptions.
Undoubtedly, GCC leaders had the very best intention for this project, but realities on the grounds proved cumbersome. The scheme encountered serious challenges from its very inception, notably relating to developing a formula for fair distribution of customs duties amongst member countries.
Sticking points include port of entry and final destination of goods within the six-nation grouping. Non-oil revenues are more important for the treasury income of some member countries than to others given the differences in the output of oil and gas. Suffice to say that Saudi Arabia and Qatar are global leaders in the production of crude oil and liquefied natural gas, respectively. Conversely, the GCC includes small energy producers.
In particular, the summit is expected to deliver on the promising common market project. Commenced in January 2008, the GCM calls for free flow of factors of production amongst member states. The scheme covers economic and investment services in addition to dealing in the stock market and setting up of companies in both public and private. In practice, GCM focuses on finding a unified regional market through which nationals could benefit from available opportunities in all member states.
In reality, it is now customary for every summit to make some progress on GCM, and the one in Bahrain should be no exception. During the last summit, the leaders approved standard rules for financial markets across GCC countries in pursuit of having unified rules for placement of stocks, securities, investment funds in regional financial markets.
However, the summiteers are not expected to make exceptional progress on the ambitious and more contentious of all integrating projects, namely the monetary union.
The project was launched at the start of 2010 but with no specific deadline for its full implementation. Possible reasons for this include delayed implementation of the customs union and absence of full membership of the project. Only Saudi Arabia, Qatar, Kuwait and Bahrain are parties to the venture.
The project’s final goals include unifying monetary and fiscal policies including introduction of a single currency for member countries. Nevertheless, calls for a unified currency are not popular nowadays partly reflecting developments in the Eurozone area amidst Greece’s debt crisis. At the very best, the summit would most likely reiterate its support for the project but with no specific promises.
Certainly, economic gains for GCC subjects through common customs and markets provide regional officials the opportunity to offer their subjects a key logic for setting up the regional entity in 1981. It remains to be seen how GCC followers would regard the summit in Manama, convening there for first time since 2004. The Christmas Eve summit should enter history with good memories.
The writer is a Member of Parliament in Bahrain.
