Consultative summit fails to produce breakthroughs

It was not surprising at all to see leaders of Gulf Cooperation Council (GCC) holding their 10th consultative summit in Dammam.

Serving as governorate of the eastern province, Dammam plays a key role in Saudi Arabia's oil industry. Saudi Aramco is headquartered in Dammam.

GCC leaders took part in the celebrations marking the 75th anniversary of Saudi Aramco. Undoubtedly, Saudi Arabia is a leading player in international oil affairs by virtue of being the largest oil exporter in the world. High and ever growing oil prices added significance to the festivities.

Apart from taking part in the Saudi Aramco celebrations, GCC leaders looked at some recent developments as testimony that regional cooperation efforts, notably on the economic front, are yielding results.

In particular, reference was made to the announcement in early May regarding construction of a causeway linking Qatar and Bahrain. The actual construction is due to start towards year-end, with the completion projected in 2013.

The causeway project falls as an integral part of the Gulf Common Market (GCM). Commenced in January 2008, GCM relates to free flow of factors of production amongst member states.

It covers all economic and investment services, dealings in the stock market and setting up of companies in the public and private sectors besides social insurance among GCC citizens.

In other words, the GCM focuses on finding a unified regional market through which nationals would benefit from the available opportunities.

Yet, the summit produced no breakthroughs with regard to either customs union or monetary union projects. The GCC commenced customs union status at the start of 2003 hoping to complete the requirements by 2005.

However, the implementation was delayed until 2007 owing to numerous obstacles. These include finding solutions to matters related to fair distribution of customs revenues amongst the member countries.

Technical officials are entrusted to come up with a formula for distribution of customs revenues taking into account issues such as the final destination of goods.

Another stumbling block relates to limited transparency. It is alleged that some member states are not confining themselves to unified customs rates on imports, with some charging less in order to entice business.

GCC states are required to adhere to a standard external trade policy with non-members, according to a document adopted during the Abu Dhabi summit in 2005.

Likewise, the final communique made no mention about the implementation or the potential delay for the monetary union. If all matters work according to the schedule, the project should be implemented in 2010. As of the moment, Oman remains the only GCC member state which has announced its decision not to join the project.

Ostensibly, Oman is not pleased with conditions attached to the ambitious project. Amongst others, member countries should limit public debt to 60 per cent of gross domestic product (GDP).

Still, another criterion restricts budget deficit to three per cent of the GDP. Omani officials want to be free to decide about the country's economic choices.

Also, another challenge relates to Kuwait unilaterally linking its currency to a basket of currencies. In May 2007, Kuwait decided to end the practice of linking its dinar solely to the dollar.

Strangely enough, Sultan Qaboos Bin Saeed of Oman was the only GCC leader not showing up at the Dammam gathering. However, Omani leadership will have the opportunity to present their case when the sultanate hosts the next GCC summit in Muscat.

The writer is a Member of Parliament in Bahrain.