Old methods still hobble GCC

Last Monday marked the 28th anniversary of creation of the Gulf Cooperation Council, which is still working with the same old mechanisms regarding taking and implementing decisions that led to many problems.

The selection of Riyadh to host the headquarters of the GCC Central Bank during the consultative meeting held recently is an example of adopting old methods in making decisions.

The decision excluded the UAE despite its many professional advantages and commercial privileges, especially its leading global financial position, the volume of its banking activities and its flexible rules, which match the age of globalisation.

All these advantages could have facilitated the issuance of the GCC single currency, and coordinating the Central Bank's work and relations with various GCC and global monetary and financial institutions.

These were the standards applied when Frankfurt was selected to host the European Central Bank.

The choice was not based on the German economy being the most powerful in the EU, but because Frankfurt is a global financial centre in Europe after London.

Despite London's financial status, the UK had missed the chance to host the bank because it decided not to join the Euro. For 40 years, Germany was excluded from hosting the EU's most important bodies.

The EU General Secretariat is based in Brussels, though Belgium is the smallest European nation.

Meanwhile, France hosted the European Parliament headquarters, which plays a great role in producing legislation that govern the EU's work.

If these professional considerations were taken into account, the UAE would be the most worthy of hosting the central bank. Applying the same old techniques also results in hindering the implementation of decisions.

The first example of which is the Unified Customs Tariff, which was implemented in January 2003, yet customs departments in GCC countries still request a certificate to allow commodities into their countries, six years after the agreement was signed.

This results in paying customs duties twice, at 10 per cent instead of the 5 per cent approved in GCC countries within the Customs Union. Requesting such certificates means that these commodities have been stored for six years, which is not logical.

If these commodities were foodstuff, they would expire, and if they were long-lasting such as cars, they would rust in the Gulf's humid weather.

Thus, the issue is simply about bureaucratic procedures and mismanagement, which hinder the implementation of decisions, especially since merchants refuse to give buyers a copy of import documents for confidentiality reasons.

In both cases, it seems that the problem lies in work mechanisms that have not changed in three decades, despite the change in circumstances and the great progress in GCC economies.

There is no doubt that all are keen on developing the council's work and maintaining its gains, yet this requires upgrading the nature of work and professionalism.

For example, the GCC Monetary Council agreement focused on conducting studies by the council, at a time when the council should set monetary policies of GCC countries based on following up and analysing monetary and financial developments in member countries and across the world.

It should also prepare studies and researches for drawing up these policies with professional independence and transparency, as in the case of the US Federal Bank and the EU.

In this regard, the Director General of the World Trade Organisation addressed member countries meeting in Muscat last week, saying "I advise you to adopt pragmatism in your approach and set up one team to deal with the organisation to allow us to help you."

The GCC Central Bank issue can be solved by reconsidering the last decision and tackling the issue with professionalism and pragmatism.

The headquarters location was selected for political reasons not related to the nature of the bank's future activities.

Furthermore, the proposed location does not host any global financial institutions, besides the restrictions that can hinder the work of the central bank and its international locations.

Thus, it is time to reconsider the GCC work mechanism and its statute, since many of these are now blocking the council's work and decisions.

Dr Mohammad Al Asoomi is a UAE economic expert.