Gulf leaders at the GCC summit in Riyadh on Tuesday. Image Credit: WAM

The Gulf Cooperation Council (GCC) needs to find a way to reinvigorate itself. Despite some important successes in the region at a political level, it has been drifting for some years on its internal economic and social initiatives.

The GCC summit this week was chaired by Saudi King Abdullah Bin Abdul Aziz, who gave a stark warning that the six-nation bloc needs to move on. His message covered both the GCC's foreign policies, as well as its internal development.

The difference between external politics and internal coordination is that at a political level, the GCC operates as a club of like-minded nations, who share similar views on what needs to be done in the Arab world and can coordinate their policies quickly. The GCC initiative on supporting foreign intervention in Libya earlier this year is a prime example of how things can work successfully. But the GCC's attempts to mediate between the various forces in Yemen is an example of how these efforts may be right-minded, but can flounder if no one is listening.

But the GCC's internal developments are as important as its foreign policies and this is where the member states face a problem. The GCC was set up in 1981 as a security bloc in the aftermath of the 1979 Iranian Revolution, but it quickly espoused the target of economic union.

But to make this work, the GCC's central institutions need to become more effective. Projects like unifying import and export tariffs for all types of goods requires both political will to agree on how it should be done, and then a strong GCC technical team to ensure that all six member states implement what they promise to.

In this particular case, there was a fierce argument between the more protectionist nations led by Saudi Arabia, and the more open-market nations led by the UAE. But once the leaders came to the essential compromise on the spirit of the customs tariffs, then the six customs authorities were supposed to implement the new rates, but it only happened partially.

In addition, the plan also required the six nations to allow free movement for goods from within the GCC. The open borders to all trade as required by a full customs union has still not been implemented completely, as particular sectors might suffer delays or imposition of duties as required by individual member states.

To police and monitor this kind of thing, the GCC itself needs much larger and more proficient technical staff, working under the GCC Secretariat. The same applies to any other economic area, like the stalled plan to unify the six GCC currencies. The troubles Europe is facing at present, despite its much more developed institutions, only points to the challenges the GCC will face as it seeks a more effective union.

But these long-term economic and social plans were only part of what this week's summit discussed. An important part of the message from the summit was a Saudi warning to Iran not to interfere in the affairs of the GCC states, which was warmly backed by the other five nations. They are keenly aware that the Iranian government of President Mahmoud Ahmadinejad has been increasing its political influence through building connections with indigenous Shiite populations throughout the Arab world.

At the GCC summit, King Abdullah bluntly said that "our security and stability are threatened, and we need to live up to our responsibilities". He added that the summit "opened in the shadow of challenges that require vigilance and a united stance".

The long-running tension in Bahrain is an obvious source of concern to the GCC, and Iran is on record as being willing to support the opposition as required. There are other Shiite communities in the Gulf which have not gone the same route as Bahrain, but the GCC leaders were making it clear to Iran that it should not attempt to foster discord in the GCC.

This is particularly important as the outlook for 2012 is turbulent. The international confrontation with Iran will escalate as the domestic politics of both Iran and the US demand more confrontation. Both countries will go through national elections and the American and Iranian leaders will need to appeal to their domestic voters' chauvinism to win votes.

The six member states have agreed to look at how to achieve closer union, and they will appoint a working commission to look at what needs to be done and how it might work. This commission will assemble during the first half of next year, and it could be an important development if it takes a serious look at how the central institutions of the GCC might be strengthened.

It would be a mistake for the commission to go looking for new policy areas for GCC action. There are lots of important areas which have good GCC plans, but have not seen any action. They may have been stalled because of reservations from member states, or maybe due to lack of political will to make them happen, or the attention of the leadership may well have moved on to the next major problem, leaving no clear direction on a particular internal initiative. A review of all this would be an opportunity to reset the GCC to good effect.