This week, Bahrain hosts the 37th summit of the Gulf Cooperation Council (GCC) states amid sociopolitical and socioeconomic challenges across the region. Yet, on a positive note, the summit takes place on the back of a new Opec deal calling for cutting output and in the hope this will push prices up in the international markets.
Gulf economies would be among the immediate beneficiaries of any hike in oil prices. These economies had to cope with low prices for two-and-a-half-years, requiring them to revisit traditional economic policies including cutting subsidies and raising fees and taxes.
More likely, the summit attendees would discuss implementation of numerous projects designed to enhance integration of GCC economies. On the political front, emphasis is likely to placed on the need to push for political union against the backdrop of geopolitical challenges.
Other ambitious schemes involve linking member states with a railway project. However, the project, stretching more than 2,000 kilometres, must stand the test of costs in the unfriendly environment of low oil prices.
Plans are underway for setting up an integrated grid for water distribution by 2020, clearly building on the success of an existing electricity grid. The power scheme had a successful track record during the long summer months, with countries having a surplus of supply showing willingness to share electricity with nations in need.
On integrating economic projects, discussions would involve sorting out the remaining problems associated with implementing the customs union. The scheme allows for a unified trade policy with non-members, something not easy for economies enjoying competitive advantages in external trade.
Persistent challenges entail developing a formula for fair distribution of customs duties taking into account the to port of entry and final destination of goods. Other issues concern bureaucratic obstacles at points of entry at some GCC states.
In reality, the most promising regional economic scheme continues to be the Gulf Common Market (GCM); implementation started in 2008 following its adoption during the GCC summit in Doha in late 2007. The scheme presses for free movement of factors of production among member states.
The project covers all economic and investment services, dealings in the stock markets, and setting up of companies in public and private sectors besides social insurance among GCC citizens. In fact, the GCM focuses on finding a unified regional market through which nationals can benefit from available opportunities in member states.
It is probable that the summit would not overcome the difficulties associated with Gulf Monetary Union (GMU). Among other things, GMU calls for introducing a single currency. Unlike the two other integration projects of customs union and common market, not all GCC countries are members of the GMU scheme.
The experience of Eurozone and troubles associated with Greece must remain vivid as Gulf decision-makers debate the merits of GMU. Certainly, this project should not be regarded as a priority.
GCC citizens appreciate the value of utility projects. The same holds true for the common market, as resources end up in the most efficient and promising economies.
GCC investors also see value in the drive for unified guidelines for financial markets inside the GCC. This is vital, as GCC subjects have the tendency to invest in stocks across the six-nation grouping.
For Bahrain, hosting GCC summit is exceptional for good reasons, taking place ahead of two other crucial events, namely the Manama Dialogue, in turn dealing with regional security issues, plus Bahrain’s National Day.
By Jasim Ali
The writer is a Member of Parliament in Bahrain.
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