Economic policy challenges facing the gulf cooperation council

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The Gulf Cooperation Council (GCC) is an umbrella organization that includes all countries found within the Persian Gulf region, except Iraq and Iran. The regional organization also serves as an advocate movement especially for economic and political matters happening within Arabian Nations. In this respect, the member countries of this trade-cum-political movement entail the United Arabs Emirates (UAE), Kuwait, Qatar, Bahrain, and Oman. One of the leadership traits that describe all the countries that are members of GCC is that they are all governed by monarchical systems. For example, while Kuwait, Bahrain, and Qatar are constitutional monarchies, Oman and Saudi Arabia are governed by an absolute monarchy. Besides, the UAE is a federal monarchy system with seven individual States that are subscribed to the GCC. However, the implementation of the GCC has faced a myriad of socio-economic policy issues in the past, present, and some are expected to occur in the future. This paper highlights the economic policy challenges facing GCC member states and their underlying causes. The GCC should harmonize its economic policies actually to realize its full mandate and operational objectives.


Even though GCC was formulated to harmonize economic development across the region, especially from the fact that most member countries are oil producers, some states still economically dominate the movement more than the others (Shafik, 2016). For example, Iran has been known to have a greater influence in the Gulf region, an aspect that gives it not only an economic edge over the others but their bargaining power in the GCC. In 2011, member states proposed that the movement be transformed into a union as a way of making strict economic, political, and cultural policies that would guide its operations. In this respect, one of the aims of forming the Gulf Union would be to reduce the sole authority of some countries such as Iran. While this seemed to be a sound proposal, its implementation faced resistance and opposition from some of the countries, an aspect that poses a policy implementation challenge. Among the economy, policy aims of the formulation of GCC were the development of a common currency to be used by all the members (Sturm et al., 2008). However, this has not been implemented as each member considers the repercussions of this policy on its internal operations. It is clear that the implementation of some economic policies is because of internal resistance within the movement.

Apart from internal policy change resistance, the GCC has been widely impacted by the fluctuations in the global economic markets. For example, one of the mandates of GCC is to oversee that oil products from member states not only find a market in the general space but also realize good prices. However, this form of harmonization policy has its challenges as the countries recognize less economic benefits on a long-term view compared to own marketing. The slow economic growth of each nation when marketing through GCC is because the organization ensures that each country has a chance to export its oil products. For this reason, some states opt to find markets for their products, an element that hinders full economic policy implementation by the movement. Besides, the economic policies of the union are not regularly revised to meet the fluctuations in the international oil markets. As a result, it is estimated that the member states can only grow their production by two percent per annum irrespective of their volume of productivity (IMF, 2016). In essence, this growth rate is not sustainable because the average population growth in these countries is 3.5%.

While policy challenges face all the members of the GCC, there is a considerable variation in each of the countries due to various reasons. For example, systems to harmonize oil marketing do not entirely affect some countries, as they do not fully depend on the exportation of the commodity for their revenue and sequential economic growth. In this regard, it is also evident that the harmonization policy is unfair to countries that depend on oil for economic stability and growth as it provides a uniform trading platform and returns. Besides, other aspects such as a size of oil reserves, population growth rate, and diversity of economic initiatives are directly affected by GCC policies. For example, countries that have larger oil reserves are disadvantaged when they are given an equal international marketing opportunity with those that have smaller resources. The impact of such policies on the economies of the members has resulted in the revision of internal policies within some of the nations to maintain sustainability. Examples are economic policy formulation and adaptations in Saudi Arabia, Oman, and Kuwait that are geared towards strengthening their internal economies and priorities (IMF, 2016).

One of the similarities observed in the recent economic policy changes in these three countries includes the formulation of effective monetary policies that eliminate budget deficits (IMF, 2016). Besides, the states have introduced laws that promote internal market growth especially from private sector investments and eradication of subsidies on their primary commodities. The three member countries have also introduced policies that enhance absorption of their private workforce as opposed to employing professionals from the Gulf region. For example, Saudi Arabia launched the Saudization policy that ensures that qualified individuals from the country are given priority by using agencies. In essence, this move aims at increasing the income of Saudi Arabians and reduces both internal and external dependency. Such individual economic policy moves by member countries reveal the inefficiency of GCC frameworks to serve the interests of all members. In this respect, if the GCC economic policies were vigorous and efficient enough, members would not seek other measures to improve their economic functionality.

Another economic policy challenge facing GCC is the formulation of policies that will ensure that productivity of its countries is sustainable. As it has been mentioned earlier, GCC members largely depend on oil resources for economic growth and development (Reiche, 2010). However, oil reserves are subject to depletion, an aspect that poses a considerable economic dilemma and uncertainty of the future of these states. While some countries, such as Kuwait have taken personal initiatives to provide other avenues of revenue derivation, achieving sustainability without depending on oil remains a problem. In this respect, it would have been easier for such nations to achieve more economic growth if they lobbied together as a union compared to individual efforts. However, as currently constituted, GCC does not have any frameworks or policies that guide parallel economic stimuli in the different member countries. It should be noted that each of the affiliate countries has its potential and requirements for economic posterity, a factor that makes it difficult for GCC to formulate laws that can suit all its members.


The discussion provides an in-depth understanding of the roles GCC play in economic development across countries in the Gulf area. For example, the movement has been at the forefront of expanding the global market niche for products from these countries, especially oil products. However, weaker and undefined economic policies have adversely affected the functionality of GCC and exploitation of its full mandate and objectives. Besides, some economic reform policy proposals have faced strong internal opposition, preventing their implementation. Upon realizing the inability of GCC to support economic growth and sustainability entirely, some countries, such as Saudi Arabia and Kuwait have decided to formulate effective internal policies aimed at increasing economic activities within them. It is clear that GCC needs to make some economic policy adjustments to alleviate some of the most pressing challenges faced by its members.

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  1. IMF. (2016). Policy Challenges in the Gulf Cooperation Council Countries. International Monetary Fund. Retrieved from
  2. Reiche, D. (2010). Energy Policies of Gulf Cooperation Council (GCC) countries—possibilities and limitations of ecological modernization in rentier states. Energy Policy, 38(5), 2395-2403.
  3. Shafik, N. (Ed.). (2016). Economic Challenges Facing Middle Eastern and North African Countries. New York, NY: St Martin’s Press.
  4. Sturm, M., Strasky, J., Adolf, P., & Peschel, D. (2008). The Gulf Cooperation Council Countries-Economic Structures, Recent Developments, and Role in the Global Economy. ECB Occasional Paper, (92).
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