The Gulf Cooperation Council (GCC-6) has enjoyed a unique socio-economic, geo-political and geo-strategic position in the Middle East and MENA region. Its huge oil and gas reservoirs have the potential to rock the entire world. Its investment preferences and expenditures have ability to bring prosperity and stability in the regional and global economies.
At the age of thirty, the GCC is passing through a new phase of its existence. There is a paradigm shift in its outward foreign policy, collective security apparatus, expansionism and the last but not the least meaningful socio-economic liberalization.
Political upheavals are at rampant in the Middle East region and political pundits are talking openly about Arab Spring by ignoring its pitfalls. One of the important member countries of the GCC passed through a cataclysm period but with timely proactive measures of the United Arab Emirates and Saudi Arabia, Bahrain succeeded to maintain the status quo.
GCC a Great Equalizer
The GCC states have been playing pivotal role to stabilize the regional as well as international financial markets through their wise political policies and better investment policies or by maintaining price equilibrium and stable supplies to the world’s energy markets. It is hoped that its collective contributory role in this matter will not change in the days to come.
Moreover, the GCC-6 states have become moderate powerhouses due to their sovereign wealth funds management and contributions to international stability in terms of energy supplies and energy security for the energy deficient world. The Gulf’s strategic significance in hosting the world’s largest oil producing states calls for extreme caution. Any sort of security threat and political instability ominous for the GCC-6 and the region at large. Its implications for the international community also resound loud and clear. The good thing is that the GCC-6 stands unified and firm in resolving and countering any internal and external political and security threat.
In recent times, United Arab Emirates, Saudi Arabia and Qatar played a leading role in achieving conflict resolutions in the region. In the times of natural calamities (Sudan), financial crises (Oman, Bahrain), political chaos (Yemen) or geo-strategic dilemma (Libya), it is the GCC especially UAE that has always rescued the GCC and the region by large from the deep seas of uncertainties to the shores of survival. Now, even the king of Bahrain His Majesty King Hamad bin Isa Al Khalifa announced a broad-based national dialogue on reforms from July 1 with all parties.
It is the case of Palestine-Israel dispute, Sudan territorial issue, solidarity with Iraq or Lebanon security, the GCC has always stood first to help. It is the conflicting problems of terrorism and extremism, free zone of weapons of mass destruction, maritime piracy, water security agenda or Human resources; the GCC-6 has tremendously played a great job. So, in the times of societal disintegration, economic melting down, politically divided and geo-strategically unstable region the GCC-6 has emerged a powerful equalizer.
Future Architecture for Gulf Security
Right from the beginning compact security has been the main agenda of all the regional countries especially the GCC-6. It gained momentum after Iran invasion to Kuwait, Iraq war, unprecedented armament race, and the last but not the least a nuclear Israel in the region. Incidents of deadly terrorism and horrendous extremisms activities latterly shaped a paradigm shift in the Gulf security scenarios. After Peninsula Shield Force active demonstration of power show in Bahrain, the search for common gulf security apparatus enhanced among the decision makers.
Now world is moving gradually but surely from bi-polar to multi-polar world. ASEAN, G-8, G-20 and BRICS (Brazil, Russia, India, China and South Africa) have succeeded to reshape the existing world economic order. The new trends may feasibly end America’s role as the sole protector of Gulf security and could envision a growing role for other players.
It is strongly suggested that the GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and new entrants Jordan & Morocco) must get their act together for their collective security umbrella. There is room for more players to chip in and contribute to Gulf stability. In this connection even Indonesia and Malaysia offered their assistance in the matters of Bahrain maritime security arrangements.
Cementing ties with NATO
In order to establish closer ties with the North Atlantic Treaty Organization (NATO), UAE has become the first Arab country to send an ambassador to NATO. It is a drastic policy change in the GCC which is looking new strategic partners to strengthen its security apparatus and military shields. It is an important step and a key development for the UAE and the GCC. It will raise an Arab voice especially GCC at international forums and it will give a window to voice the Arab perspective on various issues that are of importance to the Middle East and the MENA.
Military War Games (GCC-6 and US)
Peace time war games are important tools for the future wars. It provides practical learning to the participants. It refreshes experiences of the soldiers. It enhances tactical and operational capabilities of the armies. It brightens the chances of mutual military cooperation and collaboration among the countries. It also shows the levels of preparedness of a country to cope with any imminent security threat.
Recently, UAE being one of the important countries of the GCC held the 12th annual Eagle Resolve 2011 which further enhanced military cooperation between GCC countries and the US Central Command (Centcom). Government high officials and civil authorities from Bahrain, Kuwait, Qatar and the US active participated in the war game. Saudi Arabia, Oman, Jordan, Egypt, Iraq, Lebanon, Yemen, France and South Korea took part as observers.
This War Game was held on land, territorial waters and the airspace of the UAE and a number of training areas of Qatar, Bahrain and Kuwait. Comprehensive and integrated chemical, biological and radiological warfare, border security and medical procedures were also conducted on a larger scale. Theoretical component along with thorough discussions and seminars on tactics, cooperation, regional stability and developing military and maritime capabilities were also arranged
The War Game enhanced the process of deterrence against Weapons of Mass Destruction (WMD), crisis and disaster management and anti-terrorist operations. It also reinforced international maritime security as per the joint defence agreement and defence cooperation between the GCC and the US. The timing and places of this War Game is significant and has multidimensional regional geo-political and geo-strategic ramifications.
Pakistan Security Block Initiative
Being the sixth largest army in the world and sole nuclear Muslim states, Pakistan has proposed to GCC states the setting up of a formal ‘security bloc’ to combat any external or internal security threats in the region. The creditable policy initiative also stresses the need to have a strategic partnership which will also ensure food safety, further economic integration and the security of the countries which will be part of the security bloc”. Afterwards, Pakistan-GCC Strategic Dialogue discussed the prospects.
Potential Strategic Advantages (Pakistan-GCC)
1. Security: Pakistan and GCC countries can complement each other well due to their close proximity and common interests. Moreover, chalked out of common strategy against terrorism, extremism, human & drugs trafficking and the last but not the least maritime piracy could be rigorously followed. Instead of heavily rely on the Western countries equipments or borrowed ideas, regional security block may be the appropriate answer to the emerging security concerns to regional countries. Security block would safe guard the national sovereignty and territorial supremacy of the member countries. It may also provide strategic-cushion and better bargaining position to all the GCC countries against its rivals in the region. It is obvious from Pakistan’s important and decisive role in the recently happened political fiasco in Bahrain.
2. Non-State Threats: Non-state threats like climate change and water conservation could be commonly tackled. Food security has become a burning issue in the region especially in the GCC which could be solved by having a common security block between Pakistan and GCC countries. Since Pakistan is agriculture country and it easily fulfills the food demands of all the GCC countries. Pakistan has a lot of agriculture land which can be better utilised with the investment and technology from Gulf countries.
3. Economic Integration: GCC is one of the main sources of worker remittances in the country. Millions of Pakistanis are doing great job in these countries. The GCC is also one of the biggest sources of investments and joint ventures. So by having a concrete security block further economic integration may be speeded-up for the win-win situation to both the parties.
4. Energy Cooperation: Energy security is the mantra of every country around the world. Oil and gas reservoirs are on the decline. New alternative/renewable energy resources are making inroad. The energy mutual cooperation would provide ample opportunities to Pakistan-GCC. It would gear-up the onward march of socio-economic prosperity in the days to come.
Prospects of Confederation
The present state of turmoil in North Africa and the Middle East has emerged new thinking in the ranks of GCC-6. Now, they are seriously thinking of a Gulf Confederation Model (GCM). According to the plan the GCM will have a unified foreign policy, defence and security policy. However, each of the six countries (Saudi Arabia, Kuwait, UAE, Bahrain, Sultanate of Oman and Qatar) will remain independent and sovereign. The main object of this confederation will be self-dependence in security and military fields by evolving collective security to confront external security threats.
1. Single Foreign Affairs Ministry: The GCM would have only one common embassy in other countries. Moreover, there would be only one diplomatic mission in the Gulf region.
2. Military Cooperation: The existing Peninsula Shield will be further strengthened. Up-gradation of the weapon system and fighting capabilities of the shield will be further enhanced. There would a joint military to face emerging regional threats and confronting realities. The prospects of having new weapon system and unifying military training would also be seriously considered. There would be massive military maneuvers involving land, see and air forces of the six Gulf States.
3. Unification of interior ministries: The unification of GCC interior ministries starting with the unification of security agencies would be on the cards. It would strengthen the network of law enforcement agencies in the GCC.
During its 13th consultative meeting at Dir’iya Palace in Riyadh the GCC reconfirmed that the security of the GCC member countries is an integral issue and that the preservation of stability and security is a collective responsibility, citing the entrance of the Peninsula Shield Forces into Bahrain as per security and defence joint agreements of the GCC member countries.
Leaders of the Gulf Cooperation Council (GCC-6) have welcomed a request by Jordan to join the six countries group and assigned the GCC ministerial Council (Foreign Ministers level) to invite the country’s foreign minister for meaningful negotiations to finalise the necessary measures. In a similar move, the Supreme Council of the GCC also assigned the Ministerial Council to invite the foreign minister of Morocco to enter into negotiations to finalise the necessary procedures for joining the Council.
The Arab League has been useless, and countries like Egypt, Syria, or Iraq which have been playing an important role in the decision making are going through their own political chaos and are unable to shape a regional response to these changes. The purposed strategic expansion offers its members several dimensions of benefits: mutual security, political alliance, and economic or monetary union.
With the inclusion of the strategic states from Eastern Arabia and North Africa, the GCC’s regional domain is expected to widen from the Arabian Peninsula to the MENA region. It is hoped that GCC’s political stature is likely to grow with the inclusion of the new members. Its organisational strength in terms of economic and political weight age and security commitment will also be bolstered by the new member states.
According to the French bank Credit Agricole current report (April 2011), the inclusion of Jordan and Morocco to the GCC-6 states would add more than 12.2 percent to its economy. Jordan economy reached to US$27.5 billion in 2010 which is smaller than that of Oman and about a 15 of the size of Saudi Arabia.. Morocco economy was valued at US$103.5 billion in 2010, not far below Qatar and Kuwait, and its inclusion in the GCC would lead to a sizeable adjustment in the GCC economic structure. Both the potential members may provide greater diversification for imports into GCC-6.
Accession to the GCC is essential for the security and survival of a vulnerable country that faces a record budget deficit, soaring foreign debt, rising unemployment, numerous pockets of striking poverty Another reliable partner in securing the northern borders of Saudi Arabia, and, by extension, contributed to the security goals of other Gulf states, particularly with regard to effective control of drug smuggling.
It will boost its economy. It may increase inflows of FDI, FPI and joint ventures in the days to come. It would also be instrumental to reduce levels of poverty and generate employment. It would also be instrumental for human exports. It would increase strategic depth of the GCC-6. It would increase geo-political presence of the GCC in MENA and African region. It is also feared that full integration of both countries may reduce Saudi Arabia total GDP contribution to the GCC to 36 from 42 percent, based on 2009 GDP data.
Opportunities and Challenges
It would lead to the creation of a new strategic axis of geo-political influence in the Middle East region. Jordan and Morocco are both oil-importing countries and their inclusion would bring economic stresses to the GCC-6. Both the countries are facing fiscal deficits in the current fiscal year.
In both the countries, agriculture accounts for more than 16 percent of the GDP and employs around 42 percent of the working population, could offer additional opportunities for investment for the GCC in their search of food security heavens. Moreover, the GCC-6 may be benefiting from Jordan’s security and military expertise, and building on its common political objectives with Morocco. Jordan’s currency is pegged to the US dollar whereas Morocco’s currency is linked to a euro-denominated currency basket. It is expected that the GCC currency regime would have also evolved for the Gulf Arab states into a broad-based basket of currencies beyond the US dollar in the days to come.
Greater enhanced pool of resources (HRM) Larger population (almost double from 39 million to 77 million)
Jordan will have borders with Palestine, Syria and most dangerously, Israel which may add socio-economic integration among these countries.
Morocco will have borders with Mauritania and Algeria as well as Spain which would bring greater socio-economic prosperity. Security concerns
Qatar’s Doha Bank (2011) estimated that the GDP of the GCC will reach $1.402 trillion making it the world’s thirteenth largest economy. The economies of Morocco and Jordan would only contribute around $200 billion to GCC. There is great potential to develop the services, tourism, industrial and trade sectors in later countries. Economic contribution may bring serious problems of HRM, job creation, visa, and prosperities
Solution: EU-styled quota may be the ideal solution to avoid an influx of job seeking immigrants. It would gradually be raised to allow accommodate a full freedom of labour within GCC-8
The GCC-8 would expand from 2.5 million square km to 3.3 million square km Strategic Cushion
It will expand geo-political and geo-strategic domain of the GCC. It would provide better bargaining leverage to GCC to resolves many conflicting realities in the region. Security risks would be greater after the inclusion of Jordan and Morocco. It would very hard for the GCC forces to send troops as it did in case of Bahrain.
The GCC-6 and both Jordan and Morocco share the same language, culture, heritage and the same religion. Integrating them with the GCC bloc makes eminent business sense. They are strategically located and will bring in huge value to the group. With a combined economy of US$1,402 billion, GCC is the thirteenth largest in the world. The economies of Morocco and Jordan are expected to contribute another US$200 billion.
GCC Missing Opportunities
(a) Unaccomplished a single bloc: integrated socially, political and economically.
(b) Common Central Bank: Docile economic conditions and high public debts ratios along with high levels of bankruptcy incidents around the globe, all speak loud and clear about having a common central bank in the GCC. In the times of economic downturn and financial crisis, this central bank would act like a custodian of the last resort.
Recently, due to political power struggle Bahrain lost its offshore banking assets for more than 10 percent.
(c) Common monetary policy: Monetary policies of the European Union (EU) are under tight scrutiny. The EU sovereign debt crisis revealed the importance of centralizing both monetary and fiscal policy to avoid breaches of budget deficit and debt limits that could potentially destabilize the bloc. Even the international monetary policy system is at stake. Keeping its economies away from the red zone, the GCC must have amalgamated monetary policy. It would give the block edge over other countries in the region.
(d) Unified currency: Dollar is at its lowest ebb. Euro is not performing well. A hot debate is being carried in the different international forum. It is better for the GCC to decide as soon as possible for having unified currency by shunning their mutual differences. In a recent research study, a key investment firm in Saudi Arabia warned that the weak dollar, to which most GCC currencies are pegged, have already pushed up inflation in some members back to pre-crisis levels. It accounted for 36 percent of Kuwait’s consumer price index, 25 percent in Saudi Arabia, 19 percent in Qatar and 14 percent in the UAE in 2007.
(e) Common custom union: It would revolutionize their economies and trade volumes in the intra-region trade.
(f) Common foreign policy: Oman and Qatar have been allies of Iran. They both have even extended cooperation in the fields of trade, commerce, science and technology and energy exploration. One of the countries has also established closer ties with Israel which is not giving friendly gestures. So, lack of harmonious foreign policy has produced serious dints in the onward march of its unification in the fields of economy, monetary policy, and custom union.
(g) Common Army: Levels of martial preparedness and availability of human resource vary from country to country with in the sphere of the GCC.
Country’s Specific Issues
(a) Bahrain and Oman: Both face serious challenges of attracting investment and job creation. Marco-economic prospects are bright for both the countries in the current fiscal year but main thing is to create and maintain trickledown effects in the society. According to the International Finance (IIF) latest report (April 2011) higher oil prices and production will plunge Oman into a financial boom in 2011, with its real GDP expected to swell by around 4.6 per cent and the surplus in its budget and current account rising to new highs,. Moreover, its GDP will soar by nearly $17 billion through 2011 while its debt will dip below five per cent of GDP and foreign reserves climbing to nearly $16 billion. More effective economic liberalization and financial reforms are required to make these economies viable and dynamics. In this connection, vast network of small and medium enterprises, technical education and career counseling would bring desired socio-economic dividends in the future. The recently announced grand political reform strategy would also be important for Bahrain.
(b) Saudi Arabia: It is the biggest Arab economy which is the only Arab member of the G20 club of the world’s most powerful economies. According to the latest report of the IMF (March 2011), Saudi Arabia’s overall real Gross Domestic Product (GDP) growth is projected to reach 6.5 per cent in 2011 with inflation likely to rise to about 6 per cent as a result of both domestic and imported factors. Saudi Arabia 50 per cent population is under 18. Continuous job creation is a big challenge though its oil proceeds will be able to address these challenges in the short term. Diversification of national economy is the short and long term solution to Saudi Arabia. Institutionalization of technical education, computer literacy, science and technology, availability of easy and fair competition and use of 3Ps (strategic planning, public and private sector) collaboration would be useful.
(c) Kuwait: Mired by combative parliament and a non-starter cabinet, Kuwait sits somewhere in the middle. Meaningful gross rout political articulation is urgently needed.
(d) UAE and Qatar: Both UAE and Qatar remain the most comfortable with minority citizens and a generous welfare system. UAE is the land of diversified cultures, blending of maximum origins of nationality, languages and traditions. Interfaith tolerance is at the top in the UAE. Societal liberalization policy is continuously making its inroads and tremendously contributing goods. It is hoped that more than 70, 000000 Emiratis will cast their votes on September 24 for Federal National Council (FNC) elections. It would be a nine-fold increase from 2006, when 7,757 Emiratis 6,595 men and 1,162 women turned out to vote. It also shows rational approach towards political activation. Both the countries are the centers of global tourism, re-exports, and financial services, foreign direct investments and the last not the least sports. So, cross-cultural interaction brings new ideas of production, survival and service. Visionary leaderships of both the countries played an important role in their onward march of prosperity and progress in all possible fields of civility, commerce, economics and of course politics. Rigorous economic diversification plan is must for both the countries national economies and societies in the longer run. Attempts to build the knowledge economy in Dubai and now other city-states across the Gulf have predominantly transformed into real estate projects.
(e) The lack of long-term strategic planning has rendered the GCC a reactionary bloc especially on non-state threats i.e. climate change, water conservation and food security.
Significant Change in Global Economic Order
The trade partnership of the GCC-6 verifies the drastic shift in the existing global economic order. According to the IMF (2011) the emerging markets made up just 16 per cent of global GDP in 1987. Now, they account for 31 per cent, a figure forecasted to rise to 41 per cent by 2015. According to the latest report of the Economist Intelligence Unit (2011) about two-thirds of the world’s economic growth will be generated by emerging markets in the next five years. In the beginning, 85 per cent of the GCC-6 trade was with Organisation for Economic Co-operation and Development (OECD). By 2009 the emerging markets’ share was 45 per cent. It is also evident from the financial point view; a third of Dubai’s 2009 sovereign bond issue was taken up by Asian investors.
1- China becomes a reliable strategic partner
It seemed that the UAE wants to further strengthening of bilateral relations with China. It is an ideal destination for exports of oil due to which UAE and some other GCC-6 has made substantial investments in China’s refineries. There have also been investments in consumer goods because of the expanding middle class
Increasing demand for oil and other export products along with an expanding middle class in these emerging markets present the UAE and GCC-6 with a host of new trade opportunities in industries such as energy and port operations, tourism, retail, financial services especially sharia-compliant finance and telecoms.
UAE-China Bilateral Trade
More than 3,000 Chinese companies are rigorously engaged in the UAE. A huge community of 200,000 Chinese residents lives in the UAE. Direct non-oil trade exchange between Dubai and China has hit 16 per cent over the last five years. UAE is the number 1 in the re-exports of rice. It is ranked first in knowledge based economy. It holds first position in telecommunications, and infrastructures in the GCC-6 and MENA. On the other hands, China’s economy is a roller-coaster. It has become 2nd largest economies recently and may replace even the USA in the days to come. Its diversified economy and expertise in SME and energy sector would be useful for all the GCC-6 including the UAE.
Direct trade between the two countries hit Dh46 billion in 2010 against Dh43 billion in 2009. It is hope that with the passage of time it may increase to many fold in the days to come.
Source: UAE central bank
African continent is another emerging market for GCC-6. Dubai’s non-oil trade with the Common Market for Eastern and Southern Africa (Comesa) increased five-fold between 2002 and 2009, from $1.42 billion in 2002 to $7.24 billion in 2009. It has become one of the ideal places for securing food security arrangements.
It is hoped that GCC-6 will direct FDI in building infrastructures, construction and real estate markets. DP World currently operates container terminals across every continent and is developing projects in Brazil, China, India and Turkey, amongst other countries. Dubai Logistics City, Al Maktoum International Airport, Jebel Ali Port and Dubai Cargo Village are playing an important role in the exports of the UAE and the GCC-6.
Emerging trends in energy sectors
Hot pursuits of easy and smooth energy supplies have become mantra around the globe. According to regional research study, the GCC region needs to invest US$65 billion in boosting power generating capacity and at least as much amount in expanding the transmission and distribution network to meet the fast growing demand, an industry. According to the recent study (2011), Saudi Arabia may face the biggest challenge. It forecast that demand would reach 75,000MW by 2019, up from 46,000MW in 2010. UAE has also revised up its 2020 power demand forecasts by about 6,000MW to 28,000MW.
Country Power Demand %
Saudi Arabia 10
Source: (Saudi Arabia’s Electricity and Co-generation Regulatory Authority)
The above data shows that the GCC-6 must add about 8 gigawatts (GW) of power generation capacity per year to cope with growing demand.
The Gulf Cooperation Council (GCC) was established in 1981 by Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates to enhance their economic and financial integration. Its total population including expatriates is estimated at about 38 million, with a GDP of $1.1 trillion in 2008. Oil accounts for about 50 percent of the region’s GDP and 80 percent of fiscal and export revenues. The currencies of all GCC countries except Kuwait are pegged to the U.S. dollar.
The GCC state is one of the fastest-growing economies. According to IMF (March 2011) over the past 30 years, the GCC-6 GDP has reached from $422 billion (Dh1.54 trillion) in 2000 to more than $1 trillion in 2010.
The GCC-6 controls over 40 per cent of the world’s proven oil wealth. It accounts for nearly half the total Arab economy, to grow in real terms by around 5.4 per cent in 2010 and 6.6 per cent in 2011. According to IMF the GCC economies may reach to around $1.15 trillion in 2011. But according to the revised estimation it was raised to 7.8 per cent in 2011. Overall, GCC-6 nominal GDP is estimated to reach $1.402 billion in 2011 from $1.084 billion in 2010. UAE’s nominal GDP is estimated to reach $363.8 billion in 2011 from $301.9 billion in 2010.
Current Account Surplus
In the financial management of a country, current account surplus played very important role. It speeds-up socio-economic projects. It instruments to reduce poverty and generates employment. According to a key Western financial centre report (2011), strong crude prices boosted the combined surplus in the current account of the GCC-6 by nearly US$57 billion in 2010 and the balance is projected to surge further in 2011. According to IIF (2011) it was US$62.3 billion in 2009 and reached to US$119.3 billion in 2010. The balance is forecast to grow to around US$133.9 billion in 2011.
Comparative Study (2010-11)
Country Amount (US$ billion)
2009 2010 2011
Saudi Arabia 24.6 46.2 48
UAE 8.2 14.9 17.2
Kuwait 27.7 41.8 48.1 (highest fiscal surplus in Middle East)
Qatar 1.5 9.8 14.5
Oman 300 million (deficit) 5.0 6.1
Bahrain 600 million 1.8 2.0
Source: IIF (2011)
The above table clearly shows substantial increase in the current account surplus of the GCC-6 during 2010-11 which should be spent on the further diversification of their national economies along with value-addition.
(a) Continued gradual efforts at economic integration, including a single currency, a single central bank and greater harmonization of legal and regulatory environments. Strong political will holds the key of grand success.
(b) Development of a common foreign policy or a strengthening of shared security forces must be initiated at the earliest.
(c) The current trade patterns of the GCC and especially UAE shows a paradigm shift in the existing world trade system. So, instead of stick with the declining Dollar, all the GCC countries must think to have Green Basket Option with lots of gold reserves in their kitties. Bilateral trade between UAE-China has reached to Dh46 billion. China’s strategic presence in all the GCC countries (oil and gas projects, its huge current account surplus and being the second largest world economy opens a window of opportunities for all the GCC States. Trade in Chinese Yuan and Japanese Yen would be another attractive alternative.
(d) Rational foreign exchange management should be pursued. It is feared that further rises in the Chinese Yuan against the Dollar are likely to hit Gulf importers even more. According to Riyadh Chamber of Commerce and Industry, the dollar’s weakness was a pressing concern for many Saudi Arabian manufacturers. Saudi Arabia is a net importer, and any drop in dollar exchange rates will affect its import prices. Moreover, basic food products are more expensive than six months ago, and the more weak the dollar, the more we feel inflation pressures in Saudi Arabia and other GCC-6. Investors, businessmen and traders in the MENA expect the Chinese Yuan to become one of their top-three trade settlement currencies during 2011after the dollar and the euro. According to HSBC’s survey (2011), Chinese Yuan has become popular among the SME businessmen for settling trade deals. It also forecasts that business valued at about $2 trillion (Dh7.34tn) more than half of China’s trade will be settled in the Yuan by 2015.
(e) Strategic dialogue must be initiated with all the emerging economies especially BRCICS (Brazil, Russia, China, India and South Africa). South-South dialogue should also be revisited. Further strengthening of bilateral trade between the GCC-6 and Pakistan would be win-win situation. Already proposed Free Trade Agreement (FTA) between Pakistan and the GCC-6 must be geared-up. UAE, QATAR, and Saudi Arabia should rethink their investment preferences that may be diverted to Pakistan’s energy, infrastructure, banking, tourism and real estate industries.
(f) Economic diversification and great focus on manufacturing would be vital for all the GCC states. GCC states may start concept of “Value Addition” in their respective economies. They should all gradually start producing refined products or petrochemicals, and to utilize their oil and gas resources as feed stocks for industries that will add more value and provide more jobs.
(g) Food security would be one of the critical socio-economic problems in the GCC states till 2020. The GCC spending on food imports is projected to more than double from US$24bn in 2008 to US$49bn by 2020. Water scarcity and declining agricultural productivity are one of the two main reasons. Pakistan would play very important role in this connection. It has vast land, friendly environment, huge human resource power and above all friendly business and investments policies which can be benefiting to all the GCC states.
(h) Common tariffs mechanism, tax system, and influx of Free Trade Agreements (FTAs) would be useful or first giant step towards a common market in the GCC states.
(i) There should be separate financial management system for the earnings of oil and gas in the GCC-6. It should be utilized in sovereign wealth funds with long-term rate of return. By doing this, the GCC-6 may be able to stay away from the market price volatility.
(j) Greater reliance should be placed on private sector financing of infrastructure. The issuing of government bonds to fund longer-term assets would also assist in deepening regional financial markets.
(k) Comprehensive policies for energy and water conservation in all the GCC-6 which would also begin to tackle environmental sustainability and responsible resource management.