An exclusive club: GCC membership would benefit both parties

 

In September 2011, after months of deliberation, the GCC formally invited Jordan to submit a bid for membership to the oil-rich economic union. The invitation, which was also extended to Morocco, represents the first time the six GCC states – Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain and Oman – have sought to broaden the organisation’s membership since its founding in 1981. The move will benefit both parties. As a GCC member state, Jordan would receive much-needed financial support and cut-rate hydrocarbons from its, oil-rich neighbours, while Gulf states would benefit from the kingdom’s military expertise, competitive workforce and diplomatic ties to Western powers.

Original plans, which have since been put on hold, entailed a gradual accession development plan, which would see the kingdom become a full GCC member by 2017. In the meantime, the government will work with the GCC in order to further shore up economic and diplomatic ties, efforts that include the GCC’s five-year, $5bn development fund for the two potential members.

A HISTORY OF COOPERATION: Since it was founded on May 25, 1981, the GCC has become one of the world’s leading economic blocs. According to an early 2012 report from QNB Capital, a Doha-based financial research firm, the GCC area currently boasts hydrocarbons reserves worth an estimated $65trn at current export prices. In terms of volume, the bloc is home to 36% of global oil reserves and 22% of global gas reserves. Around half of these reserves can be found in Saudi Arabia, which shares a border with Jordan.

While Jordan and Morocco are the only two Arab kingdoms that are not members of the GCC, both have a long history of cooperation with the bloc. Indeed, since 2003 Saudi Arabia, Kuwait and the UAE have been Jordan’s primary energy suppliers. In the early 1980s, King Hussein unsuccessfully lobbied to join the council, primarily in an effort to obtain financing with which to modernise the military. King Abdullah II, the current monarch and King Hussein’s son, has been more successful amid more conducive regional circumstances.

The current accession process began in May 2011, when the GCC leadership agreed to consider Jordan’s bid for membership. In September 11, Amman and Rabat received a formal invitation to join the council. Since then Jordan’s government has agreed to a five-year accession development plan. In December 2011 the GCC announced the establishment of a $5bn development fund, which will be used to carry out projects in Jordan and Morocco, in an effort to boost trade and economic ties in the run-up to accession.

EXPECTED RESULTS: It is hard to overestimate the potential benefits of GCC membership. Unlike many of its neighbours in the region, the kingdom lacks any sizable energy reserves – the government imports around 96% of its energy, which costs in excess of 20% of annual GDP. This number is expected to fall substantially once Jordan joins the GCC, however, due to expected preferential pricing from the oil-rich bloc. Similarly, Jordan would likely benefit from increased investment from GCC-based companies, a surge in remittances from Jordanian nationals working in GCC countries and, potentially, a jump in visitor numbers from the Gulf. “Joining the GCC will increase aid in all kinds, create job opportunities for Jordanians and open the Gulf markets to Jordanian products,” Fahd Fanek, a Jordanian economist, recently told local news media.

The GCC’s existing members also stand to benefit from Jordanian accession. The kingdom’s military expertise in particular is considered to be especially valuable, considering ongoing tensions in the region.

The Gulf nations will also have access to an influx of high-quality Jordanian human resources. According to a study by the Dubai Chamber of Commerce and Industry, Jordan is home to the region’s “most efficient and low-cost labour force”. Taking into account the kingdom’s high unemployment rate, a substantial percentage of this workforce would likely welcome the chance to seek work in the Gulf. Finally, the Gulf economies could benefit from areas like Jordan’s close trade and political relationships with leading Western economies.

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The Report: Jordan 2012

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