The members as of Dec. 2020 were Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. These Middle East countries share the common faith of Islam and Arabian culture. They also share an economic interest distinct from their OPEC membership. These countries seek to diversify their growing economies away from oil. On a per-capita basis, they are among the wealthiest countries in the world. Together, they supply one-third of U.S. oil and own at least $273 billion of U.S. debt.
List of GCC Countries
The GCC has six member states:
The Kingdom of Bahrain - Its 1.4 million people enjoy a GDP per capita of $51,800. Its economy grew by 2.5% in 2017. It has 124.5 million barrels of proven oil reserves. Kuwait - Its 2.9 million residents enjoy the 11th highest standard of living in the world. Its GDP per capita is $69,700. The country holds 6% of the world’s oil reserves. That’s 101.5 million barrels. The Sultanate of Oman - Its oil reserves are only 5.4 million barrels. It is shifting to tourism to improve the lifestyle of its 3.4 million residents. Its GDP per capita is $45,500. Qatar - The second richest country in the world, with a GDP per capita of $124,900 for each of its 2.3 million residents. It has 25.2 billion barrels of proven oil reserves and 13% of the world’s natural gas reserves. The Kingdom of Saudi Arabia - The largest of the GCC countries with 28.5 million people. It has 16% of the world’s proven oil reserves. That’s 266.5 million barrels. Its GDP per capita is $55,300. The United Arab Emirates - Its 6 million people enjoy a per capita GDP of $68,00. That’s thanks to a diversifying economy that includes Dubai and the world’s tallest building, the Burj Dubai Khalifa. Dubai is the second-largest of the seven city-states in the UAE. Abu Dhabi is the largest. The UAE has 97.8 million barrels of proven oil reserves.
WEF Recommendations for GCC
The World Economic Forum did a study on the future of the GCC members. It recommended diversification away from oil. It encouraged the GCC countries to do a better job of educating their people. That would support more investment in business research and development. Currently, these countries must import foreign workers to fill this need. Family-based sultanates rule these countries. Their leaders realize that further education could be risky. A more worldly population may want to change the way their country is governed. The GCC leaders want to modernize their economies without creating more uprisings like the Arab Spring. For example, Bahrain had some riots in 2013. Military reprisals and negotiations with the dissidents kept the rulers in power. The report highlights the danger of a United States attack on Iranian nuclear facilities. The possible retaliation by Iran against military bases in the Middle East could spark an all-out regional war. A global recession could follow preventing the GCC leaders from modernizing their countries. The report also highlights the “best case” scenario. GCC countries could continue to broker peace in the Middle East while also developing their economies. Good examples are Dubai, UAE, and Qatar.
What Happens If GCC Members Drop the Dollar Peg
The GCC countries have reasons to drop their peg to the dollar. But the GCC official policy is that members will keep it until the Council has created a monetary union, like the European Union. The peg fixes the exchange rate of each countries currency to the dollar. When the dollar fell 40% between 2002 and 2014, it created an inflation rate of 10% in these countries. It forced the price of oil and other commodities to increase. If they removed the peg to the dollar, they would not need to buy so many Treasuries to stabilize their exchange rate. That would cause the dollar to decline, causing inflation in the United States. It would also mean that oil is no longer priced in dollars. That could result in lower oil prices. But nothing will happen quickly since potential implications need to be studied further.
