European Union and the Gulf States: A growing partnership, The

Middle East Policy, Oct 1999 by Saleh, Nivien

The European Union (EU) pursues a three-tiered approach with regard to the Arab countries of the Middle East. On a general level, it entered into the so-called EuroArab Dialogue with the Arab League. This dialogue has not been very effective and has even been pronounced dead by some authors.2 On a more specific level, the EU tries to realize a policy of integration with regard to the countries of the southern Mediterranean. This policy is based on cooperation agreements with several southern Mediterranean countries on the one hand, and on the Euro-Mediterranean partnership launched with the 1995 Barcelona Declaration on the other.3 Third, since 1988 the EU has engaged in a dialogue with the member states of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. While European policy vis-a-vis the Mediterranean countries has received a great amount of scholarly attention, literature on the relations between the EU and the GCC is scarce.4

This essay seeks to address the relationship between the two regional alliances as it has evolved since 1988, when the EU-GCC cooperation agreement was signed. Trying to shed light on the partnership, I will first discuss the 1988 agreement, which laid the groundwork for future relations. As a second step, I will concentrate on the stakes that the signatories have had in strengthening their ties. I will then trace how the relationship has developed and analyze the levels of cooperation.

THE AGREEMENT

During the mid-eighties the European Community and the member-states of the GCC entered into discussions aimed at furthering cooperation. In 1988 these talks resulted in a Cooperation Agreement, which entered into force in January 1990.5 This agreement, comprising the institutional framework for the relationship between the European Union and the GCC, states three general objectives: Relations between the European Community and the GCC countries shall be strengthened by placing them in an institutional framework; economic and technical cooperation relations are to be broadened; and development and diversification in the GCC countries shall be promoted, thus reinforcing these countries' role in contributing to peace and stability in the region.

On the one hand, these goals are to be realized through economic cooperation. This entails promoting efforts of the GCC countries to develop their productive sectors and diversify their economies. It also means encouraging technology transfer and development, particularly through joint ventures. In addition, cooperation in the fields of standards and measurements is to be pursued. The diverse economic sectors covered include agriculture and fisheries as well as industry and energy. The agreement addresses trade relations between the signatories and their part in the realization of the general objectives. Here the agreement calls for discussions ultimately leading to the signing of a free-trade agreement.

To achieve the stated objectives, a Joint Council was established which "shall periodically define the general guidelines of cooperation."6 Composed of representatives of both contracting sides, this Joint Council acts according to mutual agreement. It is to meet at least once every year, and its decisions are binding. To facilitate its work, the agreement provided for a subsidiary structure, the Joint Cooperation Committee. In addition, the Council may set up any other committee it deems necessary.

Since the agreement entered into force, the Joint Council has convened as planned once every year, with the exception of 1995, when the two sides met in Granada, Spain, in Troika formation,7 marking a turning point in the relationship. In addition to the sessions of the Joint Council, foreign ministers met in April 1998 in London, and in September 19958 and 1998 at the margins of the U.N. General Assembly in New York.9 For the Joint Council sessions, the rank of government representatives varies between senior official and foreign minister: In 1996 a majority of governments were represented by their foreign ministers. In 1998, a year in which the decisions that were to be made were less fundamental, the governments on both sides were represented by ministers as well as by senior-level officials. This indicates that these meetings have relatively high priority for the signatories. It is important to note the difficulty in convening a meeting for 21 ministers, each of whom has a diverse range of policy obligations.

THE STAKES

Why have the two sides wished to strengthen their ties and negotiate a freetrade agreement? Generally speaking, while the European Union is a major diversified trading bloc that relies heavily on the export of manufactured products, the economies of the GCC countries are dominated by the energy sector. In fact, oil and petroleum make up 95 percent of total exports by GCC countries.10 Therefore, for these countries, high world energy prices lead to high profits. For the EU the opposite is true; since energy is an input that contributes to production costs, the EU favors low energy prices not only for itself, but also for those economies with which its fate is inextricably linked through trade. This signifies two things: First, since developing countries' demand for oil is bound to increase, production facilities need to be expanded to meet world demands without considerable rise in price.11 Secondly, it is in the interest of the trading nations to raise the stakes that the GCC countries have in their economic fate. This can come about either through GCC economic diversification or through investment in EU industrial sectors.