The Cooperation Council for the Arab States of the Gulf, also known as the Gulf Cooperation Council or GCC, is a political and economic union between six Arab states that surround the Arabian Gulf, specifically Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and the UAE.

The Council was established on May 25, 1981 in Abu Dhabi, with six original member states, which has not changed until now. The Council has its headquarters in Riyadh, Saudi Arabia. Under Article Four of the GCC Charter, the Council has the basic objectives of “effect[ing] coordination, integration and inter-connection between Member States in all fields in order to achieve unity between them” and to formulate similar regulations in the fields of “economic and financial affairs; commerce, customs and communications; and education and culture.”

Taken together, the GCC states represent some of the fastest-growing economies in the world, mostly building off the boom in oil and natural gas prices that has occurred in the last decade. This rise is coupled with a building and investment boom, both from the private sector and the governments of the respective states. As a combined total, the region’s Gross Domestic Product is valued at 1.6 trillion USD, with a GDP per capita of 33.3 thousand USD.

Ted Chu, professor of practice economics at NYU Abu Dhabi, spoke about the economic drives behind the integration of the member states and the implications of the GCC on a regional and global scale.

Chu’s overall impression of the Council revolves around its pioneering presence in the Gulf region.

“This is the first economic cooperative organization in the region, and it has served a very good function for the economies in the region,” he said.

He spoke further about the motivation behind the formation of the Council.

"When you have many medium and small sized economies, it [makes] sense for them to cooperate in a well-managed manner," said Chu. "In my consideration, the GCC is similar to [the] Association for Southeast Asian Nations, ASEAN, and Mercosur [a South American trading bloc], in that they increase economic cooperation within a very close geographical community.”

Chu said that reducing import tariffs, which contribute to government revenue, will actually increase government revenue in the long run. He said breaking down the barriers to trade will result in a larger market, which will attract investors from larger corporations. Perhaps on their own, the small-and-medium economies of the Gulf will not present a viable market, but when companies are able to traverse national borders and tap into the regional market, it creates a more attractive environment for investors, he added.

“Another dimension of economic integration besides trade is financial integration, namely, should the GCC member states use a common currency?” Chu said. He explained that the decision is a nuanced one, with arguments both for it and against it.

One argument for a common currency, he said, argues that it will further reduce the cost of conducting business across member states.

“Between countries with different currencies, there is always an inherent exchange rate risk that comes when a company wants to invest in another country. However, with a common currency, that argument goes out the window,” Chu said.

While a big market with a common currency is certainly a big pull for investors, there are also some disadvantages associated with the establishment of a common currency. The challenges the Eurozone is facing now after the 2008 economic crisis can be seen as a strong argument against the usage of a single currency.

“With a unified currency, [a country’s] hands are a bit tied when it comes to determining monetary policy, as [they] are not able to take any policy action without the agreement of the other members of the currency,” said Chu.

Moving forward, Chu believes that the GCC can coordinate its macroeconomic policies better so that the investment environment becomes more favourable from an investors point of view. He said that the countries should have deeper integration, and treat the region as one place, thereby providing a large market for investors.

“I also see the possibility for more coordination in terms of diversification efforts, and the sharing of insights, to avoid duplication of efforts across the region,” said Chu.

Besides economic profits that influence the member countries on a macroscopic scale, the GCC also has concrete benefits on the everyday life of citizens of the member countries.

GCC citizens enjoy visa-free travel between member countries, similar to the Schengen zone, which grants free movement within countries in the European Union. When GCC citizens live in other GCC countries besides their home countries, their residence visas are valid for a longer period of up to five years.

“Everyone from the Gulf has a special place for other people from the Gulf,” sophomore Noor Al Mahrooqui said. “I feel very at home here [since] the culture is very similar [to my home country of Oman].”

Regarding public opinion on the GCC in Oman, Al Mahrooqui said that people are generally supportive of the Council and of the fellow member countries.

“I have never ... encountered a serious debate regarding the problems of the GCC,” Al Mahrooqui said. “[The GCC countries] have always supported each other no matter what.”

Chu looked forward to the potential advances of the GCC's place on the world stage.