Spring Break
UAE's economy grows
Shawkat Hammoudeh
Issue date: 6/5/09 Section: Ed-Op
The Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, is about 28 years old. It was established in 1981 in response to perceived increasing political risks in the Gulf region in the aftermath of the 1979 Iranian revolution and the 1980 Iraq-Iran War. It ratified an economic agreement in 1982 as the first step toward economic integration among its members. The motivation behind the establishment of the GCC is due to politics more than economics. The growth of GCC has been very slow in most of those long years, with occasional spurts taking place during short periods. Again, this slow growth has been underpinned by the reasons behind the motivation. Saudi Arabia has justifiably dominated the GCC due to its larger population, wider geographic area and more enormous resources. On the other hand, the other member countries wanted the political protection of a Big Brother which they found in Saudi Arabia. More recently, things have changed. Some GCC members have witnessed significant increases in their population, accumulated large wealth and built more stable and advanced institutions. They feel that they do not need the Big Brother's protection. Instead, they need to be treated as equal partners.
One of those countries is the United Arab Emirates. The UAE now has about five million inhabitants, one of the largest sovereign wealth funds in the world, advanced financial system and more diversified economy than Saudi Arabia. The UAE is the second largest economy in the GCC and the Middle East after Saudi Arabia. It wishes to be treated as a partner almost equal to Saudi Arabia in the GCC. It has been a founding member of GCC and it hosted the first GCC conference in 1981.
The UAE's recent withdrawal from the GCC Monetary Union surprised most people including those who do not admit it. During the heads of states' dinner banquet, which was held as consultative event to discuss the location of the anticipated GCC central bank, the other GCC members supported Saudi Arabia over UAE as the permanent place for the central bank. The UAE showed strong reservations on this decision. Then the big surprise came few days later when UAE announced its decision to withdraw from the Monetary Union, despite the fact that it signed all the GCC agreements.
One of those countries is the United Arab Emirates. The UAE now has about five million inhabitants, one of the largest sovereign wealth funds in the world, advanced financial system and more diversified economy than Saudi Arabia. The UAE is the second largest economy in the GCC and the Middle East after Saudi Arabia. It wishes to be treated as a partner almost equal to Saudi Arabia in the GCC. It has been a founding member of GCC and it hosted the first GCC conference in 1981.
The UAE's recent withdrawal from the GCC Monetary Union surprised most people including those who do not admit it. During the heads of states' dinner banquet, which was held as consultative event to discuss the location of the anticipated GCC central bank, the other GCC members supported Saudi Arabia over UAE as the permanent place for the central bank. The UAE showed strong reservations on this decision. Then the big surprise came few days later when UAE announced its decision to withdraw from the Monetary Union, despite the fact that it signed all the GCC agreements.
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