Gulf States are still in business

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In this article we assess business opportunities in the Gulf Cooperation Council states where a recent cease fire seems to be holding allowing all nations in the council to rebuild their relationships.

Doing business in the Gulf region

The GCC has some of the fastest growing national economies in the world with excellent transport connections; diversified industries across finance, aviation, healthcare and communications; welcoming policies for foreign investment, and strong partnerships with many other nations.

Established in 1981 to unite the Arab countries which border the Gulf of Arabia, the full name of the Gulf Cooperation Council is the Cooperation Council for the Arab States of the Gulf. The GCC is a partnership of the governments of Bahrain, Oman, Saudi Arabia, Qatar, Kuwait and the United Arab Emirates. Alongside OPEC, the GCC is one of the most important and powerful economic and political entities in the MENA region.

The GCC has a prime location astride the Red Sea, the Gulf of Oman and the Persian Gulf that establishes it as an important crossroads for trade between Western and Eastern economies. The GCC member states produce around 20 percent of the world’s crude oil while holding about 30 percent of global reserves, and oil revenues make up around 80 percent of the region’s total income.

The GCC has some of the fasted growing national economies in the world with excellent transport connections; diversified industries across finance, aviation, healthcare and communications; welcoming policies for foreign investment, and strong partnerships with many other nations.

The foundation of the GCC is a shared history and a belief in a shared Arab destiny between nations that share a common language, religion and cultural heritage. It is a powerful body led by a Supreme Council of heads of state from each member country and a Ministerial Council that manages the day-to-day programs and policies for the organisation.

GCC fractures

Since June 2017 the GCC has been in crisis. Saudi Arabia, the United Arab Emirates, Bahrain and non-GCC Egypt severed ties with Qatar and imposed a land, sea and air blockade.

It seems that Qatar’s support for popular uprisings, known colloquially as the ‘Arab Spring’ in 2011 and 2012 was a major political catalyst for the rift. Qatar’s liberal stance appears to have upset the conservative Sunni monarchies that control the Gulf states. Qatar has also been accused of ‘funding terrorists’ and being too close to the Iranian regime; charges it has always denied.

As a result of tension over these issues, the GCC split, Oman and Kuwait continued their cooperation with Qatar and Al Jazeera has recently reported that these nations may attempt to establish a free-trade zone independently of the GCC.

In January 2021 it seemed like the fractured relationship could be repaired, at least on the surface. Borders are reopening and diplomatic relations are being restored.

The issues were aired and apparently resolved at a 5 January meeting of the GCC member states where Saudi Arabia—the most important Gulf nation—agreed to lift sanctions against Qatar and resuming ties.

World leaders welcomed the apparent resolution as a return to regional stability. However, analysts remain concerned that there is still ‘mistrust and anger’ on both sides. At the core of the dispute is a long-standing divergence in foreign policy interests. Qatar wants to forge a more independent path and pursue alliances with other nations, such as Turkey.

Despite the apparent détente and improving relations between the GCC nations, internal unrest still blights the region. Jordan’s ruling elite is in turmoil, and the government of Kuwait is riven with factionalism. However, these political upheavals have not deterred the World Bank from providing an optimistic economic outlook for the GCC for 2021 and beyond, the global market for petrochemicals also remains strong.

Australia’s relationship with the GCC

The GCC is a key market for Australia’s agricultural exports such as livestock, meat, dairy, vegetables, sugar, wheat and grains. Currently Australia does not have a free-trade agreement with the Gulf nations. Negotiations began in 2007 but were halted in 2009 and have not been resumed despite a total trade balance of AUD$11 billion in 2019.

Australia has also recently had a checkered history with the export of live cattle and sheep to the Gulf region. Several high-profile shipments were targeted by animal welfare activists after animals dies from malnutrition and disease aboard several vessels. Now the live export is heavily regulated, particularly around high-risk times of the year in the northern hemisphere summer. The continuing COVID-19 crisis has also had an impact on the trade according to a recent news item Middle East Connect and Cultural Advisors (MECCA) can provide expert advice to smoot the path to successful business relationships with the GCC nations. Contact us today for an obligation-free discussion of your needs and how we can help. from Vets Against Livestock Export.

DFAT has identified opportunities in food, water, education, construction, infrastructure, consumer goods, and business expertise as markets in which Australian companies are competitive. The Gulf States continue to be an important market for Australia, but business operations face some hurdles when first starting out.

Making a successful entry into Middle Eastern markets requires specialist assistance with issues such as finding local partners, navigating business regulation and banking requirements, negotiating contractual obligations, and dealing with variations in local language, culture and customs.

Middle East Connect and Cultural Advisors (MECCA) can provide expert advice to smooth the path to successful business relationships with the GCC nations. Contact us today for an obligation-free discussion of your needs and how we can help.