The Gulf Common Market

Question: what is it we don’t like about the EU? The Common Agricultural Policy. Suppose, then, that a common market formed, and in that common market the key commodity was not agricultural production but, say, oil.

Six Gulf Arab states, including Saudi Arabia and the United Arab Emirates, will form a common market from the beginning of next year, said Abdul Rahman al-Attiyah, head of the Gulf Cooperation Council.

“The common market aims at creating a unified market in which GCC citizens can benefit from valuable economic opportunities in the Gulf,” al-Attiyah said. “The agreement will open the way for intra-Gulf and foreign investment in the region and increase the usage of available resources in the Gulf countries.”

A Common Oil Policy, then? Bear in mind that, among the key problems associated with peak oil, the fact that oil exports are declining even more quickly than oil production is prevalent, and a big contributor to the so-called ‘crunch’ that the rest of us face. A common market in the Middle East is more likely than not to exacerbate that, given that Market members will be top of the list to get the exports of bigger, superfielded Other Members.

There’s also the matter of the common currency, apparently still slated for 2010 (probably later). For the likes of the US, these are developments probably worth watching: even OPEC itself is “only” some 40-odd percent of oil production in the world, but (still, I suspect – although that Brazilian find will bump this around) two-thirds of oil reserves – hardly the entire market, but more than enough to make a serious difference if, say, oil stopped trading in dollars, and/or Arab states stopped pegging their currencies (or, by then, currency) to the dollar. Add that to the US’s loss of favouritism in getting sweetheart deals for oil, and the US has a pretty big problem.

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