The Gulf Co-operation Council is focusing on putting aside longstanding geopolitical differences and moving forward together on the shared challenges of the region, leading Middle East experts have told an anniversary seminar at the Chatham House think tank.
The academics told the London-based institution that any nuclear deal with Iran and the United States should involve the agreement of Gulf States and that the GCC, which on Wednesday was marking its 40th anniversary, was the forum through which to achieve co-ordination. The regional union should also continue functioning together to advance the interests of all six countries, the Chatham House webinar heard.
Despite challenges over the last four decades, the experts welcomed the anniversary of the GCC's founding, which brought together the UAE, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar as an economic and regional security organisation.
With the Al Ula declaration rejuvenating Gulf unity in January by ending the three-and-a-half-year rift with Qatar, diplomatic ties between the states have been bolstered, the webinar heard.
Bader Al Saif, a Kuwait-based participant, called for the GCC “to continue functioning in a healthy way, in a proper way and in a way that advances the interests of all states”.
He said the GCC states “do not need to cancel one another” and could “integrate themselves”.
The lecturer from the Malcolm H. Kerr Carnegie Middle East Centre, speaking from Kuwait, said “being honest, transparent, patient and with a sense of grace,” were the “traits that brought the GCC together”.
Commenting on the ongoing talks between the US and Iran on a nuclear deal, he said there needed to be "a clear message" from the US "both to the GCC governments and Israel that nothing will take place without initial counsel with them as partners".
There should be acknowledgement of the “successes and economic integration” that the bloc has witnessed, said Kristin Smith Diwan, of the Arab Gulf States Institute in Washington.
“In the past decades, the GCC has taken some steps towards a customs union and co-ordinating their policies,” she said.
The webinar was also told by Ms Diwan that the post-oil economy posed a challenge as “the most fundamental economic factor” for Gulf states.
Chatham House also heard from Mr Al Saif that some GCC nations were concerned that Turkey and Iran were “messing up with some members”.
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Strait of Hormuz
Fujairah is a crucial hub for fuel storage and is just outside the Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond.
The strait is 33 km wide at its narrowest point, but the shipping lane is just three km wide in either direction. Almost a fifth of oil consumed across the world passes through the strait.
Iran has repeatedly threatened to close the strait, a move that would risk inviting geopolitical and economic turmoil.
Last month, Iran issued a new warning that it would block the strait, if it was prevented from using the waterway following a US decision to end exemptions from sanctions for major Iranian oil importers.
Retirement funds heavily invested in equities at a risky time
Pension funds in growing economies in Asia, Latin America and the Middle East have a sharply higher percentage of assets parked in stocks, just at a time when trade tensions threaten to derail markets.
Retirement money managers in 14 geographies now allocate 40 per cent of their assets to equities, an 8 percentage-point climb over the past five years, according to a Mercer survey released last week that canvassed government, corporate and mandatory pension funds with almost $5 trillion in assets under management. That compares with about 25 per cent for pension funds in Europe.
The escalating trade spat between the US and China has heightened fears that stocks are ripe for a downturn. With tensions mounting and outcomes driven more by politics than economics, the S&P 500 Index will be on course for a “full-scale bear market” without Federal Reserve interest-rate cuts, Citigroup’s global macro strategy team said earlier this week.
The increased allocation to equities by growth-market pension funds has come at the expense of fixed-income investments, which declined 11 percentage points over the five years, according to the survey.
Hong Kong funds have the highest exposure to equities at 66 per cent, although that’s been relatively stable over the period. Japan’s equity allocation jumped 13 percentage points while South Korea’s increased 8 percentage points.
The money managers are also directing a higher portion of their funds to assets outside of their home countries. On average, foreign stocks now account for 49 per cent of respondents’ equity investments, 4 percentage points higher than five years ago, while foreign fixed-income exposure climbed 7 percentage points to 23 per cent. Funds in Japan, South Korea, Malaysia and Taiwan are among those seeking greater diversification in stocks and fixed income.
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