For decades, the Gulf Cooperation Council (GCC)—comprising Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain—has toyed with the idea of a common currency or deeper political union, similar to the European Union (EU). Yet, despite multiple announcements, summits, and feasibility studies, no real progress has been made.
Why? Unlike the EU, the GCC faces deep-rooted political rivalries, economic disparities, and conflicting visions of sovereignty.
1. The GCC’s Failed Attempts at a Common Currency
Past Promises, No Action
The idea of a GCC single currency was first proposed in 2001, with a target launch date of 2010. By 2009, the project was delayed indefinitely. In 2024, discussions resurfaced, but no concrete steps were taken.
Key Stat: A 2025 report by the Gulf Research Center found that only 23% of GCC policymakers believe a common currency is achievable within the next decade.
Why the Euro Worked (And Why the Gulf Dinar Won’t)
The EU spent decades building institutions like the European Central Bank (ECB) and enforcing fiscal rules before introducing the euro. The GCC, however, lacks:
- A supranational governing body to enforce monetary policy.
- Economic convergence (GCC states have vastly different GDPs, inflation rates, and debt levels).
- Political will to surrender monetary sovereignty.
2. Political Rivalries: The Biggest Barrier to GCC Unity
Saudi Arabia vs UAE: The Battle for Dominance
Saudi Arabia, the largest GCC economy, sees itself as the natural leader. However, the UAE (particularly Dubai and Abu Dhabi) resists Saudi dominance, preferring independent economic policies.
Key Example: In 2023, the UAE rejected a Saudi proposal for a GCC-wide VAT harmonization, fearing loss of control over its tax policies.
Qatar’s Isolation and Distrust
The 2017-2021 Qatar blockade (led by Saudi Arabia, UAE, and Bahrain) exposed deep fractures. Although relations have improved, Qatar remains wary of deeper GCC integration.
Key Stat: A 2025 survey by the Doha Institute found that 68% of Qataris oppose a GCC political union, citing distrust of Saudi and UAE influence.
3. Economic Disparities and Oil Dependency
Wealth Gaps Among GCC Members
- Saudi Arabia & UAE = High GDP, diversified economies.
- Kuwait & Qatar = Rich but smaller populations.
- Oman & Bahrain = Struggling with debt and lower oil revenues.
Key Stat: The IMF 2025 Outlook predicts that Oman and Bahrain will face fiscal deficits if oil prices drop below $60/barrel, while Saudi Arabia and the UAE can withstand lower prices.
The Problem of a Petrodollar Currency
Unlike the euro (backed by mixed economies), a GCC currency would rely heavily on oil exports, making it volatile. If oil prices crash, weaker GCC states (like Oman) could face economic collapse.
4. Sovereignty Concerns: No Gulf State Wants to Surrender Control
Monetary Policy Independence
Each GCC state controls its own currency peg:
- Saudi Arabia, UAE, Qatar = Pegged to the U.S. dollar.
- Kuwait = Pegged to a currency basket.
A common currency would require surrendering this control—something no Gulf monarchy is willing to do.
Fear of Losing Fiscal Autonomy
The EU forces members to follow strict debt and deficit rules (Maastricht Criteria). GCC states, however, spend freely on subsidies, mega-projects, and welfare programs.
Key Example: Saudi Arabia’s Vision 2030 involves massive spending—something a GCC central bank might restrict.
5. The EU Comparison: Why the GCC Model Is Different
The EU Had a Unifying Vision
Post-WWII Europe sought peace through economic unity. The GCC, however, was never about political integration—just economic cooperation.
The EU’s Strong Institutions vs GCC’s Weak Ones
- EU: European Parliament, ECB, European Commission.
- GCC: No supranational parliament, no independent central bank, and decisions require unanimous approval (which rarely happens).
6. Future Prospects: Will the GCC Ever Unite?
Alternative Models: Loose Cooperation Over Full Union
Instead of a single currency, the GCC may focus on:
- Harmonized regulations (e.g., visa policies, trade laws).
- Joint infrastructure projects (e.g., GCC railway, power grid).
The Role of External Powers
The U.S. and China prefer dealing with individual Gulf states rather than a unified bloc, reducing pressure for integration.
Conclusion
While the EU succeeded in creating a political and monetary union, the GCC will likely never follow suit. Political rivalries, economic disparities, and fierce protection of sovereignty make a common currency or political union impossible.
Instead, the GCC will remain a loose alliance—strong on security cooperation but weak on economic and political unity.
Sources and Further Reading
- Gulf Research Center (2025) – “GCC Monetary Union: A Distant Dream?”
- IMF Regional Economic Outlook – Middle East (2025)
- Doha Institute for Policy Studies (2025) – “Qatari Public Opinion on GCC Integration”
- European Central Bank (2024) – “Lessons from the Euro for Regional Currency Unions”
- Saudi Central Bank (SAMA) 2024 Report – “Monetary Policy Challenges in the GCC”
For further reading, visit:
- IMF GCC Economic Reports (https://www.imf.org/en/Countries/GCC)
- GCC Official Portal (https://www.gcc-sg.org)