The GCC: How Much for Stability?

Our guest author is Matthew M. Reed, a Middle East specialist at Foreign Reports, Inc., a consulting firm in Washington, DC. More of his commentary can be found at Al Ajnabee, where he writes about the new Middle East and U.S. foreign policy. The views expressed here are his own.

The Gulf Cooperation Council (GCC) is busy. In March they announced a $10 billion bail-out for Oman and Bahrain, the two poorest member states suffering from upheaval. Following the Egyptian revolution, Saudi Arabia promised $4 billion for the new government and $1.4 billion for uneasy Jordan. Qatar followed suit by giving Egypt $500 million. In Libya, where rebels are gaining ground, Kuwait and Qatar each promised hundreds of millions of dollars. The Emiratis hosted international donor conferences, sent fighter jets to Libya, and promised $3 billion for Egypt’s new government.

Four questions stand out. What are the donors’ intentions? Where is the money going? How much influence can they buy? And how much will be delivered? Careful review suggests these moves aren’t simply “counter-revolutionary,” as some claim. In fact, the money is going to revolutionary causes also, once again proving Gulf power politics are strategically flexible—not just rigid or reactionary.

As for intentions, Gulf donors want two outcomes. First, they want to rein in crises by improving local conditions—essentially exporting the rentier formula while avoiding bloodshed. They can’t bankroll their neighbors for long but they can buoy friends as the tide rises. Saudi Prince Waleed bin Talal al-Saud summed up this strategy recently when he said, “We are not trying to get our way by force, but to safeguard our interests.”

The second goal is to preserve their regional status. Genuine Arab democracy threatens to make monarchies obsolete, although much the same was said when the “fake republics” first emerged in the 1950s in Egypt and Iraq and, later, in Yemen and Libya. In any case, Gulf leaders want to create durable relationships with new regional players regardless of their system of government. Without a doubt, oil guarantees their international importance, but they are not willing to isolate themselves within the Arab community by opposing trends they cannot stop.

The aid also comes with strings attached. Saudi and Bahraini finance ministries worked together to select specific projects including housing, a revamped airport, and a new refinery to create jobs. When asked about unemployment recently by the Washington Post, Bahrain’s Foreign Minister said “The whole Gulf Cooperation Council [is] helping Bahrain and Oman with $10 billion over 10 years. That should ease up a lot of things for us.” Jordanian state media claims Gulf funds will be spent on easing the country’s budget deficit. And in Egypt, which will receive billions in grants and loans, the money will stabilize state banks, enable public expenditure, and allow them to avoid terms dictated by the IMF.

With so much money changing hands, a bigger question looms: How much influence can the GCC buy? The answer is not much, but this is no fault of theirs. Recipient countries are not beholden to donors especially if those recipients are self-interested autocrats. Why so? When regimes face existential crises their concerns narrow greatly. If money fails to curb unrest, leaders choose reform or violence. Expect them to respond in their own interest if faced with this choice. Consider how much money the US spends on foreign aid and its modest returns and the GCC’s generosity seems less important.

Much has been made of the GCC’s membership offers to Morocco and Jordan and the influence it might afford Gulf leaders. Aid and acceptance into the “Arab Monarch’s Club” may encourage those countries to resist dramatic reform but better relations will not immunize kings from popular demands. To suggest so is to overstate the power of the GCC and understate the unique factors that make Moroccan and Jordanian unrest so much more acute than that of the Gulf.

If indeed the GCC wishes to set the pace of reform in new member states, they will have to compete with other donors as well, including the United States. Washington will give Jordan $700 million this year alone. These donors may have different visions for Jordan but it’s hard to imagine either enjoying leverage if the situation becomes dire. King Abdullah II will decide what’s best for him, his legacy, and his country, as will Mohammed VI of Morocco.

Exactly how much will be delivered is also a matter of speculation. Most likely the money will be channeled through the individual development funds of each Gulf state, meaning distribution could be piecemeal and drawn out. Events might also outpace whatever goals the GCC now has. If that were the case then funding could be cut short. Most importantly, the Gulf states have a reputation for pledging plenty and providing only some.

Assuming Gulf money will have a major impact on the Arab Spring would be a mistake. Their aid will bolster relations with budding democracies, but friendly regimes, faced with existential threats, are unreliable given the circumstances. It’s also unclear just how much money will ever reach these countries. If anything, outreach to post-Mubarak Egypt and Libyan rebels proves the Gulf monarchies do not care what form stability takes in other states.