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Six Arab Gulf states take first steps toward economic community

Compared to the European Community, the Gulf Cooperation Council, which embraces six conservative Arab oil producers, may prove to have an easier task in integrating the economies of its member states.

But the six Arab Gulf states - Saudi Arabia, Kuwait, the United Arab Emirates , Bahrain, Qatar, and Oman - still have a long way to go. Leaders of the six states signed a draft economic agreement at last week's Gulf Cooperation Council (GCC) summit in Riyadh.

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GCC's Secretary-General Abdallah Bishara describes this agreement as a ''skeleton which requires flesh, an accumulation of principles which require detailed steps for implementation.'' But once the agreement is implemented Bishara says, ''It will change the whole face and shape of the Gulf.''

The Secretary-General went on to say that ''it is a great stride trying to convert six chambers in a big house into a big house without barriers. It is really an attempt to demolish barriers within the edifice of the GCC.'' Citizens of GCC member states will be able to travel without restrictions in all six countries and will be allowed to own property in any part of the GCC - a privilege which may prove difficult to implement.

Diplomats in the Saudi capital point to the fact that contrary to the European Community - an alliance of relatively strong states - the GCC has one dominant member: Saudi Arabia.

Says one observer: ''The motive for the GCC is political, the rationale is economic. The Saudis are pushing the GCC for political reasons. They want one happy family. But this makes economic sense because it will promote economic efficiency.''

The GCC is expected to proceed with economic integration gradually. The first step will probably be in the field of industrial cooperation. Gulf industry ministers met last month in Riyadh in what diplomats call ''an essentially Saudi-run show.'' The ministers commissioned a number of studies regarding among other things the harmonization of industrial incentives in the various member states.

The second step is expected to be the abolishment of trade and custom barriers. Although these barriers are very small some of the smaller Gulf states partially finance their budgets from these tariffs. ''The Saudis don't need the money'' says one Western diplomat, ''They will cover the losses of the smaller states.''

Only in a much later stage are the Gulf states going to move toward integration of their finance and oil policies. ''Oil is an issue of national policy'' explained a Kuwaiti expert on Gulf economics. He added that ''it is therefore difficult to secede this to a supernational organization.''

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Observers of the GCC believe that economic integration in the Gulf will be based on a horse trade: Saudi Arabia will compensate its GCC fellow members for their economic concessions to the council in exchange for recognition of its dominant political position.

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