Riyadh, Saudi Arabia
Saudi Arabia is the driving force behind the most effective defense and economic commonwealth the Arab world has yet organized. This is the Gulf Cooperation Council that emerged from an agreement reached in February 1981 by heads of state of Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain, Qatar, and Oman. The GCC aim is to coordinate and unify economic, fiscal, monetary, industrial, and defense policies.
With oil revenues declining, each of these Gulf states is finding it no longer can afford to go its own way on matters of economics and security. Thus the GCC promises to be an even stronger organization in the future.
The Saudis, according to diplomats, first saw the need for a collective Gulf approach, and they have been the most unswerving advocates of the cause. With huge amounts of petrodollars at hand, the Saudis in the past were able to build up their military and buttress themselves against internal and external problems by a diplomacy of largesse. Says a diplomat in Riyadh, ''There has been a direct correlation between Saudi Arabia's economic status and its political status.'' As the Saudi budget tightens, coordinated Gulf political, economic, and defense policies offer a good alternative to costly, unilateral attempts to keep the region stable.
On March 1 this year, the GCC's economic agreement went into effect, opening signatory countries - with a total population of 14 million and enormous spending power - to business and trade in a manner similar to the European Community's Treaty of Rome.
Already GCC members share security information and informally coordinate defense policies by means of bilateral agreements. A more solid joint-defense arrangement has so far eluded the Gulf states, because of disagreement over the possible role the United States might play in the event of a crisis. More nonaligned states such as Kuwait have been displeased with the US military exercises that have been carried out in conjunction with more Western-oriented states such as Oman.
Nevertheless, an attack on one GCC state would in all likelihood be met by all. Because of this, the GCC has come under criticism from Iran. But it is noteworthy that Iraq, also a Gulf country, is not a member. In the past, Iraq - like Iran - has sought hegemony over the Gulf.
Still, according to diplomats and Saudi officials, many Gulf states perceive Iran as the most immediate threat, even though Iran's war with Iraq has severely hampered its ability to project itself outside its own country. The Iranian Air Force has been battered in the war. But if even one plane did slip through air defenses and cross the Gulf to attack, say, the Saudi oilfields, analysts say this would spark a massive retaliation by Saudi Arabia and possibly her Gulf allies, informal though the alliances may be. Such an attack almost certainly would prompt American intervention as well.
But diplomats here see such a crisis as less and less likely, given Iran's military weakness.
It is in the area of the GCC economic agreement that much of the day-to-day change in the Gulf is occurring. The ultimate aim of the economic agreement is to create an integrated economic entity in which there is free movement of capital, goods, and manpower. Some of its important features are:
* No duty on agricultural, manufactured, or petroleum and mineral products originating in GCC states, plus agreed-on tariffs to protect GCC industries.
* Free access for national ships to ports in any member state, and exemption of passengers and goods from fees and taxes.
* Freedom of GCC nationals to operate in any GCC state and to start businesses with or without local partners.
* Coordinated petroleum policies (making the GCC an increasingly important power bloc as unity among Organization of Petroleum Exporting Countries diminishes).
* A $2.1 billion investment corporation, headquartered in Kuwait, to handle regional and international investments.
With its enormous financial strength and growing industrial base, the GCC seems to be shaping up as a durable common-market and defense alliance in the Arab world. A military crisis likely would speed up defense coordination. Burgeoning peacetime commerce - especially as collectivization becomes more economically necessary - should quicken economic interdependence.