GCC-EU partnership to grow under new Brussels leadership
The EU will change leadership in a few weeks following political shifts among member states and the composition of the European Parliament. How will this affect the EU’s relations with the Gulf Cooperation Council (GCC) and its members? While the GCC-EU relationship has always been important to both sides, it has gone through some difficult times recently over the EU’s approach to Iran. Will that change under the new leadership?
Over the past 38 years, the EU as a group has remained the GCC’s No. 1 trading partner. Last year, the two-way trade in goods reached a total of about $170 billion. Gradually, however, GCC trade with the EU has declined as a share of overall GCC external trade, going down from more than 25 percent in 1981 to about 11 percent last year. If current trends continue, China will soon replace the EU as the top GCC trading partner. But GCC-EU trade will remain important for both sides as they try to conclude a free trade agreement and other arrangements to facilitate trade and promote investment. There were important differences of opinion on trade and political issues, of course, but the relationship remained solid until the EU became the focal point in the nuclear deal negotiations with Iran. In those talks, the EU sidelined the GCC. Despite extensive discussions over the years about Iran’s destabilizing activities in the region and its support for terrorism, the EU overlooked those concerns in its pursuit of a deal and potential economic benefits for European companies in Iran.
The new EU leadership will take office on Nov. 1 and is expected to revisit EU policies in some important areas, including its foreign policy and the relationship with the Gulf region.
The need to recalibrate relations with Iran is dictated by several factors that the new leadership will likely take into account. For one thing, the nuclear deal has failed, as the US withdrew and Iran has repeatedly breached it. Meanwhile, Iran’s support for the Assad regime in Syria produced Europe’s worst refugee crisis in decades, challenging the
EU’s efforts to uphold its founding values and undermining political arrangements in a number of member states, which witnessed a rise in racism, xenophobia and support for extremist right-wing groups.
Trade and investment also matter. The EU was losing the competition with China, South Korea and other Asian powers in part because it was losing its privileged position in the GCC market. The ambitious economic diversification plans adopted by GCC countries are opening up great opportunities for investment and trade, which EU member states have been losing out on to their Asian competitors. They need to get in on the action before it is too late.
The key relevant actors in the EU who take office in November include the bloc’s new top diplomat. Spanish Foreign Minister Josep Borrell will become the EU’s high representative for foreign affairs and security policy and vice president of the European Commission. He is quite familiar with the GCC region and Spain has traditionally played a positive role in bringing the two blocs together. Phil Hogan, the incoming trade commissioner, is also familiar with the GCC as he has served, since 2014, as the EU commissioner for agriculture and rural development. He has previously stressed the need for greater trade with and investment in the Gulf. His appointment is expected to encourage current efforts to revive the free trade agreement negotiations, which have stalled since 2008. One of the most important changes in EU leadership is the appointment of Ursula von der Leyen as president of the European Commission — the top post in the EU bureaucracy. She has served as Germany’s defense minister and supported the idea of an EU army. While she will probably not push the latter idea, she is nevertheless planning to further develop the EU’s defense capabilities. She is planning to create a new entity, led by France’s Sylvie Goulard, with the aim of harmonizing the development of weapons and defense systems in the EU.
This change will create new opportunities for GCC-EU cooperation, as the GCC has, from its inception, boasted a significant military pillar, which culminated in November 2018 with the appointment of the first ever GCC joint military command.
Thus, in many respects, the impending changes in the EU leadership will likely lead to stronger GCC-EU engagement on political, security and trade issues.