Gulf Cooperation Council (GCC) Countries

6 Rich Countries That Own the World's Oil

Burning gas in oil field in Gulf Sea.
Burning gas in oil field in Gulf Sea. Photo: Ali Al Mubarak/Getty Images

What Is the Gulf Cooperation Council?

The Gulf Cooperation Council (GCC) is an organization of six oil-exporting countries. It was formed in 1981 to foster economic, scientific and business cooperation among them. Its headquarters is in Riyadh, the capital of Saudi Arabia, its largest member. These Middle East countries share the common faith of Islam, an Arabian culture, and an economic interest separate from OPEC.

On a per capita basis, they are among the richest countries in the world. Together, they supply one-third of U.S. oil and own up to $225 billion of U.S. debt. These countries are seeking to diversify their growing economies away from oil.

List of GCC Countries

The GCC consists of six members:

  1. The Kingdom of Bahrain - Its 1.2 million people enjoy a GDP per capita of $40,500. Its economy grew 4.5% in 2010.
  2. Kuwait - Its population is double that of Bahrain. They enjoy the 10th highest standard of living ($48,900 per person). The country holds 9% of the world's oil reserves.
  3. The Sultanate of Oman - Its dwindling oil reserves means it must rely on tourism more to improve the lifestyle of its 3 million residents.
  4. Qatar - The richest country in the world, with a GDP per capita of $179,000 for its 848,000 residents. It has 25 billion barrels of proven oil reserves and 14% of the world's natural gas reserves.
  1. The Kingdom of Saudi Arabia - The largest of the GCC countries (26 million people) has 20% of the world's proven oil reserves. Its GDP per capita is only $24,200.
  2. The United Arab Emirates (UAE) - Its 5.1 million people enjoy a per capita GDP of $49,600. That's thanks to a diversifying economy that includes Dubai and the world's tallest building, the Burj Dubai Khalifa. Dubai is the second-largest of the seven city-states in the United Arab Emirates. Abu Dhabi is the largest, with proven oil reserves of 92 billion barrels. Since Dubai only has oil reserves of 4 billion barrels, it focused on developing itself as a major world financial center and tourism destination. Until the recession, all went well. In 2004, the Dubai government began building the Burj Dubai, now known as the Burj Khalifa. It is the world's tallest building. It also backed Dubai World, famous for its real estate developments: man-made islands built to look like the world map and a palm tree. On March 23, 2011, Dubai World negotiated restructuring on $25 billion in debt with its 80 creditors. Dubai World stunned the world on November 25, 2009, when it asked its creditors to delay interest payments on $60 billion in debt. Most of Dubai's business investments is in hard-to-sell real estate. The global recession made these assets difficult to lease, thus putting Dubai World in a cash-flow crunch.

    GCC Countries Must Educate Their People to Diversify Away from Oil

    The World Economic Forum did a study on the future of the GCC members. It recommended diversification away from oil. It encouraged the GCC countries to do a better job of educating their people. That would support more investment in business research and development. Currently, these countries must import foreign workers to fill this need.

    These countries are ruled by family-based sultanates. Their leaders realize that further education could be risky. A more worldly population may want to change the way their country is governed. The GCC leaders of the GCC modernize their economies without creating more uprisings like the Arab Spring. For example, Bahrain had some riots in 2013. Military reprisals and negotiations with the dissidents kept the rulers in power. (Source: WEF, The GCC Countries and the World: Scenarios to 2025, May 19, 2007. Washington Post, Arab Spring Yields Different Results in Bahrain, Egypt, and Libya, December 20, 2011)

    Impact on GCC of U.S. Attack on Iran

    The report highlights the danger of the U.S. attacking Iranian nuclear facilities. The possible retaliation by Iran against military bases in the Middle East could spark an all-out regional conflagration and potentially lead to a global recession.

    That would make it nearly impossible for the GCC leaders to modernize their countries while trying to improve internal security.

    The report also highlights a “best case” scenario.  GCC countries could continue to broker peace in the Middle East while also developing their economies. Good examples are Dubai, UAE, and Qatar.

    What Happens if GCC Members Drop the Dollar Peg?

    The GCC countries have reasons to drop their peg to the dollar. However, the GCC official policy is that members will retain the peg until the Council has created a monetary union, similar to the European Union.

    The peg fixes the exchange rate of each countries currency to the dollar. When the dollar fell 40% between 2002 and 2014, it created an inflation rate of 10% in these countries. It forced the price of oil and other commodities to increase.

    If they no longer peg to the dollar, they will not need to buy so many Treasuries to stabilize their exchange rate. That would cause the dollar to decline further, causing more inflation in the United States.

    On the other hand, it would also mean that oil is no longer priced in dollars. That could result in lower oil prices. However, nothing will happen quickly as potential implications need to be well-studied.