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The Gulf Cooperation Council and Egypt normalise relations with Qatar

05 February 2021
On 5 January 2021, the Gulf Cooperation member states and Egypt signed the "Al-Ula Declaration" at the 41st GCC Summit (the "Declaration"). This ended a three year dispute, which began on 5 June 2017, and confirms that political and economic ties between signatory nations will be restored.

At a high-level, it confirms the increasing strength of relationship between the GCC nations (comprising the UAE, Saudi Arabia, Bahrain, Kuwait, Qatar and Oman) and Egypt. It re-asserted that the GCC nations want to cooperate and develop by being a single, unified, economic and political group, and identify Egypt as a key ally of these nations.


The Declaration contained a number of specific, and important, take-away points. Through a monthly client alert, DWF intends to summarize and discuss the key developments taking place, as Qatar re-opens to the rest of the GCC (excluding Kuwait and Oman, which had remained neutral and had maintained diplomatic and economic relations with Qatar) and Egypt. In particular, DWF will focus on developments in the following sectors:
  • Financial services and business relations;
  • Transport and movement of people and goods;
  • Technology;
  • Construction; and
  • Energy.

This month's update briefly summarizes what the Declaration says about each of these sectors and what to look out for in the near future.

Financial services and business relations

During Saudi Arabia's presidency of the G20 various cooperation networks were formed between the GCC nations. These included economic and business initiatives as well as enhancing civil institutions, empowering women's rights and encouraging entrepreneurship. The stated aim is for all GCC countries to pursue and develop those programs and execute their objectives.

The GCC nations also re-iterated their desire to strengthen governance, transparency, accountability, integrity and anti-corruption mechanisms through joint action - including specialized bureaus. The Declaration stated an intention to benefit from the Riyadh Initiative by participating in cross-border corruption investigation(s) and prosecution(s) to "mitigate the impact corruption has on economic growth, sustainable development, and mutual trust between governments and their people".

Transport and movement of people and goods

The stated intention is to complete "the requirements for the Customs Union and the Common Gulf Market. This includes achieving full economic citizenship that grants citizens of GCC countries the freedom to work, move and relocate, and invest in Member States".

It appears that the target of the Declaration in this regard is to create a similar concept of free movement of goods and people as is presently in the European Union.

Technology

The Declaration also calls for developing technological capability within government entities, including Artificial Intelligence, which will be used to quickly execute government services. Development of technology will be aimed at delivering benefits in schooling, healthcare and e-commerce. All these activities will support the Digital Cooperation Organization that was set up between the GCC nations in 2020.

Construction

The Declaration provided limited detail on specific projects, however, it expressed the desire for "a Gulf railway network, the creation of food and water security systems, and continuing to encourage joint projects that localize investment in the Gulf". The Declaration also touched upon the need to build the Gulf Centre for Disease Prevention and Control.

Energy

Whilst not specifically stated, oil and gas production is a core component of the GCC economic policy. The Declaration vowed to strengthen the GCC's regional and international role by developing strategic partnerships with other states, groups, organizations, international organizations and to serve common goals. Without being expressly stated in so many words, energy policy and oil is a key part of the GCC's approach to these issues.

Miscellaneous

The Joint-Defence Agreement and principle of collective security for the GCC countries was endorsed. Further military integration was agreed under the supervision of the Joint-Defence Council and the Supreme Military Committee.

Next Steps

It has become clear that based on the Declaration and pursuant to a number of official announcements, all the restrictions imposed on Qatar in 2017 have been lifted. In particular both Saudi and UAE companies are free to engage with their Qatari counterparts in relation to all commercial dealings.  However, it remains to be seen how the Declaration will be implemented and it is expected that the next few months will be crucial in this regard.

As mentioned, DWF will continue to provide a monthly update on the normalisation of relations between Qatar and the GCC, focusing on the above sectors.

If you have any questions please get in touch with one of our contacts below.

Further Reading